Publication - Research and analysis

Behaviour and motivation of businesses: qualitative insights

Published: 1 Nov 2019
Part of:
Business, industry and innovation
ISBN:
9781839603105

Report on research to understand attitudes and behaviour of SME owners in Scotland in relation to business growth.

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Contents
Behaviour and motivation of businesses: qualitative insights
4 Growth enablers and barriers

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781.9 kB

4 Growth enablers and barriers

This chapter explores factors that had impacted on the growth-related behaviours of the SMEs that took part in the research. It first outlines the extent to which participants had experienced growth, before examining the factors that either enabled or restricted growth. These factors are outlined under three broad headings: environmental and contextual factors; behavioural factors; and the role of advice and support. 

4.1 Extent to which businesses had experienced growth

Before considering participants’ experience of growth, it should be noted that “growth” was conceived of in different ways by different businesses, ranging from sales and turnover, number of customers, size or number of premises, and size of workforce. Reference to growth and growth-related behaviour in this section encompasses all of these interpretations of the term.  

The extent to which the businesses that took part in the research had experienced growth, in any form, varied. Some businesses did not have clearly defined growth targets, which often reflected their reasons for entering into business (for example,  “fallen into” ownership, as described earlier). By definition therefore, these businesses found it difficult to comment on whether or not the business had grown in line with their aspirations. Of the businesses remaining, some had met or exceeded their growth ambitions, while others had failed to grow or observed a decline in their performance. There was some variation by size of business: all medium sized enterprises (50+ employees) said they had grown, while sole traders and small enterprises (2 to 49 employees) reported more mixed experiences. 

Among those who had experienced any growth, the pace at which this had occurred had varied. For some, growth had been slow in the early stages, before picking up in later years. For others, growth had beeb rapid in the early years, before reaching a more steady level of performance or plateauing. The latter group included businesses that believed they had reached capacity, either in terms market demand, the size of their premises, or time and resources. Such businesses tended to report either having no intentions to grow further or putting their growth plans on hold until they were better placed to achieve them – though there was little evidence of their taking steps to get to arrive at such a position. 

Other participants described their growth as “gradual” or “steady”, and these businesses tended to be satisfied with this pace, regarding it as a fairly typical or normal.  

“Businesses never grow as much as you would like them to, but I am relatively satisfied with how we have done – comfortable, and steady.”  

(Small enterprise, Financial and business services, Highland and Islands, Over 10 yrs, M)

As well as a varied pace of growth, participants reported a mix of both planned and organic growth. Broadly speaking, participants who reported planned growth tended to be older and to work in larger businesses that had operated for at least five years. Planned growth was characterised by such actions as developing and reviewing business plans or growth plans, updating these plans regularly, carrying out market research, and setting growth targets for coming years. Businesses who exhibited these types of behaviour tended to feel in control of their growth, though they also sometimes observed that businesses were “living and breathing things” and there was a limit to which growth could be controlled. 

“You can only do so much planning, especially when you are starting out. But as soon as you open up the product to the public, so many things can go wrong or go right, and you can be blindsided. A start-up’s forecast will always be a ‘finger in the air’ exercise to a certain extent.” 

(Small enterprise, Food and drink, Lothians, 1-5 yrs, M)

Participants who reported unplanned or organic growth – typically younger participants, working in smaller businesses – tended to explain this in terms of unpredictability in their market. It was common for them to say their approach was necessarily reactive, reflecting what was happening in their market at any one time; for example in terms of prices, level of customer demand, or competitor acitivity.  

Businesses thay had not experienced growth often attributed this to their having set unrealistic targets at the outset, or not having planned adequately in the early stages. 

“It hasn’t gone as well as I would have liked...it is on a week by week basis at the moment…it was not a long thought out decision opening this business, I just fancied a bit of change. If it doesn’t work, it doesn’t work.”  

(Sole trader, Wholesale, retail and repairs, South of Scotland, 1-5 yrs, F)

“The number one lesson that I have learned is that it is all about focus… I think I really regret that we didn't do that market research sooner, I think I was just a bit scared just to pick up the phone and speak to people. If I had done that sooner and we had focused [our product off] that would have been helpful.”  

(Small enterprise, Wholesale, retail and repairs, Glasgow, Less than 1 yr, F)

Others attributed their slow growth to unforeseen obstacles or challenges that demanded changes to the way they had been operating. These participants had realised through “trial and error” and testing the market that they needed to make significant changes to business practices, such as moving from offline to online, from a consumer to business-to-business model, or from retail to wholesale distribution. Still, these participants often discussed such experiences in positive terms, describing how they had helped them to clarify the most appropriate approach to delivering their business and ultimately placed them on a stronger footing.

4.2 Environmental and contextual factors affecting growth 

4.2.1 The economy and market conditions 

The impact of the economy has been felt on a number of levels by partipating businesses. Most broadly, they commonly reported that their growth had been impacted by a generally unfavourable financial climate in recent years. There was repeated reference to the recession in 2007, in response to which a number of businesses had decided to hold back on pursuing particular growth behaviours, such as employing more staff or expanding their premises; indeed one participant described this period as a “battle for survival”, while another spoke of having gone into “batten down” mode. While such comments were made by a range of businesses, they were particularly prevalent among those in the construction, property, tourism and creative industries sectors. 

“Prior to the financial crash I was looking at expanding because of the amount of work I was turning away, but the financial crash put a halt to that. Turnover dropped by 60 per cent within a short space of time.”   

(Sole trader, Creative industries, North East Scotland, Over 10 yrs, M)

The weakness of the pound had also had an impact, but in different ways for different types of business. For tourism businesses, the low pound had increased the number of overseas visitors to Scotland and therefore boosted their sales. Among those trading internationally, however, the weaker currency had led to increased costs on imported goods and placed pressure on their cash flow.  

Economic challenges were compounded by competition from other businesses. Competition took a range of forms, including other businesses offering the same or similar products or services (sometimes more cheaply), and larger providers dominating the market and being able to attract employees by offering higher wages. In some cases, businesses had actively taken steps to stand out from competitors, such as making sure their product or service was delivered to the highest possible standard. However, others reported being unsure about how to respond to competition and saw it as a stumbling block to their growth. There was no clear pattern in terms of types of businesses more or less likely to take either of these approaches. 

“You're up against [companies like] Amazon and they are massive, huge, and to me are almost like a monopoly…. it's just getting bigger and bigger and is not a level playing field. It is a huge barrier to small, medium enterprises, these monster companies are just taking over.”

(Small enterprise, Wholesale, retail and repairs, West of Scotland, 6-10 yrs, F)

“It is highly competitive, you are dealing with larger companies, and people who are doing it as a ‘homer’ and getting paid cash, and you can’t really compete with that. And there are Polish guys now doing it for a fraction of the cost.”

