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Productivity and micro business

The Productivity Insights Network, funded by the Economic and Social research Council, have recently published a follow-up evaluation of a series of programmes designed to boost productivity (see https://productivityinsightsnetwork.co.uk/app/uploads/2019/02/PIN_ProjectReport_Green _January19.pdf ). The initiatives under the microscope were all originally part of the UK Commission for Employment and Skills Future Programme. Looking at the report from […]

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Can policy be inspired by practice?

At the beginning of this week (19 November 2018) I had the great good fortune to be invited to a workshop on ‘Driving improvements in business performance’ for Department for Business, Energy and Industrial Strategy (BEIS) personnel organised by the Work Foundation (http://www.theworkfoundation.com/). My challenge was to decide what to say in five minutes on […]

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Business productivity review

As part of their concern with the UK’s productivity performance, the Government has launched a consultation. You can have your say at https://industrialstrategy.dialogue-app.com/j3rumznbpn#idea-count-container . We’ve already posted some thoughts under the business support and advice services heading. Do you agree with our points about sole traders and micro businesses?

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Business startup comes to Chesterfield

Here’s a date for your diary: Saturday 24 February. The micro biz champion Tony Robinson OBE will be in Chesterfield to tell us what it’s really like to work for yourself. Marketers, bookkeepers, social media experts and lost of others will be on hand (along with folks who’ve recently started their own business) to offer […]

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Productivity and micro business

Productivity & micro biz pic

The Productivity Insights Network, funded by the Economic and Social research Council, have recently published a follow-up evaluation of a series
of programmes designed to boost productivity (see https://productivityinsightsnetwork.co.uk/app/uploads/2019/02/PIN_ProjectReport_Green
_January19.pdf
). The initiatives under the microscope were all originally part of the UK Commission for Employment and Skills Future Programme.

Looking at the report from a micro-business (less than 9 employees) perspective, there are some elements that will come as no surprise to anyone
familiar with this view of the economic world: avoiding terms like ‘productivity’ or ‘leadership and management skills’, policy stability, offering
bite-sized programmes and facilitating time out for business owners to reflect on performance. In this article I want to touch on the first of two
issues the report raised for me: assessing impact.

The report identifies a number of problems in assessing the impact of this kind of intervention. Baseline data is needed but collecting it may deter
participation, so the report calls for “a balance to be struck between flexibility and rigour”. Change may not occur during the period of a particular
initiative. Previous research on Business Link is cited that suggests that it takes three years for significant performance improvements to manifest
themselves.

So, how do we engage micro-businesses in becoming more productive and assess their progress? A huge challenge is making contact with such
businesses; I’ll return to this issue in a subsequent post. Beyond that stage, any intervention or offer of support needs to be relevant. That cannot be
determined a priori by an external agency; it must be for the business to decide. They know their business best, they will want to be in control of
what’s happening (having control is why many of them went in to business in the first place) and that will maximise their commitment.

Last year I contributed to the Government’s consultation on productivity by conducting some very simple research at a meeting of a small, informal
local business network. A few questions were used to kick of a very interesting discussion. This is how they started:

___________________________________________

The Government is calling for evidence as part of its review of productivity in UK businesses. What do you think?

Here are four basic ways you could improve the productivity in your business. Which ones are relevant to you? Tick each one that applies.

productivity qre pic2

Pick the option that you think has the biggest potential to improve the performance of your business.

  1. What’s stopping you?

___________________________________________

I’m sure they must be better ways of doing this but I think it has two merits. It

  • uses everyday business terms (e.g. sell more) to get away from talking about productivity
  • focuses on what the business owner currently recognises as the ‘big issue’.

Developing a discussion, providing bite-sized support and applying a plan-do-review approach to help reflect on progress can be used to tackle the
challenges facing the business.

Public authorities should then have no problem in tracking long-term performance, if they wish. Companies have to return basic accounts and will
have a company registration number which can be used to track changes over time. Similarly, sole traders and the self-employed have a unique tax
reference (UTR) which can be used to track their finances. This may not be perfect but a brief review of the self-assessment return indicates what
can be done. The return has to include:

  • turnover
  • cost of goods
  • staff wages and salaries
  • total allowable expenses
  • net profit/loss

The metrics that can be derived from these figures may be limited but they have the attraction of utilising information that is already available to the
powers that be and so place no additional burden on the business.

The solution to assessing impact is therefore to combine the narrative data which can be drawn from records of the reviews of progress with high level
numeric data that align with measures related to productivity.

Comments welcome!

In the next post I’ll be looking at sustainability for support.

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