On Growth: Susan Marlowe

To my mind, current assumptions about small business growth remind me of the ‘Emperors new clothes’ fable. Everyone talks about it as if it is a ‘good thing’ and that small firm owners almost have a moral duty to grow their firms – after all: growth, it’s the only game in town! But is it?

We know that in the contemporary economy, there is an over concentration of small ventures in the service sector – it is cheap to start up such firms and requires limited human and fixed capital but because of this very fact, it is a crowded sector where opportunities for growth are constrained by market parameters. So, fact one – there is restricted ‘market space’ for growth in sectors where small firms are over concentrated so for many small firm owners, growth is not an option.

Next fact, the ‘desire’ to grow. What do most small firm owners want from their self employment – well, just what most people want from employment – to pay their mortgage, look after the family and achieve a comfortable life style. Indeed, why should those who own small firms be imbued with a burning desire to go multi-national after all? We do not see continuous critical evaluation of middle managers because they have failed to, or are not that interested in, being the next Philip Green or any top flight CEO.

Finally, why is there a moral imperative for small firm owners to save the economy – surely sound macro-economic management which sustains a mixed economy should be the strategic aim of government not the task of small firm owners. How and indeed, why should the small firm sector be given responsibility for job creation when their very profile – mostly small, mostly marginal, mostly services suggests this is not feasible.

This is not to suggest a homogenous, turgid population of small firms who are struggling to survive – some is true for some of course, but many, although remaining small and marginal, will also be sustainable and profitable over time as they have a secure customer and supplier base which works well at the micro level - so they are already making an invaluable contribution.

We know that about six percent of the sector do have the scalability, capacity and desire for growth – often these are innovating, science and technology firms or those, like the Starbucks example, who are in the ‘right place at the right time’. So, these growth firms will make a considerable contribution to the dynamics of the economy, create jobs and wealth.

Governments do have a responsibility to promote an environment which encourages entrepreneurship by maintaining debate and dialogue with investors, banks and venture funders in order to ensure a flow of appropriate finance. This should also promote education which prepares young people to think and act entrepreneurially (whether working for the NHS or a new bio-med firm) and also, ‘normalises’ self employment as a potential career ambition. The government also needs to review regulation and its impact on smaller firms, to encourage opportunities for knowledge exchange and transfer from universities in order to incubate and commercialise innovation.

By doing these things, It will create the right environment to enable and facilitate entrepreneurial thinking, ambitions and activities. I do accept that this will form one element of a vibrant economy and no matter how many white horses you provide, the average hairdresser, garage owner, plumber, builder or window cleaner is unlikely to don their armour and ride in to save the rest of us!

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Having researched and published extensively in these areas, Susan Marlow has undertaken research projects for the Economic and Social Research Council, the European Union, the Association of Chartered Certified Accountants (ACCA), Barclays Bank, PROWESS (Promoting Women’s Enterprise Support) and the Home Office.

Current research interests focus upon the interaction between gender and high technology start-ups, incubation issues, failure and closure and institutional influences upon female entrepreneurship.