The eurozone is braced for further austerity measures while in the UK there's a bleak outlook for many sectors of business. The Government has stressed the important role that SMEs can play in improving the UK economy, with David Cameron describing them as "the driving force behind recovery."
It's a tough call – are small and medium businesses equipped to grow and succeed in order to make a significant contribution to a more prosperous future? SMEs make up 99 per cent of the UK economy, employing 23 million people, but many small businesses fail to grow or don't survive the crucial two-year period. Founder/managers tend to learn about business as they go along but there is a growing awareness that those managing SMEs benefit from business education to grow the organisation and make it successful.
The GMAC Corporate Recruiters Survey 2012 suggests an increasing number of UK SMEs are hiring business school graduates. According to a sample of 1,096 recruiters, companies with fewer than 1,000 staff accounted for the largest proportional increase in demand for management graduates (32 per cent) with a further 20 per cent considering recruiting MBAs.
In the past SMEs have been wary of hiring business graduates, considering them too expensive and lacking in practical skills. In the current economy the traditional employers of business graduates – corporates, consultancies and FTSE companies – have slashed their recruitment budgets, so graduates seeking a job have had to lower their salary sights.
Dave Wilson, CEO of GMAC which runs GMAT, the standardised test for graduate business programmes, observes that, for many of today's graduates, a high salary isn't the ultimate goal. "They are more committed to giving back to society. If they can work 40 hours a week, ride their bicycle to work and make the world a better place, that's fine by them."
How many business graduates subscribe to these ideals is unknown, but with entrepreneurship a popular offering in many business schools, students see that a small organisation can provide faster career development and broader opportunities.
Dr. Sue Smith of Lancaster University Management School (LUMS) argues, since the Govern-ment is calling on SMEs to save the UK economy, it should put its money where its mouth is. "The Government acknowledges small enterprises should have access to business training and development but cost should not be a barrier. Universities and business schools have the responsibility for education but need financial support to work with SMEs."
In the past, business education programmes, particularly MBAs, have been aimed at individuals aiming for large corporations. What do they currently offer which is of value to those in small organisations?
Dr Shai Vyakarnam, director of the Centre for Entrepreneurial Learning at Cambridge Judge Business School, claims much of the content of a business programme is equally relevant to a small enterprise as a large one. "Senior managers in a small business have the opportunity to get clarity for their growth strategy and acquire useful business tools though this knowledge which has to have practical applications in the real world. It's vital to get buy-in within SMEs from those unused to a more sophisticated business language and mindset."
Innovation is a key lesson in business programmes which will benefits SMEs, according to Nigel Biggs, entrepreneur in residence at the University of Surrey. "Small businesses don't innovate enough as they grow, particularly when the founder, who was the energy for innovation, leaves. When investors come in, they want short-term results and are nervous about risk and trying something new. But growth comes from innovation and everyone in an SME should have an entrepreneurial mindset."
Since 2004, LUMS has run LEAD, a 10-month programme tailored to small business decision makers. "Many participants know their business has growth potential but don't know how to get to the next stage" says Dr. Smith. "We create a trusted community where people learn from each other, often doing exchanges and shadowing one another."
In response to requests from LEAD participants, LUMS also has designed a Top Team programme for their senior managers which Smith says "enables them to make a meaningful contribution to the strategic debate within the company." Both programmes are subsidised by university funds since cost is frequently a barrier for smaller SMEs.
Gerard Burke, director of the Cass Business School's programme Your Business Your Future for SMEs is so confident of its direct benefits to the bottom line that he offers a a money back guarantee. He explains "We challenge every participant to recoup the fees of £9,500 by making immediate improvements to their business. Most do this easily, some even spectacularly like the IT security company who gained £40k per annum by charging for a previously free service."
Time and money are the two main drawbacks for small businesses wanting to acquire management development. The Open University Business School offers a large range of part-time programmes, including taster courses so students can combine work and study and take their learning directly into the workplace.
Do founder/managers of small businesses with business qualifications look for the same in their employees? Not necessarily, says Josh Coleman, who established his business Bike Dock Solutions while doing a business degree at Surrey University and employs 12 staff. "A business qualification must be complemented by practical experience."
Denis Kaminsky, co-founder with Lars Almqvist of Arcus Global, which provides cloud computing solutions, finds that business training doesn't guarantee success. Both are MBA graduates from Cambridge Judge Business School "but we find when recruiting that having an MBA isn't necessarily enough. Our business is consulting where relationships are key, so we require a strategic mindset combined with technical skills and the ability to manage relationships, which is difficult to find."
Sarah Willingham, whose MBA at Cranfield Management College helped her become a serial entrepreneur, agrees that SMEs need well-rounded individuals to manage growth. "They must be flexible, driven, with specific skill-sets and exprience – and a business education adds valuable confidence."