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Myths Surrounding Growing a Business-UK-2006

Myths Surrounding Growing a Business-UK-2006

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Published by dmaproiect
This study was undertaken by Durham Business School on behalf of the Small Business Service from February to July 2006 and is intended to provide a better understanding of the perceptions of small business about growth. In total, 73 small businesses took part in 10 in-depth focus groups conducted throughout England. The sample was deliberately structured to include a range of both micro (under ten employees) and small businesses (between 10 and 50 employees). The aim was to capture the views of businesses with a track record of growth, and contrast them with newer and smaller businesses with successful operating experience, but relatively static levels of employment and/or turnover.
While extant research describes the barriers to growth faced by businesses, this study tries to distinguish between those barriers that are real and others which owner-managers believe to be real, but are, in fact, exaggerated or non-existent. It is proposed that owners of younger businesses are susceptible to these misperceptions or ‘myths’, and as a result are less inclined to grow their business. The experiences of such businesses are contrasted with those of more mature businesses with growth experience, to illustrate that some of these beliefs present a lower barrier than imagined, and the available range of solutions
This study was undertaken by Durham Business School on behalf of the Small Business Service from February to July 2006 and is intended to provide a better understanding of the perceptions of small business about growth. In total, 73 small businesses took part in 10 in-depth focus groups conducted throughout England. The sample was deliberately structured to include a range of both micro (under ten employees) and small businesses (between 10 and 50 employees). The aim was to capture the views of businesses with a track record of growth, and contrast them with newer and smaller businesses with successful operating experience, but relatively static levels of employment and/or turnover.
While extant research describes the barriers to growth faced by businesses, this study tries to distinguish between those barriers that are real and others which owner-managers believe to be real, but are, in fact, exaggerated or non-existent. It is proposed that owners of younger businesses are susceptible to these misperceptions or ‘myths’, and as a result are less inclined to grow their business. The experiences of such businesses are contrasted with those of more mature businesses with growth experience, to illustrate that some of these beliefs present a lower barrier than imagined, and the available range of solutions

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Published by: dmaproiect on Feb 26, 2010
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Myths surrounding growing a businessA focus group based study on behalf of theSmall Business Service
 
Gordon AllinsonPaul BraidfordMaxine HoustonIan StoneDurham Business SchoolAugust 2006URN 06/2252
 
Contents
Executive Summary..............................................................11 Introduction.......................................................................6
1.1 Context of the research..........................................................................61.2 Policy context..........................................................................................7
2 Literature review...............................................................9
2.1 Overview.................................................................................................92.2 Establishing a growth framework..........................................................102.3 Identifying the myths............................................................................122.4 The perception of risk...........................................................................132.5 Management capacity...........................................................................152.6 The effect of financial performance......................................................162.7 The impacts of regulation.....................................................................162.8 Human resource policies.......................................................................172.9 Does advice make a difference?...........................................................18
3 The current research........................................................21
3.1 Aims of the study..................................................................................213.2 Methodology.........................................................................................213.3 The sample ..........................................................................................243.4 The scope of the research.....................................................................26
4 Understanding growth......................................................28
4.1 Baseline position – the ambition for growth..........................................284.2 How is growth understood?...................................................................304.3 Business objectives at different stages/sizes/ ownerships....................324.4 Myths associated with the understanding of growth.............................33
5 Enabling growth internally................................................396 External factors................................................................517 Policy implications...........................................................58Bibliography......................................................................63
 
EXECUTIVE SUMMARY 
 This study was undertaken by Durham Business School on behalf of theSmall Business Service from February to July 2006 and is intended toprovide a better understanding of the perceptions of small businessabout growth. In total, 73 small businesses took part in 10 in-depthfocus groups conducted throughout England. The sample wasdeliberately structured to include a range of both micro (under tenemployees) and small businesses (between 10 and 50 employees). Theaim was to capture the views of businesses with a track record of growth, and contrast them with newer and smaller businesses withsuccessful operating experience, but relatively static levels of employment and/or turnover.While extant research describes the barriers to growth faced bybusinesses, this study tries to distinguish between those barriers that
are
real and others which owner-managers
believe
to be real, but are, infact, exaggerated or non-existent. It is proposed that owners of youngerbusinesses are susceptible to these misperceptions or ‘myths’, and as aresult are less inclined to grow their business. The experiences of suchbusinesses are contrasted with those of more mature businesses withgrowth experience, to illustrate that some of these beliefs present alower barrier than imagined, and the available range of solutions. The report’s key findings include:
Most owners aimed for growth in efficiency (profit and margins),rather than in the standard indicators associated with becoming‘larger’ (output, employment and assets). There is not universalagreement that ‘business growth’ equates to ‘being bigger’.
Many businesses distinguish the idea of being larger from theprocess of how to bring about change leading to growth. Non-growers are particularly susceptible to rejecting a strategy of growth because of negative views of the consequences of beinglarger. For these businesses, the questions of how to grow arenever explored in great detail, simply because they do not want todeal with the anticipated consequences.
Even for those who consider that being larger brings net benefits,the actual process of growth is believed to be inherently risky andassociated with an exaggerated prospect of failure. Non-growerstend to think that maintaining their business at current levels isless likely to result in operating difficulties than a scenarioinvolving growth.
Non-growers are less likely to consider how risk can be quantifiedor minimised, by collecting data and calculating projections of their future profitability and cashflow.1

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