Research finds small town SMEs in a ‘constant state of adaptation’

Small and medium-sized enterprises (SME) based in small towns are undergoing a constant state of adaptation in order to survive, according to research published by a team from Birmingham City University and the University of Birmingham.

Small town businesses

Dr Jacob Salder, Research Fellow in the Centre for Enterprise Innovation and Growth at BCU, interviewed upper management in 50 SMEs across Southern Staffordshire to investigate their entrepreneurship practices. In a paper published with Professor John Bryson (University of Birmingham), they argue there’s a perception that SMEs drive growth but the focus is on those based in larger cities. “These cities may be seen as the powerhouse”, says Jacob, “but there’s also key growth in smaller towns and cities across the country. SMEs in these places require recognition for the important role they play in both driving economic growth but also supporting smaller communities”.

Location, location, location

Metropolitan SMEs benefit from a wide range of resources such as transport links, government investment in infrastructure and access to talent – the environment is fundamentally different for SMEs in smaller towns and cities. A few things contribute toward this i.e. government organisations tend to invest in larger cities so access to support through institutions like universities is easier for a business in Birmingham than, say, a business in Tamworth. As a result of that, there’s State and private investment happening in cities that smaller towns don’t directly receive. Jacob explains: “firms have to identify and access the tools at their disposal and balance that by managing constraints around finances, environment and often a personal connection to the business.”

The research found these non-metropolitan firms are constantly adapting and diversifying i.e. changing their products to meet market challenges or diversifying their offer and entering new industries. This adaptation is part of the survival process these businesses are involved in to respond to fragmenting markets and declining demand for certain types of product. “The small town location drives necessity and entrepreneurship that may not have been developed if they were based elsewhere.”

The need for different support

Metropolitan businesses benefit from a number of support channels, with courses and workshops designed to cater to a critical mass of businesses. From the interviews with non-metropolitan firms, Jacob argues that the current support delivery model isn’t working for these businesses, as their needs are more nuanced and their markets more distinctive. “There’s a need to communicate with these businesses to assess and understand their learning and growth requirements,” Jacob states. The need to adapt the support given to these businesses is made imperative as often these are low margin firms, with little time and resources to commit to speculative support and development initiatives.

Next steps

The research is just the first step in analysing different forms of entrepreneurship across the UK. Jacob intends to take the findings from this paper and look at differing entrepreneurial environments in the UK, taking the emphasis away from big cities and back to smaller towns and cities. This further research will help identify best practice from current thriving entrepreneurs and provide a knowledge base for organisations looking to support SME growth and development beyond the metropolis.

Read the paper in full here.