Transcript University of Newcastle upon Tyne Business School Partner

University of Newcastle upon Tyne
Business School Partner’s
Programme 2010
Session 1, 2, 3,
Wednesday 8 July 2010
Introduction to class and subject
The Small Business Sector
Introduction to Class and Subject
Angela McLean
• Managing Director
Fast Forward Now Ltd
• Entrepreneur in
Residence Newcastle Uni
• Inspirational Role Model
Award WIN 2009
• NE Business Supporter
EF 2010
Business School Partner’s Programme
• Outline of programme (see blackboard)
• Subjects covered
• Schedule of dates (including assignment)
• Attendance
• Any Questions?
Business School Partner’s Programme
• Class Introduction
• Have you studied business related topics at
school?
• Does you family run a business?
• Which business related subjects are you
interested in?
• Any problem areas?
In groups of 4/5 discuss the above questions and
be prepared to discuss in class
Case-study Company
Garbeau
• Case-study (on
blackboard)
• The Garbeau story
so far….
• www.garbeau.eu
Additional Information…
• The Elevator
• Assessment (on
blackboard)
• Assessment format
Any Questions…so far?
the baggers story…
The Small Business Sector
Session 3
Problems of Definition
• Small firms do not
conform to any neat
parameters
• Need to consider the
industry
• Personalities and
aspirations owner(s)
• High growth/self
financed tradesmen
• High tech start-ups
Bolton Report 1971
“Small firms are present in virtually every
industry and the characteristics they share as
small firms are sometimes not apparent
because of the differences arising from the
contrasting conditions of the different
industries. There is also extreme
variation…as regards efficiency, methods of
operation, the nature of the market served
and the size of the resources employed.
Thus a manufacturing business employing up
to 200 people have very little in common with
a small shop owned and run by a married
couple.”
Bolton Report encouraged…
• Development of the
Small Firms division
under a Minister for
Small Firms
• Encourage and
support the sector
Definitions of a Small to Medium
Enterprise (SME)
Employees Turnover Balance Sheet
Medium
Small
Micro
50-249
10-49
0-9
<50m
<10m
<2m
<43m
<10m
< 2m
and not more than 24% owned by a large company (euro)
Source: Euro-Info, March 1996, European Commission
Differences between a small/large
company
Small company
Large company
Outlook
Short term
Long term
Resources
few
Many
Marketing
Combined function
Specialist
Department
Product range
Single
Portfolio
Customer base
Narrow/niche
Wide
Information
Personal/disorgan’d
Impersonal/organs’d
Branding
By association
Prominent/policed
Focus
Technical/production
General
management
Strategy/planning
Organic/concurrent
linear/
Importance to the Economy
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A productive outlet for enterprising individuals
Efficient form of business organisation
Specialist suppliers or sub-contractors
Contribute to the variety of products/services
Competition to the monopolistic tendencies of
large organisations
• Innovative
• Breeding ground of new industries
• Seedbed from which tomorrow’s large
companies will grow
Small Business Quiz
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Number of businesses in the UK?
% of these that are SME’s?
% of workforce employed in the SME sector?
% which grow significantly in one year%?
% which have the ability to grow?
% of ‘steady state businesses?
% that go into liquidation each year?
% of business start ups that get funding from a
bank?
Employment
• Majority of SME’s – employ either no one or else
a handful of people
• 95% have fewer than 10 employees
• Over 70% had no employees (1 person
business)
• Micro firms one third of employment in the
private sector
• Firms employing under 50 accounted for 10
million of the 22 million jobs in the private sector
Current Trend
• Broader base of very
small businesses
• Larger firms decline
• Micro firms continue
to increase
• Average business
employs 5 people
Failure rate
Approximately 2 million
people start a new
business every year –
the majority will fail
and only 1% will raise
finance from an
outside investor
Types of Business Closure
• The young are more likely to die
• The smallest are vulnerable
• Those that grow are less likely to close
than those that do not – treading water is
not a good survival strategy
Vulnerable Businesses
• Low margin
• ‘Cut throat’
competition
• Price-sensitive
markets
• Local markets
• Low wage (for
owner/manager)
Gibb
The Common Mistakes!
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Underestimate start-up time
Under-capitalised. Lack of working capital
Over-estimate market size –inability to market
Lack of business expertise
Confuse cash with profit
Wrong location
No USP
Recruit the wrong people – people
management
• Failure to monitor the business
• Don’t retain profits for growth
Any Questions?