(Sole trader, Construction, North East Scotland, 1-5 yrs, F)

Running alongside these challenges was a sense of uncertainty around how the economy might be impacted by political and constitutional changes in the future, including Brexit and the prospect of a second Scottish independence referendum. As is discussed more fully in Chapter 5, this uncertainty had left businesses feeling insecure about their own future and therefore cautious about taking steps to grow. Those in the construction and property sectors in particular felt that economic uncertainty had made customers less likely to spend, and therefore reduced demand for their services. 

“If conditions are not there to help you flourish, you just have to wait and see. But confidences have been shaken among small and medium sized businesses, and people feel insecure.” 

(Small enterprise, Real estate activities, Lothians, Over 10 yrs, M)

“What does Brexit mean? We don't know yet, and how will that affect the property and construction industry? I don't know yet. So, if I don't know, I'm worried. The construction industry is pretty fickle, and uncertainty means people think more about what they do and maybe [put things off] until next year.” 

(Medium enterprise, PST[9], Mid Scotland and Fife, Over 10 yrs, M) 

4.2.2 Access to finance

Having ready access to finance when needed was commonly regarded as essential to business growth. A number of businesses had secured bank loans to help them purchase equipment, or invest in and expand their premises, often highlighting these occassions as key stages in their growth journey. In contrast, others had experienced difficulties securing finance from banks, particularly during the recesssion when banks pulled back on offering loans to businesses. The closure of local bank branches was commonly identified as an added barrier, with participants observing that it had resulted in business banking becoming increasingly centralised and less grounded in an understanding of local businesses and business owners’ needs.  

“During the recession the banks behaved abominably to small businesses. They were completely unhelpful, and you just didn’t know where to turn to. In the end I had to sell one of my houses to find the money we needed instead.”   

(Small enterprise, Food and drink, Central Scotland, 5-10 yrs, F)

“They are shutting all these branches and losing a lot of the know-how in local places, the people who know their customers.” 

(Small enterprise, Food and drink, Mid Scotland and Fife, Over 10 yrs, F)

A small number participants noted the importance of finance from other external sources. This included government or council-backed start up loans, and grants from bodies such as Scottish Enterprise, HIE, Business Gateway, the Scottish EDGE Fund, and The Princes Trust. Grant funding from such sources was seen as favourable to taking out loans from banks, reflecting the reluctance towards debt noted in Chapter 3. The small number of participants who had received finance from the aforementioned  sources felt it had had a significant impact on their growth; for example helping to fund the purchase of premises, equipment or stock. Nonetheless, they occasionally noted that the application process had been time consuming and therefore would potentially be off-putting for other businesses. 

“If you’re relying on a grant or funding packages you could find that you’ve done nothing but shuffle paperwork back and forth with the various organisations for six months before you get even the green light to progress things, so that can be frustrating.” 

(Small enterprise, Sustainable tourism, North East Scotland, Over 10 yrs, M)

A small number of participants felt there was a lack of finanical support available to established businesses, compared with start-ups. Another contented that there was less support for sole traders than for larger businesses, due to a reluctance on the part of lenders to finance very small businesses. 

“Banks, mortgage lenders, any of these people are an absolute nightmare to get any sort of finance if you're self-employed.” 

(Sole trader, Creative industries, North East Scotland, Over 10 yrs, M)

4.2.3 Policy and legislation

Policy and legislation were identifed as both enablers and barriers to growth. In terms of the enabling dimension, there was reference to grant schemes or government-backed loans for start up businesses, including support from HIE, Business Gateway, the Scottish EDGE Fund, and local authorities. Participants often reported that such funding had helped them to start and sustain their business, enabling them to invest in premises, equipment or product development, or simply to meet general operating costs. Other more targeted grant schemes were discussed in similarly positive terms, including schemes to help with the installation of biomass boilers, or with the conversion of petrol vehicles to LPG (liquified petrolium gas), which participants in the agricultural and energy sectors respectively highlighted as haaving been helpful. 

In terms of barriers, there was frequent reference to legislation being restrictive for businesses. This included legislation designed to protect employees and customers, such as the minimum wage, workplace pensions, and health and safety regulations. A number of sole traders, in particular, were put off by the time, effort, and expense associated with compliance with these measures. While these participants did not necessarily disagree that it was important to protect employers and customers, they felt that the costs associated with compliance were prohibitive.

“There is more legislation now, which can hold you back from moving forward. We would like to employ more staff, but we are held up by minimum wages and workplace pensions, which mean costs would be higher.” 

(Small enterprise, Energy, Glasgow, Over 10 yrs, F)

“I do everything myself. I’m not looking to employ anyone, because of things like PAYE law and pension provision.” 

(Sole trader, Accommodation and food, Highlands and Islands, 6-10 yrs, M)

“I was actually building houses for a company and we were getting £3,000 to erect a house and finish it. Then health and safety regulations kicked in, so we then had to erect a scaffolding ourselves around the house, free of charge.”  

(Sole trader, Manufacturing, Mid Scotland and Fife, 6-10 yrs, M)

Other, more sector-specific policy and legislative requirements were similarly identified as barriers to growth. Among businesses working in the property rental market, reference was made to the recent changes to laws governing the landlord and tenant relationship, under the Private Housing (Tenancies) Act 2016. This legislation was seen as having changed a number of aspects a landlord’s obligations, including requiring additional qualifications, registration and accreditation, making it more difficult for landlords to terminate a tenancy and  reducing the amount of notice that tenants were required to give. As well as placing incrased practical demands on landlords, the changes had caused some of those interviewed to worry about an increased likelihood of their experiencing disputes with tenants and potentially being taken to court as a consequence. One landlord reported that, for these reasons, he had decided to close his very successful lettings agency. 

“The Council and the Scottish Government will always protect the tenant over the landlord, always. The new legislation says it all, these private residential tenancies that the Scottish Government has given us, means we can effectively no longer get rid of bad tenants.”

(Small enterprise, Sustainable tourism, South of Scotland, Over 10 yrs, M)

Agricultural businesses had other policy-related concerns. In particular, they noted that farming subsidies were too short term, making it difficult to plan ahead. Some also commented that the future of subsidies was uncertain, thus posing a risk to the future growth – and, indeed, the future sustainability – of some farms. On the other hand there were some in the sector who saw farming subsidies as a tool which could discourage growth, as they were given to businesses regardless of how well they were performing. 

“[The government] are presently subsidising the cost of food by paying farmers to grow certain things. There is no forward planning beyond two to three years at the moment…because the government is only in for five years at a time or less.”

(Small enterprise, Food and drink, Mid Scotland and Fife, Over 10 yrs, F)

“At the moment we face Armageddon in 2022, if they take away the single farm payment we will be losing north of £50,000 a year, and I will have to make decisions whether to just do a running jump and let the whole lot become scrub. You can’t go on losing £50,000 a year for ever.” 

