Large number of North West startups fail due to poor management, says report

The North West’s startups need to improve their management skills if they want to increase their chances of survival, according to a new report.

The Growing Your Small Business report, which analyses information from the UKCES Employer Skills Survey and the Office of National Statistics’ Business Structure Database, found that close to half (46%) of North West companies founded in 2011 failed within three years.

Bad management and incompetence was found to be the cause in over half (56%) of the business failures during the three-year period.

The report, produced jointly by the Chartered Association of Business Schools, the Chartered Management Institute (CMI) and The Supper Club, also found a lack of professional management skills to be holding North West startups back when it comes to productivity and employment growth, with only 16% of the region’s SMEs considered ‘fast growing’.

Just 42% of small companies provided management training in the previous 12 months. In comparison, almost nine out of 10 (89%) of firms with over 250 employees offered training opportunities for managers. For enterprises with fewer than 24 members of staff, that figure fell to 36%.

CMI chief executive Ann Francke said: “Small businesses are a vital part of our economy, yet as our report shows their growth is being held back by poor management and leadership.

“CMI has an important part to play in changing that and improving the productivity of small business.”

The report, launched at the House of Commons, is the beginning of a campaign to help SMEs access management support from business schools across the UK.

The chief executive of the Chartered Association of Business Schools, Anne Kiem, said: “The UK’s business schools are full of world-class business expertise and knowledge.

“With business schools conveniently located in the North West, including those who hold the Small Business Charter, they are perfectly placed to support the growth of small businesses in the region.”

The Supper Club’s director, Emma-Jane Packe, said she believes that the majority of challenges faced by entrepreneurs are common across all sectors.

Emma-Jane said: “Having the skills, along with a capable team, to manage through these is imperative but sharing with a peer group can help you find solutions faster and be an invaluable resource in helping you scale your business.

“We say to all SME business owners, we know it can be lonely being an entrepreneur, but the support is out there to help you achieve growth.”