The Small-Firm Sector

Defining the Small-firm Sector

• EU definition of SMEs

– by number of employees

• micro enterprises

• small enterprises

• medium enterprises

EU SME definitions

Defining the Small-firm Sector

• EU definition of SMEs

– by number of employees

• micro enterprises

• small enterprises

• medium enterprises

– use of EU definitions in the UK

Defining the Small-firm Sector

• EU definition of SMEs

– by number of employees

• micro enterprises

• small enterprises

• medium enterprises

– use of EU definitions in the UK

• Size of the small-firm sector in the UK

Number of UK businesses, employment andturnover by size of enterprise (2002)

Number of UK businesses, employment andturnover by size of enterprise (2002)

Number of UK businesses, employment andturnover by size of enterprise (2002)

Number of UK businesses, employment andturnover by size of enterprise (2002)

Number of UK businesses, employment andturnover by size of enterprise (2002)

SME share of UK businesses, employment andturnover by industry (2002)

SME share of UK businesses, employment andturnover by industry (2002)

SME share of UK businesses, employment andturnover by industry (2002)

SME share of UK businesses, employment andturnover by industry (2002)

The Small-firm Sector in the UK

• Changes over time

– growth in the service sector

– growth in niche markets

– new working practices

• flexible labour markets

• subcontracting

– growth in self-employment as an answer to unemployment

0

10

20

30

40

50

1920 1930 1940 1950 1960 1970 1980 1990 2000

% The importance of small firms in the UK

Employment in manufacturing enterprises with fewer than 200employees as % of total employment in manufacturing enterprises

0

10

20

30

40

50

1920 1930 1940 1950 1960 1970 1980 1990 2000

%

Employment in manufacturing enterprises with fewer than 200employees as % of total employment in manufacturing enterprises

The importance of small firms in the UK

0

10

20

30

40

50

1920 1930 1940 1950 1960 1970 1980 1990 2000

%

Employment in manufacturing enterprises with fewer than 200employees as % of total employment in manufacturing enterprises

Self employed as % of UK labour force

The importance of small firms in the UK

0

10

20

30

40

50

1920 1930 1940 1950 1960 1970 1980 1990 2000

%

Employment in manufacturing enterprises with fewer than 200employees as % of total employment in manufacturing enterprises

Self employed as % of UK labour force

The importance of small firms in the UK

The Small-firm Sector in the UK

• Changes over time– growth in the service sector

– growth in niche markets

– new working practices• flexible labour markets

• subcontracting

– growth in self-employment as an answer to unemployment

– role of government

The Small-firm Sector in the UK

• Changes over time– growth in the service sector

– growth in niche markets

– new working practices• flexible labour markets

• subcontracting

– growth in self-employment as an answer to unemployment

– role of government

• International comparisons

Survival, Growth and Failure of Small Firms

• Competitive advantage and small firms– flexibility

– quality of service

– production efficiency and low overheads

– product development and innovation

• Problems facing small businesses– selling and marketing

– funding R&D

– management skills

– less ability to gain economies of scale

• The growth of small businesses– the process of growth

Survival, Growth and Failure of Small Firms

Management role and style in thefive stages of a small business

Management role and style in thefive stages of a small business

Management role and style in thefive stages of a small business

Management role and style in thefive stages of a small business

Management role and style in thefive stages of a small business

Management role and style in thefive stages of a small business

Survival, Growth and Failure of Small Firms

• The growth of small businesses (cont.)– the entrepreneur• motivation and desire to succeed

• educational attainment

• management experience and business knowledge

– the firm• the age of the business

• the sector of the economy

• legal forms

• location

Survival, Growth and Failure of Small Firms

• The growth of small businesses (cont.)

– strategy

• workforce and management training

• use of external finance

• product innovation

• export markets

• use of professional managers

– conditions for success of small businesses

Government Assistance to the Small Firm

• Small-firm policy in the UK

– small business start-up

• types of support

• financial assistance

– small business growth

• financial assistance

• corporate venturing

• national 'business angels'

– training programmes

Government Assistance to the Small Firm

• Small-firm policy in the EU

– historical background

– SME Action Programme

EU SME Action Programme

Government Assistance to the Small Firm

• Small-firm policy in the EU (cont.)

– policy initiatives

– financial instruments

• Structural Fund

• European Investment Bank

– research and technology development

– vocational training programmes

– other programmes