(Small enterprise, Sustainable tourism, South of Scotland, Over 10 yrs, M)

4.2.4 Recruitment, retention and skills

The ability to recruit and retain staff was seen as a further factor impacting on growth, particularly in rural areas. In terms of recruitment, a commonly cited challenge, was finding enough people with the requisite skills to fill positions, including both junior and more senior positions. This was seen as a challenge in a range of sectors, but was especially prevalant among those working in tourism and food and drink. One participant attributed recruitment challenges in the former sector to a widely held perceptions that the hospitality industry is poorly paid, making it unattractive to potential employees even though her business offered competitive wages. 

Competition from larger businesses offering higher salaries was noted as specific  recruitment challenge by business across a number of sectors. They described finding it difficult to offer a comparably attractive package for potential new recruits. 

“The biggest problem that we had is actually employees and finding the right people for the roles. The JP Morgan’s of the world can just grab all the new talent as it comes out, offer really high pay checks that start-ups just can't compete with. So, that slowed our development because we just couldn't get the right resource in.”  

(Small enterprise, Wholesale, retail and repairs, Glasgow, Less than 1 yr, F)

In terms of retention challenges, these were particularly highlighted by businesses in the tourism and food and drink sectors, where work was often seasonal and tended to have high staff turnover. Further, those in remote rural locations highlighted structural barriers that posed challenges for retaining staff, specifically the lack of accomodation in their area for staff. 

“The [high] staff turnover we suffer on the island is often as a result of people not being able to find anywhere to live, because there is a lack of affordable accommodation.”

(Medium enterprise, Accommodation and food, West of Scotland, Over 10 yrs, F)

However, there were examples of businesses taking active steps to try to retain their staff, such as one manufacturing business who had put in place longer term contracts for trainees as a means of keeping them in ther business, having previously suffered from employees leaving as soon as they had received their training.  

Concern over recruitment and retention of staff were heightened by uncertainty over the future ability to employ non-UK EU nationals, reflecting the general sense of insecurity arising from Brexit (outlined in more detail in Chapter 5). Again, these concerns were particularly prevalent among those in the tourism and food and drink sectors, who tended to rely on overseas workers. These concerns were even more pronounced in more remote rural locations, where populations were small and declining and businesses were therefore dependent on in-migration to fill positions. 

“The number of people [here] that are of working age is far below the Scottish average, which makes our issues of getting staff even harder, and [more so] with Brexit, because we need our Eastern European staff to keep this business afloat.” 

(Medium enterprise, Accommodation and food, West of Scotland, Over 10 yrs, F)

4.2.5 Physical assets

The availability and suitability of physical assets; specifically, premises and equipment, had also impacted on business’ ability to grow. While some had been able to find any premises they needed in the right place and at the right time, others had faced difficulties in these respect. Several people, commented that available premised were too small for their purposes – this was particularly the case in rural areas – or too expensive. 

The specific location of available premises was highlighted as an additional challenge, particular by retail businesses, for whom footfall and passing trade was an important driver of sales. Business located in quieter area, with low footfall, felt this has been a reason for poor performance. Conversely, businesses that considered themselves well-located, highlighted this as an enabler to growth. Indeed, one participant described being reluctant to move locations for this reason, even though her operations were somewhat constrained by the size of her premises.  

“I'm in really, really small premises, but at this moment in time I would just be happier if there was an increase in footfall.”

(Sole trader, Wholesale, retail and repairs, North East Scotland, 1-5 yrs, F)

“One of the things that stops us moving forward is that we have such a small shop. But I wouldn’t want to move because the shop is so nice and our location is so good. If you move to the wrong part of the high street, that can be a risk.” 

(Small enterprise, Wholesale, retail and repairs, South of Scotland, Over 10 yrs, F)

The ability to acquire equipment had been a similarly important factor in some participants’ growth journey – especially those in the agrictural and manufacturing sectors, who gave examples of having invested in equipment which allowed them to work on a larger scale. Further, those who had invested in new or updated equipment (such as forklifts and biomass boilers) and automated their processes noted that this had helped to reduce their costs and make their practices more efficient. 

However, other businesses were reluctant to upgrade their equipment, preferring to remain “traditional”. In part this was due to a perceived risk that a more industrial, mass production approach could affect the quality of their product. For others, it reflected a perception that traditional manufacturing approaches were part of their “USP”, which would be at risk if they were to modernise. 

4.2.6 Culture and mindset

Though not a widely held view, in certain circumstances participants felt their growth had been hampered by the existence of “small town mindsets”. This point tended to be made by businesses in rural locations, who described having facing resistance from the local community on account that it had not felt adequately informed or consulted about the development of the business, or simply because it was hostile to ‘incomers’ setting up businesses locally. 

“There is a small community ideology here, which is not always the best way of giving individuals encouragement to do something different. When we set the business up, even though I have been living here for 40 years, there was one section of the community who wanted to prevent this business by any means.” 

(Small enterprise, Accommodation and food, Highlands and Islands, 6-10 yrs, M)

In a similar vein, a small number of participants attributed their lack of growth in part to a lack of collective effort on the part of their community to promote the area positively and encourage new visitors. Reinforcing this view, other participants who felt such efforts had taken place or were in process in their areas stressed the positive impact these has had on their business.  

“The attitude here is the biggest barrier. People are very negative, and it comes from all angles. If people were promoting the more positive side of the town, rather than constantly talking about what we haven’t got, then that would make a big difference.”

(Sole trader, Creative industries, South of Scotland, 6-10 yrs, F)

“There is a lot of work going on in the background to promote the area to attract tourists… we get involved in anything that puts [the town] on the market and lets people know that we're here.” 

(Small enterprise, Wholesale, retail and repairs, West of Scotland, 6-10 yrs, F)

4.3 Behavioural factors

4.3.1 Business plans

As described in Chapter 1, quantitative research on growth aspirations, conducted as part of the Scottish Government’s Enterprise and Skills Review[10], found that having a business plan to be positively associated with business growth. Business owners who took part in the research were fairly evenly split in terms of whether or not they had had such a plan during the initial stage of their development. At the time of interview, fewer than half had an up to date plan.  

As is discussed more fully below, certain groups of participants were more likely to report having a business plan than others, including those representing larger enterprises and younger people. 

Factors influencing the development of business plans

Among business owners who had developed business plans from the outset, several factors had influenced their decision to do so. These ranged from the plan having been a prerequisite for applying for financial or other support; to being encouraged by others (particularly support agencies) to create it; and personality factors or previous business experience. 

Business plans as a prerequisite for support 

Application processes for available business funding (for example loans and grants) or support (for example, entry onto programmes such as Accelerator and Sporting Chance) tended to require the provision of a detailed business plan. Less commonly, suppliers requested them as a condition of stocking their products. 

Such requirements were the main, and in some cases only, reason business owners had created a business plan in their early days. The extent to which owners had subsequently referred to and utilised the plans varied, with some having  continued to refer to and update them regularly, and others seeing them as having been merely an initial means to an end, with limited long-term value. 

