FSB welcomes new report which says government fixated on ‘high growth’ businesses

The Federation of Small Businesses (FSB) has welcomed new research carried out by academics at Manchester Metropolitan University, which warns government funded business support schemes overly fixate on ‘high growth’ enterprises.

The report, commissioned by the regional pro-business lobbying group, Private Sector Partners NW – of which the FSB is a founder member – was published this week following detailed engagement with small firms across the North West. Businesses who took part in the research attended focus group sessions and answered detailed questionnaires on the way they develop their businesses and on their own experiences of accessing such business support schemes.

The study ultimately found that support for small businesses is often seen to focus on ‘high growth’ companies employing more than 10 staff, and is usually defined by their achievement in increasing turnover or employee numbers by 20% in under three years. It is claimed that this minority, which accounts for just 6% of all UK firms, account for more than 50% of job creation.

However, the study highlights evidence that the growth potential of such firms may be overstated, and reflective of fast, rather than sustained growth. It goes on to say that there are many ways in which small businesses ‘grow’, create employment and contribute to the economy and that these important concepts of growth are not understood or considered by designers of business support schemes. They are therefore largely ignored.

Holly Bonfield, Regional Vice Chairwoman of FSB Manchester & North Cheshire, said: “This research clearly shows the invisible contribution small businesses make to the economy and the need for government support for business to be widened to beyond the classic ‘high growth’ 6%. If government underestimates the importance of a broad range of growth models used by so many small businesses, this will restrict development and growth with an obvious knock-on effect on our economy.

“We need Government to take a fresh look at business support schemes so that non-traditional employment methods are acknowledged and supported as much as, if not more than, potential high growth firms.”