The research identified a range of reasons why SME owners were either not partaking in growth-related behaviour, or did not have the ambition or desire to conduct certain entrepreneurial or innovative behaviours.
Most fundamentally, participants’ propensity to want to grow their businesses was heavily dependent on their original motivations for starting the business, which tended to fall into one of three broad groupings: unplanned or opportunistic reasons (“falling into” business ownership); work-life balance considerations; and more material motivations. The first two groupings dominated, effectively meaning that the majority of participants did not go into business with the primary intention of being very successful in growth terms – indeed, some were actively seeking an easier life with limited work-based pressure.
A range of other motivational factors had an impact on participants’ growth aspirations and behaviours. These included aspects of their personality, previous experiences, and life stage. On the basis of this range of factors, they segmented broadly into three main groupings: The ‘Growth Averse’ (those who did not want to grow); the ‘Ambivalent’ (those who wanted to grow but slowly and not too much); and the ‘Ambitious’ (those who actively wanted to grow their business). Among the Growth Averse, the number and nature of motivational barriers at play were such that interventions to encourage growth are unlikely to have a significant impact on them. Instead, interventions may best be focused on the Ambivalent and Ambitious groupings.
Beyond motivational influences, a range of environmental and contextual factors had impacted on businesses’ capability and opportunity to grow. These included: the economy and market conditions; having ready access to finance; the policy and legislative environment; the ability to recruit and retain staff; access to physical assets such as premises and equipment; and the culture and mindset that existed within local communities. Further, and confirming the findings of previous research, a number of behavioural factors were at play, including the extent to which participants had: prepared and used business plans; made operational improvements; collaborated with other businesses; sought to establish more relationships with suppliers; and taken steps to market and promote their products or services.
In other words, and without exception, there was no single driver or even common clearly discernible set of drivers than accounted for participants’ growth behaviour but rather a myriad of exogenous and endogenous factors that came into play to varying extents, depending on their particular circumstances, past and present.
The research further highlighted that participants’ growth aspirations had often changed over time, and over various stages of their lives. Business owners appeared to be particularly ambitious when they were young, with aspirations to grow their business quickly. By comparison, there were cases of older business owners having had high growth ambitions when they first started, but having become less motivated over time due to changes in their circumstances, such as having children, become ill, or caring for a family member. Indeed, older participants who were towards the end of their careers predominantly fell into the ‘Growth Averse’ category: they were unlikely to aspire to future growth, favouring instead a steady state for their business.
Beyond life stage factors, those who had worked in business for long enough to have experienced the impacts of the 2007 recession felt this had changed their perspective on growth somewhat, causing them to be more conservative in their aspirations and planning, and more reluctant to take risks.
In addition to the factors outlined above, a number of key barriers to future growth emerged. Firstly, a lack of time, which was common to many businesses but particularly to sole traders or those with a small workforce, who saw themselves as juggling multiple roles and responsibilities. Secondly, skills gaps: those that felt they lacked capability to grow often identified specific skills gaps within their business that they felt required to addressed if they were to move beyond their current position. And thirdly, financial constraints – it was common for participants to say they lacked the necessary funding to invest in future growth activity.
Overwhelmingly, however, the main concern expressed about future growth was that of political and economic uncertainty, predominantly in relation to Brexit but also, to a lesser extent, the prospect of future Scottish independence. While a minority of participants felt that independence would be positive for Scottish businesses, constitutional issues were more commonly seen as presenting possible risks to growth, predominantly due to uncertainty over such issues as the future cost of importing and exporting goods, the ease of trading in international markets and the free movement of workers. Overall, participants felt cautious about taking steps towards growth until they felt more certain about how the constitutional picture might play out.
In terms of possible interventions to promote increased growth behaviour among SMES in Scotland, the research raised a number of questions for consideration in this regard. In particular:
- how can the potential benefits of business planning be communicated to businesses, and how can businesses be supported to create and maintain plans, taking into account their existing reservations about the process?
- how can government, and other agencies, encourage awareness of, and engagement with, existing support services? And is there scope for greater signposting between agencies in the event that one of them is unable to help a client with a particular issue or query?
- what new forms of support could government and other agencies introduce in order to complement that which already exists and address perceived gaps in provision – particularly in terms of support for sole traders, those in service-based industries, and more established businesses?
- how might businesses be encouraged to engage in more known growth behaviours including the more effective development of supplier relationships, collaboration, and marketing and promotional activity; and how can they be supported to do so?
- to what extent and how, can businesses be supported and reassured about the impact of constitutional change?
- how might the government adapt its approach for the different groups in the growth typology (such as the Ambivalent and the Ambitious), taking into account the differing motivations driving their behaviour?
- to what extent and how might the government’s approach to business engagement vary by sector, size, and location (including for those in more rural areas)?