Personality factors and previous business experience 

Some business owners explained their decision to create an initial business plan with reference to their personality – for example, describing how they “liked structure”, were “business driven” and keen to understand the business’ potential. The extent of participants’ previous business experience, whether considerable or limited, acted as a further motivator: there were those who had become aware of the importance of a business plan through their previous role(s), and others who created one precisely because they lacked business experience and felt a plan would help focus their activities. Those with little business experience has also commonly been influenced to create a plan by others around them (friends, family, other business people) and/or by business books. 

Such participants who had proactively decided to created business plans had typically done so in order to clarify for themselves what the business was trying to achieve and able to be able to describe it to others; create a means of identifying potential revenue sources; help maximise profits; and help ensure that the business was operating in line with relevant legislative and regulatory requirements. 

“That was one of the first tools I used to try and get all my thoughts in some kind of sensible structure; to think how it could potentially work as a business, so all my costs, what that looked like from operations, what I was going to do for my marketing - just having it all on one page was the start of it.”

(Small enterprise, Wholesale, retail and repairs, Glasgow, Less than 1 yr, F)

Support creating business plans

Business support agencies and related bodies played a role both in encouraging businesses to create business plans and assisting them in doing so. Participants spoke mainly about the latter of these functions – for the most part in positive terms. 

Younger business owners and those with little business experience in particular has often lacked the skills required to create a business plan so had very much valued the support they had received from agencies and other third parties with this part of their journey. Their was specific reference to support provided by Business Gateway, the Princes Trust, Entrepreneurial Spark, the Scottish Institute for Enterprise, business mentors, universities and local organisations such as Jobs and Business Glasgow. 

Existing business plan templates offered by some of the aforementioned agencies were considered useful. At the same time, there was a perception that plans had to be long and detailed, which was off-putting for some. A participant engaged with Entrepreneurial Spark noted that the organisation’s ‘one sheet’ approach was less intimidating than other templates she had encountered. In a similar vein, another participant described how his company had taken the decision to distill its previously lengthy business plan into one page which had helped it focus on key activities.

“We came away from writing, you know, a business plan that was 30 pages long and really now our template for our plan is just one...always try to get it down on to one page.”

(Medium enterprise, PST, Mid Scotland and Fife, Over 10 yrs, M)

Maintaining business plans

It was relatively uncommon for participants to have maintained a formal business plans in the long term, reflecting the fact that initial funding and support applications emerged as the main drivers for creating plans. In the absence of such external impetus, participants tended to prefer to review performance and make business decisions in less formal ways. That said, those representing larger enterprises were a little more likely than sole traders and small business owners to have formal plans that they maintained and referred to regularly as they saw these as a necessary part of running their business. 

“We work a five year plan [looking at our] sustainability, improving facilities, making the whole customer experience better, and enhancing our facilities in order to generate further revenue.”

(Medium enterprise, Sustainable tourism, North East Scotland, Over 10 yrs, M)

Seeing positive results from having a plan had served as a motivator to maintaining one for some. For example, one participant described how using a plan to break his ambitions down into more tangible targets and specific aims had helped him to achieve growth.  

“It's dead easy to say, ‘let’s grow a million pounds’, but actually how do you grow a million pounds if you don't break it down and tick things off on the journey, you will never get there.” 

(Medium enterprise, PST, Mid Scotland and Fife, Over 10 yrs, M)

Barriers to having a business plan

Business owners operating without business plans did so for a number of reasons and, broadly, these mirrored the motivators, outlined above. 

Firstly, it was clear that many businesses had lacked the external impetus to develop a business plan – for example, in the form of funding or grant application requirements – that has been so crucial for others. Equally, and as described in Section 3.1, participants had often set up their business without a clear idea or aspirations of what they wanted to achieve; in other words, with a ‘see how it goes’ mindset, which meant that proactive planning had simply not been part of the equation – and, in some cases, not something that even later, had so much as occurred to them: 

“[A business plan] just never crossed my mind, I just thought there is an opportunity here, I will just go and give it a go and that's really what I did.”

(Sole trader, Wholesale, retail and repairs, North East Scotland, 1-5 yrs, F)

"Our approach is very much based on the day-to-day. We look at what is happening in the market and respond to any changes."

(Small enterprise, Energy, Glasgow, Over 10 yrs, F)

Others, though aware of the notional benefits of business planning, described having felt no need to develop one for their business. They talked about having a vision for the business “in their head” which they felt sufficed to guide their activities. They also often commented that, when starting out in business, time is limited and best spent just “getting on with it”’. 

“They are a waste of time. It is more important to put the effort in to the business yourself.”

(Small enterprise, Accommodation and food, Highlands and Islands, 6-10 yrs, F)

Perceived uncertainties in market conditions and other external factors led some business owners to believe that a business plan could, by definition, only ever be a theoretical document and, as such, would be of limited use. Indeed, there was a view that “working day-to-day, looking at what is happening in the market and responding to any changes” as necessary was a more beneficial approach. This perspective was particularly common among businesses that were weather dependent – for example those in the farming and horticultural sectors.

Personality factors emerged as further barriers to business planing. For some business owners, the idea of working to a structured business plan simply did not ‘sit well’ with them – for example, because they disliked being organised; preferred to “take it as it comes” and not be ‘tied up’ with plans; were not “detail-“ or “paperwork-oriented’. Not having business experience or skills was similarly reported as a barrier. One business owner described how she had looked into developing one but found the “jargon” used in business planning difficult to understand even after seeking some support. She concluded that she just did not “have [the] kind of a brain” needed to put together a plan. Others who felt they lacked the capability to create a business plan reported knowing that relevant support was available but not having actively sought it out due to a lack of time. 

Equally, however, there were participants with business degrees and/or substantial business experience who had not created business plans. This was because they felt they already knew enough about running a business and therefore did not need one.  

4.3.2 Operational improvements and innovation

The current study reinforces the positive association between operational improvements and business growth, identified in previous research[11]. Indeed, even before being asked about any such measures they had implemented, participants often spontaneously cited particular improvements or innovations as having been key to their growth. 

More generally, almost all businesses that participated in the research had undertaken at least some operational improvements or innovations and most reported positive impacts of these. The extent and nature of changes mentioned varied, to some extent in line with business size: larger enterprises tended to be continually reviewing processes and practices, whereas sole traders had often undertaken just one specific change (if any), for example changing the focus of the business, changing opening hours or purchasing higher quality tools. The main types of changes businesses had implemented are summarised in Table 4.1.

