business growth ambitions amongst sme's presentation
TRANSCRIPT
Business Growth Ambitions amongst SMEs
Changes over time and links to growth
Andrew Graves and Emma Pooley, TBR Professor Jonathan Levie, Enterprise Research Centre
and University of Strathclyde Dr Ron Botham
What We Want to Know
• How does ambition among SMEs change over time and what influences this?
• What is the relationship between SME ambition and SME business performance?
Three Levels of Ambition • Substantive ambition – respondents have the highest level of personal ambition for business growth (10 out of 10 on a Likert scale) and intend to grow their business significantly larger than its current size. • Low ambition – respondents have a low level of personal business growth ambition (5 or lower on a Likert scale), or a medium level ( 6 or 7) AND do not intend to grow their organisation and view the ideal size of their business as being no higher than current size. • Moderate ambition – all others
The 2012 Study’s Findings
• Based on recall of ambition 3 years previously: – Growth was not confined to firms with substantial
ambition – Firms with substantial ambition more likely to
grow more rapidly, but also to decline (in employment and turnover)
Ambition and Growth Follow-up study interim results
• Follow-up in Nov/Dec 2014 of 1,250 senior executives of SMEs originally surveyed in Jan/Feb 2012
• 503 firms re-surveyed • Legal status and employment in 2014 identified
for all 1250 firms
Follow-up Survey of 503 Surviving Firms
• 57%: no change in ambition level • 24%: ambition level dropped • 17%: ambition level increased • Most of these change one level only, into or out
of the middle • Only one in forty (2.4%) move significantly - from
substantive to low, or vice versa
Why ambition changed
• Why Ambition level dropped – Reason #1: Changed market conditions (28% of sample)
• Why ambition level increased – Reason #1: Changed market conditions (37% of sample)
Many individual reasons given for change NB: This does NOT mean that ambition has declined among SMEs!
Follow-up Survey of 503 Surviving Firms
• Firms with substantive ambition in 2012 were more likely than firms with low ambition to have – Innovated – Invested in training and development – Developed new strategic goals – Made investments or acquisitions – Exported.
Follow-up Survey of 503 Surviving Firms
• Firms that grew between 2012 and 2014 were more likely than other firms to have – Innovated – Invested in training and development – Developed new strategic goals, – Made investments or acquisitions, – Exported.
Follow-up Survey of 503 Surviving Firms
• Dual effect feedback from past business performance and major business events onto current growth ambition (i.e. in 2014) – for some firms these have a positive effect – for others these have a negative feedback
effect
Tracking Study of All 1,250 Firms Ambition level 2012 2014 legal status outcome Substantive Moderate Low Dead/not trading 9% 7% 10% Phoenix/owner change 10% 7% 5% Continuing (includes status change) 81% 87% 86% Total 100% 100% 100% 2014 employment outcome Substantive Moderate Low More employees 41% 38% 32% No change in employee numbers 17% 20% 20% Fewer employees 34% 34% 37% No employees (includes dead firms) 8% 8% 11% Total 100% 100% 100%
Example of Factors affecting Growth: Senior Executive Type
0%20%40%60%80%
100%
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Founder Purchaser Family appt Internalappt
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Total
more employees no change less employees no employees
1250 Firm Tracking Study Summary
• Firms with low ambition more likely to reduce employment and less likely to increase it
• The chances of changing owners/phoenix rises with ambition level
• Results generally support the first study
Next Steps
• 25 cases to better understand why ambition changes, why substantive ambition can produce more volatile outcomes, and why low ambition produces lower performance
• More sophisticated quantitative analysis of existing data, controlling for other factors that affect growth to better understand the effect of ambition
Contact us:
If you would like any more information about this research please contact TBR, Andrew Graves at [email protected] ERC, Jonathan Levie at [email protected] or Ron Botham at [email protected]