New Report calls for Business-Led Mentoring Scheme

A national mentoring scheme to help start-ups and growing businesses to flourish must be business-led with backing from the banking industry, states a new report from the Federation of Small Businesses (FSB).

The report states that, on average, around two-thirds of all start-ups will fail in their first year, the new report ‘Vision for a national mentoring scheme – connecting business owners with business mentors’ says. Approximately £10-12 billion pounds is spent on government funded business support per year, with only five per cent of that going to micro businesses even though they account for 95 per cent of all businesses in the UK.

Some of the key recommendations of the report include creating a National Mentoring Service through the Institute of Enterprise and Entrepreneurs to match mentors with businesses at all stages of the business life cycle. The report also calls for mentors to have the capacity to step away from that mentoring role and move into discussions that involve potential investment into the business.

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  • I agree there is a need for more business mentoring, especially in business management matters. However, there is also a need to understand what mentoring is. One of my concerns is existing players will simply add mentoring on as an add on service without actually understanding the needs of the SME sector. This has been the common experience when blue chips scale their services down for the SME sector.

    In my experience mentoring tends to be passing down some knowledge and expertise gained during the process of building a business. However, this may limit what the mentor can offer the mentee, in that if the person has no experience of a particular business area the mentee cannot benefit.

    Professional Business Management Mentors are professionals who work with companies to help them build their internal capacities in various areas, such as strategy, communications, marketing and finance. This helps the company to scale up having a better understanding of how to manage their risks and complexities. This then lower their failure rates and makes them more attractive to investors. This may not be available in the Service as it has been proposed.

    Overall, I feel the National Mentoring service is a great idea, however feel the banks are not the best people to offer this service. The banks primary focus has been lending in a risk free way, ie assest backed financing. Whereas startups operate in a future state where understanding their risks and complexities are of greater important than having assets to secure finance against. This variation between being nurtured and trained to think in a risk averse way and the high risk and complex environment startups operate in means the potential of understanding the concerns of the business are limited and banks offering a mentoring business may actually hinder the process as opposed to helping it.

    This is based on my research during my MBA, mentoring various startups and my published work on the subject area, . I hope this helps to highlight the need for professional business management mentoring and why it is important to treat the SME sector as a distinct sector and to ensure business mentors can actually mentor the companies to help them grow holistically.

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