New report blames incompetence on start-up failures

Poor management and incompetence are to blame for the high number of start-up failures in the UK, according to a new report.

It suggests mismanagement is more of an issue than a lack of funding, an absence of skilled employees or late payments – all problems that reportedly leave firms in difficulty.

The Growing Your Small Business Report was jointly commissioned by the Chartered Management Institute, Chartered Association of Business Schools and business network The Supper Club.

It advises that entrepreneurs and young business owners need to improve their management skills and practices or face-up to blame for their firm becoming insolvent.

The report found that 44% of companies founded in 2011 in the UK failed to see out the end of 2014, with poor management and incompetence to blame in 56% of cases.

A lack of training

Only two in five entrepreneurs had undergone management training, compared to nearly 90% of leaders in large, established companies.

For smaller firms that employ less than 24 people, fewer than one in three bosses had training – highlighting a lack of essential skills relating to good business practices.

The report suggests that providing these individuals with access to training and new opportunities could help to ensure the longevity of a greater number of firms.

It highlighted 600 business schools and other publically-funded training programmes that could provide such help.

Why is management so important?

Good management is key as it ensures that business owners are not trying to everything – in such situations not enough time is devoted to the aspects that influence growth and the business tends to suffer as a result.

Delegating tasks helps reduce some of the pressures faced, enabling owners and entrepreneurs to focus on driving new leads, sales and networking.

Working with people effectively and managing finances are two key aspects as companies who do these tasks poorly could face administration or liquidation or require another form of financial management support.

The UK has more start-ups than at any point previously, but the report suggests more work is needed to ensure they are capable of surviving in the long term.

By Phil Smith

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