Table 4.1: Common operational improvements  

Change type

Common examples of changes/improvements

Technology/IT

Investment in software (e.g. a farm machinery company had introduced GPS tracking for vehicles, a letting agency had introduced industry specific software)

Automating processes (e.g. booking systems) 

Diversification and product/service changes

Improving and expanding facilities (in particular, hotel and leisure facilities expanding accommodation and adding new facilities) 

Introducing new strands (e.g.an adults clothes store introducing childrenswear)

Introducing a new way of obtaining business (e.g. a florist joining Interflora, a café joining JustEat or a skincare range being stocked in a department store)

Changing the focus of the business (e.g. from predominantly selling products to predominantly servicing or repairing products)

Premises 

Moving from home working to office/production space

Moving to larger premises

Equipment (particularly in manufacturing and construction industries)

Purchasing new equipment (e.g. farm machinery, manufacturing machinery, biomass boilers, construction tools, high quality optometry/pharmacy equipment)

Production/manufacturing changes

Review and refinement of manufacturing processes

Improvements to product/packaging

HR/staffing changes

Employee attraction and retention initiatives (See 4.1 for more detail - e.g. hotels paying staff Living Wage, introducing retention clauses into contracts)

Changing employee roles

Employing more staff

Making redundancies

Changes to payroll (e.g. moving from paying employees weekly to monthly in line with pensions regulations)

Employee engagements (e.g. introducing memos to improve communication, staff surveys)

Operating hours 

e.g. a gallery and a café reducing the number of days they were open to reflect times where business was quiet and a shop opening longer hours to allow customers to visit on their way to and from work 

Participants discussed the benefits they had achieved or hoped to achieve as a result of undertaking the specific types of change listed. Changes such as the introduction of new IT/software systems, the purchasing of higher quality equipment and the refinement of production/manufacturing processes HAS been implemented with the goal of improving both the efficiency of processes and the quality of products or services. At the same time, such changes were considered important in “keeping up” with the rest of the industry.  Improving the customer experience was a further motivator for certain types of IT changes; for example, offering the opportunity to make online bookings.  

Diversification or changes to service or products was primarily motivated by a desire to increase sales or profits. Businesses hoped that these changes would increase their customer base and/or give them a competitive edge. Changes to physical premises and staffing were similarly undertaken with the ultimately aim of increasing sales – though there were businesses that felt they needed to make cost savings to improve their financial position by making redundancies and reducing their opening hours. 

Other improvements were made with the ultimate aim of attracting and retaining staff (and therefore spending less time and money on recruitment); namely improving employee conditions (for example by paying them the Living Wage), putting measures in place to retain them (e.g. retention causes in contracts) and improving employee engagement (e.g. through communications and staff surveys). Some participants also noted that improvements they had made to manufacturing processes and equipment were in part done with view to ensuring the health and safety of staff. 

Finally, participants had undertaken some improvements with the primary motivation of complying with regulations such as pension requirements or those which were specific to their industry. These changes had, however, often resulted in incidental benefits such as efficiency savings through improved processes or systems. 

Case Study

Hugh is a director working at a medium enterprise, specialising in farm machinery, which was established more than 200 years ago. In the past 10 years, the company had experienced rapid growth which they attributed in part to a number of successful operational changes. 

Most significantly, they had changed their business model to being more of a specialist supplier stocking a smaller number of lines. This allowed them to improve their product knowledge and thus better advise customers, and also meant that the suppliers concerned viewed them in a very positive light. 

Other operational improvements had resulted in more cost-efficient processes.  These included:

1) Moving from paying employees weekly to paying them monthly. While this change had been necessitated by reforms to Work and Pensions Law, Hugh was pleased the company had been given the “excuse” to do it as it made the payroll process more efficient. Knowing that the move would likely not be popular among employees, they eased the transition by offering all staff an upfront loan of a month’s pay which would be drawn back over the subsequent 12 months.

2) The use of GPS technology to organise staff in the field and prioritise which staff visit which customers, depending on their current locations. This change was expensive to implement, involving the recruitment of two full-time staff to manage the process. However, it had proved to be significantly more efficient and has helped set the company apart from their competitors. 

Staff recruitment and retention was a particular issue for the business, not least as it was located in a more rural area. To address this, they implemented contracted training programmes to retain staff, under which they provide employees with substantial training on the condition that they remain at the company for an agreed number of years thereafter. They also introduced a staff survey which had helped point towards small improvements they could make to increase employee satisfaction. 

The company had not used external support agencies for advice or financial support in implementing these changes. They described themselves as "quite traditional" and had just never thought to approach anyone for support.

Barriers to making operational improvements/innovating

Although businesses had made a range of operational improvements, they nonetheless identified specific barriers that they had encountered this respect. These broadly reflected those discussed in relation to achieving growth more generally, and related to participants’ motivation, time and resources and skills, as well as specific external factors.

Motivational barriers predominantly comprised attributes that effectively defined the Averse and Ambivalent categories of owners, as set out in the growth typology (See Chapter 3) – being risk averse, lacking the confidence to try new things, wanting to remain in control of operational aspects of the business and being motivated more by enjoyment than growth. 

In terms of resources, participants talked about having to weigh up the cost of undertaking improvement against the likely benefits, which they felt was complicated by the fact that both elements were difficult to predict. They also reiterated challenges relating to accessing finance, often commenting that they did not have the capital to make changes, and to time pressures; both in terms not being able to step back from the day to day operation of the business to identify potential changes and to actually implement these. Time appeared to be a particular barrier among smaller businesses who often talked about wanting to take on additional employees to free themselves up but not being able to afford to do so. 

A lack of general business knowledge acted as a further barrier to implementing change. A small number of participants, who were doing very little in the way of operational improvements or innovation, appeared to lack awareness of the potential benefit of making such changes. These tended to be people representing the smallest businesses and those not doing as well as they would have liked. One example was a retail business owner who attributed her poor sales to macro-level factors (e.g. the financial climate generally). 

“I suppose the challenge for me is getting people to come in and spend money and because there has been a downturn, but things are slowly picking up again, but I feel it kind of out of my control, I just have to maybe sit tight and see what happens.”

(Sole trader, Wholesale, retail and repairs, North East Scotland, 1-5 yrs, F)

Others knew that there were changes they could make, but commented that they would not know where to start. 

“It’s the know how… I’m sure there would be someone who… has worked in operations and warehousing that could probably come in and completely turn things around and tell me how we should be doing things differently, but I just don’t have that knowledge at the moment.” 

(Small enterprise, Wholesale, retail and repairs, South of Scotland, 1-5 yrs, F)

IT-related change was an area in which participants particularly felt they lacked necessary knowledge and skills. This has often made them reluctant to adopt new technologies which could improve their businesses. Those who had undertaken IT-related changes often reported having faced the same barrier but overcoming these by undertaking training, working with consultants or outsourcing – albeit they also mentioned the time and/or financial outlay involved. 

“This online shopping thing has obviously been there since the inception, and is something that we have kind of thought we will have to do at some point, and [my business partner] actually did attend a course to help us get our website built but it didn't really materialise, because it was quite complex. We are not IT people...So, in the end it just kind of subsided and we never ever went down that route.

(Small enterprise, Wholesale, retail and repairs, West of Scotland, 6-10 yrs, F)

In terms of external factors impeding operational changes and innovation, participants again cited: the uncertainty of the market and economy in general – there was a view that a stable financial climate that supports growth is required to make changes, otherwise the risk it too high. They also reiterated challenges presented by  – in particular, being put off employing more staff due to the extra time and cost involved in relation to meeting health and safety regulations.

