LONDON'S SME'S HELD BACK BY POOR MANAGEMENT
(Monday 19 January 2004)

David Brent (Ricky Gervais) demonstrates his management style in the BBC's hit comedy show 'The Office'.

Management weaknesses and insufficient business planning appear to be hindering the performance of London businesses, according to a new report launched today by Business Link for London, the small business advice and support service for the capital, and the London Development Agency (LDA), the Mayor's agency for business and jobs. Although the independent survey of more than 4,000 London firms showed that the capital's businesses were faring well despite tough global and domestic economic conditions, it also showed how much better they could do if they adopted basic management practices.

The research showed links between effective planning and successful business. 60% of those firms reporting increased turnover in the last year had internal management accounts, whilst only 48% of those with decreased turnover had such systems. Similarly, 61% of growing firms reported having business plans compared to only 45% of those with decreased turnover. Whilst 54% of growing firms reported having sales and marketing plans, only 38% of those with decreased turnover had such plans.

More than three-quarters (76%) of London managers reported having no formal management qualification with 675 of senior management teams gaining their management experience on-the-job with their current company. In addition, virtually all of the businesses surveyed (95%), failed to boost their management skills through the engagement of non-executive directors.

Commenting on the research, Judith Rutherford, Chief Executive of Business Link for London, said: "In the current economic climate, there is a rising premium on management skills, especially in the capacity for leadership, motivation, entrepreneurship and the ability to break down the barriers within and between organisations. We believe that planning processes including business, sales and marketing and training plans are the basic tools of management. Without these building blocks in place it is much harder for businesses to know where they are going or which resources they need. Certainly they are pre-requisites for any business that would be seeking funding or investment from an external source. These are key areas where advice from business support organisations can help."

Manny Lewis, Chief Executive of London Development Agency, said "Weaknesses in management practices, as well as lack of access to finance, often explain underperformance by firms. This survey indicates the benefits of effective business planning to a firm's success and its ability to attract finance. The LDA is working closely with other partners to improve the technical skills and management practices amongst London firms to enable them to remain competitive."

In the survey, four out of 10 businesses reported an increase in turnover in the last year, 29 per cent had increased their profitability and one-fifth had increased employee numbers.

About London Development Agency

The London Development Agency is the Mayor's agency for business and jobs. The LDA prepares the Mayor's business plan for London and mobilises the support and resources of hundreds of partner organisations to help build a thriving economy for London's people, businesses and communities. The LDA is dedicated to improving sustainability, health and equality of opportunity for Londoners.