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Why bad management is causing small firms to fail

Nearly half of businesses founded in the UK in 2011 had failed by 2014 - and incompetence and bad management was to blame for 56% of these business failures.

These are the findings of a new report, Growing Your Small Business, which has been produced by the Chartered Management Institute (CMI), Chartered Association of Business Schools and The Supper Club using data from the Office for National Statistics (ONS) and the UKCES Employer Skills Survey.

With 44% of businesses in the UK failing within three years, the report concludes that British start-ups must improve management skills to increase their chances of survival.


It says that a lack of professional management skills is also holding back UK productivity and employment growth, with only 16% of all new SMEs found to be fast-growing.


The research reveals that just 42% of small businesses had provided management training in the previous 12 months, compared to 89% of businesses with 250+ staff. The position is worse for businesses with fewer than 24 staff where only 36% receive any management training.


The report also highlights a complex picture of business support practices across the UK with more than 600 initiatives available to small businesses.

A new CMI campaign has been launched to help small business owners access management support provided by business schools and provide better sign-posting to management best practice and professional support.


The CMI has also published a "heatmap" that provides employers with key information on the qualifications, networks, placements, business support and professional management qualifications being provided by local business schools.


Anne Kiem, Chief Executive of the Chartered Association of Business Schools, said: 

"The UK's business schools are full of world-class business expertise and knowledge, and with a business school conveniently located in every region they are perfectly placed to support the growth of small businesses."
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