4.3.3 Networking and collaboration

Participants had engaged in networking to varying degrees. Some had joined formal networking organisations, such as the Federation of Small Businesses, or attended formal networking events, such as those run by Business Gateway or Business Network International. Others described being involved in more informal networks of likeminded business owners in their local area, who would share knowledge and experience of running their businesses.

Networking had been important in driving business’ development and growth, through providing access to customers, allowing for the sharing of knowledge and the opportunity to learn from others, and, in the case of more formal networking, opening avenues to sources of private sector funding, such as Angel investments. 

“There is the likes of the BNI network…I've got a relationship [with them] so I could pretty well pick up the phone to people now and bounce ideas off them and ask questions”.  

(Small enterprise, Sustainable tourism, North East Scotland, Over 10 yrs, M)

Businesses that did not engage in networking sometimes cited a lack of opportunities in their local area. In addition, some commented that networking was just another task competing for their limited time, and, whilst they recognised potential benefits, it was not a priority for them at present. 

Beyond networking, many participants had engaged in some form of collaboration with other businesses, whether formal or more informal in nature. Formal collaboration largely took the form of businesses partnering with companies with differing skillsets or specialisms to their own to develop new products or services. One participant, a hotel owner, had partnered with a Scottish distillery, to produced gin and whisky from his hotel grounds. He planned to offer a visitor experience incorporating a tour of the distillery, believing this would provide his business with a new USP and thus competitive edge in the hotel market. 

Another participant, whose business involved handmaking organic skincare, wanted to include soaps in her range, but thought it would take her a long time to learn how to make them. She therefore contacted a local soap maker via Twitter and asked her to make the product on her behalf. She had recently secured a grant from the University of Strathclyde, which provided her with the capital to invest in the collaboration. 

For participants who had engaged in it, collaboration represented an efficient and cost-effective way for them to work around any skills gaps within their business, or to diversify. Some noted that it also provided important promotional opportunities – they intentionally collaborated with companies with a good reputation or strong customer base as a means of maximising their exposure to potential new customers and markets. 

“We are really trying to [collaborate] more and more. One example is [a company in London]. We realised they would be a really good route to market for us. There are different ways that we could work with them, either they can licence our platform or they can work with us on a commission basis.”

(Small enterprise, Wholesale, retail and repairs, Glasgow, Less than 1yr, F)

In term of other formal types of collaboration, there were participants from rural areas who were involved in establishing and maintaining initiatives aimed at promoting local businesses generally. For instance, a hotel based in the West of Scotland was involved in establishing an industry board with the aim of getting businesses in the community to work together to encourage tourists to the area. Perceptions of such initiatives among those who had engaged in them were generally positive: participants reported that the initatives had helped improve local business’ offerings and promoted growth. At the same time there was some concern about the ongoing sustainablity of such ventures in the absence of any financial support from agencies.  

“… we all put money [in to the community initiative] every year, varying amounts depending on the size of our business … it's all about getting businesses working together… it's all about improving the product on the island as well and making sure visitors are well looked after.”

(Medium enterprise, Accommodation and food, West of Scotland, Over 10 yrs, F)

More informal types of collaboration similarly took a variety of forms. In the main, participants discussed the sharing of resources, such as equipment, stock or skills, in the interests of cost-efficiency. Such collaboration occurred across a range of sectors, though most notably in the retail and farming sectors:  

“If somebody has got a new tractor, a new machine and you haven't got it, you don't think twice, you’ll get [them to help you]. That happens a lot, and then you may have to do labour in exchange or something like that.”

(Small enterprise, Food and drink, Mid Scotland and Fife, Over 10 yrs, M)

“We have this young girl that's 16 and wants to be a hairdresser who started working with me [in the florist] … then an opportunity came up at [a local] hairdressers, but [there’s] not enough [work there] for this girl at the moment, so we now share her. I'm supposed to have this girl on Saturdays and if [the hairdresser] needs her she [says] will it be okay if next Saturday I have her?”

(Small enterprise, Wholesale, retail and repairs, West of Scotland, Over 10 yrs, F)

Additionally, participants reported recommending other local businesses to their customers, or sharing workloads with other businesses, at times where they themselves did not have the required skills or capacity themselves. 

“All the guesthouses and hotels in this particular area all help each other out. If I’m full and someone comes looking for a room, I’ll send them to [another hotel]. If they are full and they have someone else looking for a room, they’ll send them to me. So we help each other out.”

(Sole trader, Accommodation and food, North East Scotland, 6-10 yrs, M)

Businesses that did not engage in any form of collaboration commonly reported having never needed to; for example, because they were content with their pace of growth. At the same time, it was clear that many businesses had simply never considered collaboration and had little sense of what it might involve in their particular case or benefits it might bring. 

Less commonly, there were participants who felt they did not have the time or resources to devote to collaboration. This was often based on an assumption that collaboration would necessarily take them away from the day-to-day running of the business, and thus potentially undermine their ability to grow. 

“The barriers to [collaboration] would be time and money… one, the firm is busy doing our day to day jobs, and secondly, [the firm] can’t really afford for somebody to go off and do something and not be earning, the answer to that would probably be, no.”

(Medium enterprise, PST, Mid Scotland and Fife, Over 10 yrs, M)

A few participants were sceptical about the idea of collaborating with other businesses. They felt protective of their business and ideas, and worried that collaboration could result in a competitor being able to glean important information about their product, service or ways of working that might ultimately benefit that competitors at their expense. 

Others reported experiencing scepticism about collaboration on the part of other businesses. For example, a florist in the South of Scotland, recalled how trying to organise a local Christmas market took her many years, due to resistance from other local businesses, who could not see any worth in the venture. 

Overall, there was no clear pattern indicating that collaboration was more or less prevalent amongst particular types of business: those choosing not to collaborate represented a spread of locations, sectors, length of operation and engagement with support services.  

4.3.4 Supplier relations

Virtually all participants described their relationships with any suppliers they worked with in positive terms. They commonly observed that “if you are good to suppliers, they are good to you”, or stated that their supplier relationships were long-standing which had fostered the development of mutual understanding and trust. 

“…We see them regularly, we speak to them regularly, and if there are issues, if we need their support to extend credit terms or something like that we talk to them. [There is] a lot of trust, because we have known them for a long period of time.” 

(Small enterprise, Wholesale, retail and repairs, West of Scotland, 6-10 yrs, F)

Several factors were identified spontaneously as having been important in maintaining participants’ good supplier relationships; in particular, the prompt payment of invoices; communicating regularly; and simply getting to know suppliers as people, for example by visiting them in person (though a couple of participants noted that developing friendships with suppliers had occasionally made it difficult for them to raise issues with them). Further, it was common for people to say that they tried to use local suppliers where possible, both because doing so was more convenient than dealing with people further afield, and because the were keen to support other local businesses.

