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Helping entrepreneurial firms to grow


Part of the research currently being undertaken within the National Entrepreneurship Observatory involves interviewing several of the managing directors of the fastest-growing firms in Wales.

This is a fascinating project which is revealing knowledge on the way that growing organisations manage themselves in an increasingly turbulent environment.

The book will be out next year!

One of the issues already being highlighted in the detailed interviews is that the development of a sustainable competitive strategy is not only down to being better than your competitors but, for many small firms, is about minimising the impact of areas in which the business has inferior competencies and capabilities.

In this respect, perhaps the most critical issue for many growing firms is the role of the owner-manager within the business as it grows. As most of you will realise, most small firms are characterised by a simple organisational structure which reflects the personality traits of the owner-manager.

This means that, typically, the owner- manager will be actively involved in the day-to-day management of the business and can even be directly involved in the production of the product or the provision of the service.

In addition, the entrepreneur will base part of the competitive advantage of the business on the personal relationship with key clients. There are numerous benefits to this 'simple' structure in that the entrepreneur is in close contact with the key issues of the business and is 'on the spot' to deal with problems. These advantages allow the business to respond to the needs of customers in a quick, innovative and flexible manner.

However, it appears that the management style of the owner- manager can also be the antithesis of good management practices. This is because the skills and behaviours necessary for successful venture creation can become barriers to the growth and development of a business, and traits such as a strong need for control and a high sense of distrust can result in owner-managers engaging in actions that prevent the organisation growing.

Therefore, for individual small businesses to develop and prosper, significant strategic and structural weaknesses must be reduced. The role of any business support programme must help to facilitate the owner-manager in the development of a strategy and a clear competitive advantage.

For banks and business support agencies, the pressurising of the owner-manager to produce formal plans does not necessarily assist the business in addressing strategic and structural problems. In this respect, any support programmes developed by the Assembly Government will need to systematically address the deficiencies of small businesses by providing the owner-manager with the opportunity to develop the skills and acquire the resources that are needed to develop an effective strategy.

Even entrepreneurs can learn new tricks and any future business support initiatives must ensure that they get the opportunity to do so and help to contribute to the development of the Welsh economy.

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