Changing Use of External Business Advice and Government Supports by SME's in the 1990's

This paper uses cross-sectional surveys of 1991 and 1997, and a panel survey of firms surviving between 1991 and 1997, to compare the levels of use by SMEs of external business advice. The analysis demonstrates only modest changes over time in aggregate use, and these are not statistically significant. This suggests that earlier growth in external business advice services may now have plateaued. There are some significant changes of use by source (increasing for advertising, personnel and recruitment, new technology and computer services; and decreasing for taxation and financial management advice). The paper is one of the first to assess sector patterns. Publishing, manufacturing and other business activities are the largest users of advice. Sector differences are shown to be considerable and need to be taken account of in future analyses. For government advice services, the shift from a centralised structure (Small Firms Service and Enterprise Initiative) to a decentralised structure (training and Enterprise Councils and Business Link) had no impact on greater market penetration except for the greater participation by the larger SMEs in use of Investors in People. Increased use of government sources has occurred, however, through enterprise agencies and regional development bodies. Further comparison in 1999 suggests a decline in use of Business Link and stronger focus of use of government support services. This indicates that the Small Business service and Learning Skills council may struggle to meet their market penetration targets.