The New Business Growth Service – Six Steps to Growth
Launched on Small Business Saturday on 7th December 2024, the details of what the new Business Growth Service (Mk2) will provide for the small business sector across England has yet to be revealed, but we are assured it will not be long now. Under the previous Government, the business support landscape in England was weakened and left in a very fragmented state. However, there is now an opportunity for an important reset through the new Small Business Strategy. Months of in-depth consultations with small business owners, business representative organisations and other stakeholders could ensure the Business Growth Service will provide the guidance and support for the diversity of small businesses in the private sector.
What the Business Growth Service (BGS) needs to do is to be clear as to its purpose. The headline objective has already been announced – to make it easier and quicker for SMEs to find ‘government’ advice and support all under one roof with the key outcome being ‘growth’. Recognising the crucial role of small businesses to future growth, the BGS must differentiate itself from similar initiatives across the last few decades, e.g. – www.GREATbusiness.gov.uk, which is another example of where all Government advice, guidance and support were brought together in one place.
Reinventing the small business support wheel is not an option after almost 20 years of stagnating growth and productivity in the UK. To meet its aims, we make six recommendations for the BGS (with three of these focused on design):
1. The BGS needs clarity of purpose. Some existing institutions in this space, even with growth in their name, are unclear whether they are increasing productivity or growth or competitiveness. Being clear about purpose also means being clear about what it is not. International evidence shows that successful programmes (such as Danish Growth Houses, or the Netherlands Growth Accelerator) benefitted from having clear growth and satisfaction targets for their client firms.
2. Select targets based on evidence. The BGS must recognise the episodic nature of growth. Firms identified as scale-up in one period does not confer permanent status as a scale-up. So, the BGS should not have targets for ‘scale-ups’, however defined, but rather encourage more firms to have episodes of scaling. ERC research has shown that firms have a fast-growth episode then often plateau, although they may have a future growth spurts (Hart, Prashar and Ri 2021). The BGS must also recognise that very few firms engage with the scaling process.[1]
3. Targeting with strong diagnostic tools. If the purpose of the BGS is to increase growth in the firms that use it, to get the right advice at the right time, then it needs to recognise firm growth is episodic (Raby, Hart and Harney 2022). For the BGS this means that the service needs to have the flexibility to help with high growth episodes (see intensive, holistic support). And to have informal tools to understand whether and when more intensive support is appropriate, based on ambition, market capacity, absorptive capacity (BIS, 2014) and willingness to engage with advisers (Buffart et al. 2020). For example, several UK programmes have used GrowthMapper (https://growthmapper.com/) which helps to focus the conversations with business advisors for more intensive support.
4. Intensive, holistic support: This means focused, high-touch engagement that provides tailored guidance to businesses addressing multiple business needs, including finance, management skills and market access. Whilst the BGS might be able to signpost to this support, if the BGS simply has a one-stop-shop online light-touch it will not deliver on its implied promise of growth support (Mole et al., 2011). Account manager systems can be useful in this approach (Scottish Enterprise, 2020). In Canada, BDC Advantage develops long-term support for high impact businesses (OECD, 2017). The connection of programmes to mentors is also one of the most important elements here. We know the experience of high growth also influences whether the firm would undertake it in the future (Raby et al., 2022).
5. Engagement of firm management: This means active participation of business leaders in the development process to ensure commitment and alignment. We know that the impacts from the BGS will vary. Evidence from a US food and agriculture programme demonstrated that more engaged managers who sometimes pushed back on advice were more likely to adopt the advice and improve their firm’s performance (Miller, O’Mahony and Cohen, 2024). For the BGS, a way to encourage and monitor engagement and encourage co-production will bring better results (Rice, 2002; Miller et al., 2024). Whilst the consultation has involved business representatives and responded to the difficulties firms have in navigating the environment, each intervention needs to be co-produced between adviser and SME managers.
6. Ecosystem integration: Strong linkages to other support mechanisms, such as incubators, accelerators, financial institutions, and skills training programmes is vital (Goswami, Mitchell and Bhagavatula, 2018). The relationship between skills training and the BGS is particularly important since growth and training are correlated. The Chambers of Commerce make a difference in the UK, particularly with small firm leadership (Tiwasing and Sawang 2022).
By leveraging international experience, implementing these six steps, and aligning with the current government’s growth mission, the Business Growth Service could drive significant progress towards maximising the contribution of the small business sector to growth.
Kevin Mole and Mark Hart, Enterprise Research Centre
Please note that the views expressed in this blog belong to the individual bloggers and do not represent the official view of the Enterprise Research Centre, its Funders or Advisory Group