Beyond the aforementioned behaviours, very few participants had consciously made efforts to try to build more effective relationships with suppliers or achieve better value from them – though a small number reported having switched suppliers with the aim of getting a better or cheaper service; or negotiating trade credits with them to help manage their cash flow. 

4.3.5 Marketing and promotional activity 

There was general recognition that marketing and promotional activities were important facilitators of growth. Indeed, it was common for participants to identify specific such activities – typically setting up a website or social media accounts; advertising in the press or leafleting; or involvement in initiatives aimed at promoting local businesses generally – as key points in their growth journeys. 

At the same time, it was clear that many participants, particularly sole traders and other smaller enterprises, were not always doing a great deal if anything in the way of marketing or promotion.There appeared to be four main reasons for this. Firstly, those in the earlier stages of their journey commonly said that they did not have the time or resources to put into marketing or promotion as their entire focus was on “getting their ducks in a row” and the day-to-day running of the business. It was common for these people to comment that marketing and promotion was something they would focus on at some (often unspecified) point in the future when they had the capacity to do so. Significantly, this included some people who were struggling to establish a customer base and/or break even. 

“The first year I was working till 11, 12 o’clock at night but for no return, because the shop had [so many] expenses…so we didn't advertise the framing [service] here because I couldn't cope with the volume of [work].” 

(Small enterpries, Manufacturing, Mid Scotland and Fife, 1-5 years, F)

 “That first 12 months was less about ‘let's put a plan together for marketing, business development and growth’…I think over the next year, it's going to be [these things] that we are going to concentrate on, because I think we have got ourselves into a position where we can now do that well.” 

(Medium enterprise, PST, Mid Scotland and Fife, 6-10 yrs, F)

Secondly, there were participants who felt that marketing and promotional activities were expensive, particularly as the returns generated were not always obvious or discernable. This led them to conclude that such activities did not represent a worthwhile investment for them. In some cases, such views were based on personal past experience but in others, simply on proxy experience or word of mouth. 

“I have thought about advertising and getting a web page up and running, but most of my mates who are sort of one-man bands, they're just saying that basically it's expensive, they don't get enough work from it.” 

(Sole trader, Manufacturing, Mid Scotland and Fife, Over 10 yrs, M)

Other participants expressed uncertainty as to how to go about marketing or promoting their business to their target clientele, commenting that they were unsure about what particular markteting avenues would be most effective. Reflecting this, they commonly identified information and advice on such activities as the type of support they most needed to help grow their business in the future. There was specific mention of information and advice on social media marketing, which was commonly regarded as more effective than more traditional approaches such as advertising in newspapers and leafletting. At the same time, several participants commented on a need for local agencies, such as tourist boards and local authorities, to do more to promote their local business communities generally. Indeed, in the absence of locally-based support, some participants had taken it upon themselves to try to promote their local business community – for example, one person had produced a flyer incorporating a map of local businesses that she shared with other businesses for dissemination to customers.

Less commonly, there were participants who said they had never needed to advertise because they had been able to develop a satisfactory customer base through word or mouth or other informal means. In the main, these were people whose businesses were located in smaller communities and/or whose target market was very locally-based or their product or service very niche. 

“I'm a good joiner, so it was a case of word of mouth and then I didn't need to advertise. Once I could prove to the members of the public that I could do a good job, you know, brothers, sisters, aunties, uncles, it just took off.” 

(Sole trader, Manufacturing, Mid Scotland and Fife, Over 10 yrs, M)

“We do do marketing, but actually our kind of sales drive is just personal business development, it's just knowing the people in your local markets.” 

(Medium enterprise, PST, Mid Scotland and Fife, Over 10 yrs, M)

Nonetheless, there was a clear sense that some of these businesses had the potential to grow were they to undertake marketing – for example, they talked about having had to turn away customers in the past. However, in several such cases,  they were struggling to meet current demand or otherwise keep on top of things, so did not feel it made sense for them to market themselves at present. 

4.4 The role of support and advice 

4.4.1 Awareness of support services 

Awareness of available support services for SMEs varied. On the one hand, it was common for participants to have at least heard of Business Gateway, whether or not they had had any engagement with the organisation. Awareness of other agencies providing support was lower, particularly amongst business that had be in operation for over ten years. In general, very few participants were aware of the Scottish Investment Bank or the Scottish Growth Scheme. 

Participants who were aware of support agencies or services tended to have become so via their existing business networks, including other agencies they had engaged with, other business owners, or contacts from previous employment. Others noted that word of mouth from their personal networks played a role in informing their awareness of services.

Some young entrepreneurs had come to know of support agencies or services though their universities. In such cases, their institutions had introduced them to external support services as part of their course (for example, product design, or business management), or the participants had directly asked their unversity who to appeoach when they were thinking about setting up a business.

Case study 

Susan (30) started her own business after having studied business management at university. She was keen to start a business, and spotted a gap in the market for a safety device that would help protect people who worked alone or travelled alone for work. After carrying out a lot of market research to shape her product and identify potential clients, she successfully launched her business and it has grown in line with her aspirations. 

Susan feels that external support was instrumental in helping her to start and grow the business. After having carried out an internship with the Scottish Institute for Enterprise during her time at university, she was exposed to several avenues of advice and support. She approached Business Gateway for advice, who awarded her a £1,000 start-up grant. She also entered a number of competitions for funding including Scottish EDGE, for which she was successful. 

As a result of engaging with Gabriel Business Angels, she was aligned with a business mentor who provided advice and support on areas in which she was less experienced. She says that she would not have been able to get to the stage she is at now at without the range of support that was available to her as an entrepreneur.  

Participants with little or no awareness of support services reported being unclear where to find out about this. There was a sense in which they conceived of the support landscape as confusing, and felt it would take a lot of time to identify the range of agencies that existed and the right one to engage with in their particular case. Some participants reflected that they would welcome being approached by agencies or services, instead of having to do the ‘leg work’ themselves. 

“…I will welcome any [support] to either help the club financially or develop as an organisation…We don't get fliers or mail shots or emails or anything like that.”

(Small enterprise, Sustainable tourism, North East Scotland, over 10 yrs, M)

A corollary of low awareness of support services was limited understanding of the types of support available. Indeed, there appeared to be some misconceptions on this matter. Some participants believed that engaging with support agencies was something they would only do if their business needed to borrow money or apply for a grant. Others felt that support was only there for new businesses, not more established ones.

“I didn’t think I needed help…I didnae know that [support services offered financial support] … we did need money when we were doing certain things [but] we went to the bank… I didnae know where else to go.” 

(Small enterprise, Real estate activities, Lothians, over 10 yrs, F)

“[I believed] that a lot of funding [was] available to new starts as opposed to companies that have been going for a while.  So, probably at the back of my mind, [I was] thinking they're just for new start-up businesses.”

