Women small business leaders beat their male counterparts
LABELS can make our lives easier, but they can also be counter-productive.
The world of entrepreneurship and small and medium enterprises is a good example: the term SME is used to describe everything from a start-up business operating in someone's spare bedroom to a company ready to float on the stock market with hundreds of staff and turnover of tens of millions of pounds.
This generalisation matters because it encourages us all to think of SMEs as a homogenous group with the same problems and anxieties. In fact, the challenges confronting a micro business run from home and a mature business closing in on an IPO are completely different - so too, therefore, is the support and assistance these businesses require from policymakers and others.
Equally, too many of us have an idea in our minds of what a typical small business leader looks like - leaving aside the equally clichéd stereotype about technology companies all being run by hipsters from Shoreditch, it has for too long been assumed that small businesses are generally run by white middle-aged men in the mould of Alan Sugar or Richard Branson.
Anyone who needs help convincing that this is outdated nonsense should read new research just published by Barclays Bank and Cambridge University. It paints a picture of entrepreneurs that is remarkably diverse - and also reveals that the top-performing small business leaders are often to be found among groups who are frequently excluded from the discussion about entrepreneurialism.
The obvious example is female small business leaders. Barclays' research shows that these women have greater entrepreneurial ambition than their male counterparts - 47 per cent of them plan on starting another business within the next three years, against only 18 per cent of men. Women tend to be more modest about their businesses, Barclays' research suggests, though their companies report, on average, higher pre-tax profits.
But it isn't only women who stand out as successful small business leaders once you start looking past the stereotypes.
Barclays also looked at "senior entrepreneurs", whom it defined as small business founders over the age of 50. Contrary to what you might expect, these older business leaders have exactly the same appetite for risk, innovation and autonomy as their younger rivals. But they also tend to be better organised, more creative and more outgoing, the bank's research suggests.
And what about migrant entrepreneurs, who - despite the depressing rhetoric on immigration in Britain today - are responsible for launching one in seven companies and creating 14 per cent of all jobs in the SME sector, according to the Centre for Entrepreneurs? Small business leaders with a migrant background tend to be less gung-ho, Barclays says, and plan carefully for financial stability.
Vesselin Popov, a development strategist at Cambridge University's Psychometrics Centre, argues that the research should prompt a rethink about the way we talk about SMEs and the support structures we create for them. "These psychometric results debunk the myth of the CEO superhero," Mr Popov argues. "Entrepreneurs do differ from employees but as a group, they are still incredibly diverse and often misunderstood."
Above all, we need to dump the labels. Entrepreneurs aren't all confident lone wolves with the drive and confidence to succeed whatever the obstacles thrown in their way. Rather, they're a remarkably diverse group with different motivations, problems and concerns. And they almost certainly don't look like the picture you've got in your mind's eye.
This stuff really matters. For all the talk about cutting red tape, improving access to funding for small businesses or solving late payments, one factor above all else gives a small business a greater chance of succeeding. The Federation of Small Business says that 70 per cent of firms that receive tailored and personalised mentoring survive for five years or more, twice the survival rate for businesses that don't get such support.
That's a killer statistic. But if we want to provide more of that tailored and personalised support, we need to get to know our SMEs better, rather than making lazy assumptions about them.