Shouldn't you be at school, SMEs? How a lack of training is letting down business

TOO MANY IRISH small- and medium-sized businesses are falling over because managers don’t have proper training in how to run their operations.

But a lack of time, money and interest in education are all turning owner-operators off improving their skills, small business groups have said.

As part of TheJournal.ie’s focus on education in the small- and medium-enterprise (SME) sector this month, we look at how business owners stack up in the classroom and ask readers what they think is the best way to learn about running your own operation.

SMEs accounted for nearly 70% of private-sector workers in Ireland and just over half all business turnover in 2011, and the segment has been identified as a key to building a sustainable recovery.

Ireland's recovery depends on small business, like Teddy's Ice Cream in Dun Laoghaire. William Murphy William Murphy

Where we at?

In early 2010 the Management Development Council recommended a national system for management training be put in place to boost productivity, competitiveness and innovation among SMEs.

It forecast that teaching the bottom half of Irish businesses better management skills could improve the economy by up to €2.5 billion just in the manufacturing sector.

But the council said management skills in Irish SMEs currently lagged significantly behind those in most European countries and in the US.

Management Development in Ireland report, 2010.

Time to focus, people

Small Firms Association director Patricia Callan said the council’s plans were shelved due to a lack of funds, but even when money was being invested in SME training it was often in the wrong subjects or geographical regions.

“We have always said that we need to focus on the owner-managers themselves; people don’t take the time out to learn about good management practices,” she said.

“It’s always an issue but it tends to be the fifth or sixth issue talked about – I think it should be a central plank.”

An IBEC survey last year found just over a quarter of businesses with less than 50 employees had formal training plans in place – the lowest share for any company size.

IBEC Management Training Survey 2013 IBEC Management Training Survey 2013

Many SMEs not keen to learn, until they see the benefits

Irish Small and Medium Enterprises Association (ISME) chief executive Mark Fielding said many SME owners and managers were reluctant to invest in management training, but once they saw what it did for their business they become converts.

“It’s difficult for many small businesses to see the return on investment for them, but when they do it you will find that over the following five or six years their staff will be trained as well,” he said.

ISME has said the government should be training future entrepreneurs in the basics of business before high school and more students should be encouraged to start their own company rather than just looking for a job.

• READ: Enterprise culture “lacking” in Irish schools

“The best way to approach it is to go in very, very young and start at a primary-school level … but our (country’s) idea of entrepreneurial training is to wait until they are in their fifth year and give them one module on business,” Fielding said.

Something like this, then? Business kid Business kid

But it’s expensive, this education business

The most recent annual report on the cost of doing business in Ireland found the cost of education was high and the problem was one of the barriers to the country being more competitive in the international market.

Education costs had gone up 92% between 2001 and 2013, although the figures include schooling and training at all levels.

Forfás / National Competitiveness Council Forfás / National Competitiveness Council / National Competitiveness Council

What about mentoring then?

Meanwhile, a parliamentary report last year found mentoring was the “most important soft support” the government could back to help SMEs and it had the power to make the difference between success and failure for some businesses.

It recommended setting up a national organisation to oversee mentoring for SMEs after recognising there were problems finding mentors with actual entrepreneurial experience and with properly keeping checks on their performance.

Have your say

What is the best way to learn about how to run a business well?

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