(Small enterprise, Real estate activities, Lothians, 1-5 yrs, M)

Still others expressed a view that support services were geared towards certain types of businesses, such as IT or online businesses, and were less interested in “dirty industries”, such as construction or haulage, or perceived “high-risk” industries, such as food and drink. On this basis they commented that services were “not for them.”

Less commonly, engagement with support services was something participants were just not willing to countenance; either because the idea of doing so did not ‘sit’ with their conception of how a business should be grown,  or because they felt they already had strong business accumen and/or the resources they needed to run their business.

“That is not really in our business philosophy. We think if you build up a business, you should have a good idea and do it the old fashioned way”.

(Small enterprise, Accommodation and food, Highlands and Islands, 6-10 yrs, M)

4.4.2 Use and perceptions of support services 

Although most had had at least some form of contact with support agencies or services, around a third reported having had none.  

Among those who had had such contact, the number of agencies or services they had been in touch with varied. Some had engaged with just one support service, in the early stages of setting up their business, and sought no further support thereafter. Others had engaged with multiple services, including Scottish EDGE, Business Gateway and Scottish Enterprise. Amongst participants who had engaged with two or more support services, this tended to have snowballed from the initial contact (in cases where the initial experience had been a positive one).  

Young entrepreneurs were among the most engaged with support services[12] and typcially had been since the inception of their businesses, following signposting by their university and/or wider networks (such as friends and other young business owners). Those who had been involved in entrepreneurial schemes or competitions, such as the Sporting Chance Initiative, or Entrepreneurial Spark, reported seeing first-hand how engagement across multiple agencies could make a difference to the growth of their business. 

“Without Entrepreneurial Spark, that would have been a huge barrier, because we wouldn’t have known where to go. They are really good in terms of providing guidance and setting you on the right path. They provide you with the tools and the skillset you need, so that you then just have to go and find the cash and the resource.”

(Small enterprise, Wholesale, retail and repairs, Lothians, 1-5 yrs, M)

As is evident in the above quotation, the main reason participants had engaged with support agencies or services was for help with the initial set up of their business. The types of assistance commonly sought at this time predominantly related to grant funding or other external finance, training to address a skills gap, assistance with business and growth planning, or access to business networks.  

Perceptions of support agencies and services were mixed; some participants were pleased with the amount of support they had been offered and consequently considered Scotland to offer a positive environment for new entrepreneurs. 

“Scotland is an incredible place to start a business and we have had such phenomenal help from all the different organisations, and it is people that genuinely care and they really want to see you do well… I couldn't ask for a more supportive eco system to be part of.”

(Small enterprise, Wholesale, retail and repairs, Glasgow, Less than 1 yr, F)

Such participants reflected on reaching out to support services as a first step into making the idea of their business a reality- taking it beyond being just an idea, and starting the process of making it into something tangible. They felt services had understood what their business was trying to achieve, and given them confidence in their business ideas.

Such views were especially common amongst those who had applied for grants or funding schemes early in their businesses journey. Acceptance onto a scheme, or winning a grant, served as an affirmation that their idea could translate into a successful business, and showed that someone else believed in it. Such schemes also provided support when participants’ were taking active steps to grow, for example, enabling them to take on a first employee, through an internship or wage subsidy programme. 

Participants who had not been successful in such applications, sometimes reported finding the process of applying useful nonetheless, as it had offered them the opportunity to talk about their business, giving them valuable feedback and a clearer view of their weak points. 

“I’ve applied for [Scottish EDGE] four times so far. I’ve found the process to be really beneficial… being able to take a good step back and a thorough look at your business… its really good for giving you a clear view of your weak points.” 

(Small enterprise, Wholesale, retail and repairs, Glasgow, 1-5 yrs, F)

Beyond funding, another type of support that was discussed in particularly positive terms was the provision of shared office space under schemes such as Entreprenuerial Spark or the Sporting Chance Initiative. Participants commented that this had not only provided them with a professional setting in which to work, but enabled them to interact, network and share ideas with other entrepreneurs. 

“[Strathclyde Entrepreneurial Network] give you office space with all the other start-ups that are there. So, we built up a bit of a community we would all like share what competitions we were entering or what start-up events was going on. That was just a really motivating place to be part of everyday.” 

(Small enterprise, Wholesale, retail and repairs, Glasgow, Less than 1 yr, F)

Support with marketing and advertising – for example, in the form of access to expert advice – was similarly valued.

“[Bridge 2 Business] did give us an initial £100 to get some marketing stuff [including] business cards… and [our advisor] with them was really good… really knowledgeable because she’s been through it all herself.”

(Small enterprise, Wholesale, retail and repairs, South of Scotland, Less than 1 yr, F)

Amongst those who had experienced the support of mentors – whether arranged through an agency or via less formal means – such experiences were described in generally positive terms.  Participants reported that their mentor had understood the industry their business they were operating in, and accordingly had been able to provide relevant advice and insights. Conversely, a small number of participants reported having been allocated a mentor they felt did had not understand their concept or product, resulting in a much less helpful experience.

“When I was with the Princes Trust my mentor must have been at least 70. I don't think he had played a video game in his life… when I tried to pitch my game it was almost impossible to pitch it, to explain why this game was so much better than anything else.”

(Small enterprise, Creative Industries, Lothians, Less than 1yr, M)

Other participants who reported more negative experiences of receiving  support expressed a view that agencies and services “make a lot of noise”, but ultimately offered nothing helpful. Typically, they described having looked for support via an agency or organisation only to find such support was not offered. There were two dimensions to this: some participants said that the agency they had engaged with had not seemed ‘set up’ to help businesses like theirs – for example, a tradesman who had approached his local Business Gateway said the support on offfer had appeared more orientated to people with online or tech-based start ups than to people like him. Others, said that the agency they had approached has been unable to offer a very specific type of suport they had been seeking; for example advice on how to comply with regulations when taking on a first employee, or advice on setting up a franchise. 

“We had contacted Business Gateway a couple of times, when we first wanted to employ someone. We actually found them really unhelpful. I think we were just unlucky… We had a series of meetings with people who said ‘oh that’s not my area of expertise’…one woman told us to go home and try a search engine on the internet.” 

(Small enterprise, Food and drink, North East Scotland, Over 10 yrs, F)

More generally, there was a perception that the quality of support provided by agencies and services sometimes varied depending on the advisor. Some also felt there was geographical-based variance: in more rural areas contended that there were more, or better quality, funding and networking opportunities available to business in larger towns and cities. 

Among those who had not engaged with any agencies or services providing support – and indeed some of those who had –  time was identified as a key barrier to doing so. They commented that the conditions of accessing some forms of support, such as writing business plans, were too onerous, and would take them away from the day to day running of their business for longer than they could afford. Grant applications were seen as a similarly high-effort endeavour, that could result in no return. In short, there was a feeling among these participants that enterprise agencies were “too bureaucratic” and their decision making “too slow”.


Contact

Email: EIDEEBSPEnquiries@gov.scot