1 Enterprise Mentoring Summary of Evidence on the Provision and use of Mentoring by Small and Medium sized Enterprises 20 September 2012

1

Enterprise MentoringSummary of Evidence on the Provision and use of Mentoring by Small and Medium sized Enterprises

20 September 2012

2

Mentoring Research

• BIS has developed its understanding of business mentoring through extensive market engagement and external research

• BIS has also commissioned primary research to address evidence gaps– Use and benefits of mentoring

• IFF (2010) Small Business Survey 2010• IFF (2010-12) BIS SME Business Barometer

– Supply of mentoring• GHK (2012) Estimating the Provision of Business Mentoring

• The evidence collected has informed the policy action plan which BIS has also published

3

Many small businesses do not make sufficient use of external advice and information• New and existing SMEs help drive economic growth by raising competition,

stimulating innovation and have been shown to make a disproportionately large contribution to job creation

• Using external information, advice and guidance can have a major impact on improving business skills and, through this, business outcomes

• In 2010, 49% of SME employers have sought external advice or information on matters affecting their business

• It is estimated that as many as 3 in 10 businesses may have unmet demand for external business advice– In many cases lack of use will stem from market failures such as a lack of

information on the potential benefits

• Mentoring is particularly suitable for engaging with entrepreneurs as it meets a common preference for learning to be informal, from experienced peers, and it can be tailored to the needs of their business

1) Challenge

Source: NIESR (2006) ‘Business start-ups, Closures and Economic churn- a review of literature’; Anyadike-Danes et al (2011) ‘Job creation and destruction in the UK: 1998-2010’; SQW Consulting (2009) A review of mentoring literature and best practice’; BIS calculations based on Small Business Survey 2010and ‘Research to Understand the barriers to take up and use of business support’ CEEDR and BMG (2011)

4

Factors that make mentoring appealing to entrepreneurs also help make it difficult to measure

• Business mentoring is hard to measure:– Often informal, with mentors

experienced peers rather than specialists

– Can be tailored to the needs of individuals and evolve over time

– Definition of mentoring is fluid, those involved may not realise they are involved in mentoring

– Mentoring can form part of a wider professional service (eg accountants)

Informality and flexibility are both factors that

make mentoring particularly suitable for

entrepreneurs…

…but the wide variation in what constitutes

mentoring and what it may offer help make it

difficult to assess potential benefits and

costs

1) Challenge

5

In 2010, more than 300,000 SMEs had used a mentor in the previous year

• larger SMEs are more likely to have used a mentor

• But as most SMEs are non-employers, only 2 in 5 (130,000) of those using mentoring are employers

• Younger business more than twice as likely to be using a mentor– (15% of those trading for

less than 3 years had used a mentor compared to 6% of older firms)

2) SMEs and Mentoring

Source: BIS analysis of the Small Business Survey 2010 and Business Population Estimates

Number of SMEs using business mentor in last 12 months by size

Medium (50-249), 5000, 2%Small (10-49), 25000, 8%

Micro (1-9), 100000, 32%

No employees, 185000, 58%

Proportion of SMEs that report having used a business mentor in the last 12 months by size

6%

10%

15%15%

7%

11%

All SMEs SME Employers No employees Micro (1-9) Small (10-49) Medium (50-249)

6

…with large numbers benefiting from mentoring

60,000 SME employers improve their enhance their

leadership and management skills

• Of SME employers using a mentor more than 9 in 10 have benefited

• In the last year use of business mentoring has helped:

Source: BIS analysis of the SBS 2010, Business Population Estimates and BIS Barometer surveys (August 2011, November 2011 and February 2012)

100,000 SME employers improve

their ability to develop business

plans and strategy

70,000 SME employers to

increase sales or profits

40,000 SME employers to obtain

finance


7

Growing enterprises are more likely to use a mentor, as are those in service sectors

• SMEs that used a mentor are more likely to be growing– They are also more likely to

have provided training to their staff and management

• SMEs in service sectors are more likely to use a mentor than those in other sectors– Further analysis is required to

identify whether these differences are due to sectors or a result of other characteristics by sector

Source: BIS analysis of the Small Business Survey 2010

Percentage of SMEs in each sector that have used a mentor

0%

2%

4%

6%

8%

10%

12%

14%

Primary Production Construction Transport, retailand distribution

BusinessServices

Other Services

Growth outcomes and expectations by whether have used mentor (SME employers)

49%

68%

14%

11%24%

16%

13%5%

0%

25%

50%

75%

100%

Yes No

Sustained Growth:Grew last year, expectto next

New Growth: Didn’tgrow last year, butexpect to next

Contained Growth:Grew last year, don’texpect to next

No Growth: Didn’tgrow last year, don’texpect to next

Whether used a mentor in last year


8

Of employers using a mentor, less than 40% said they were using a specialist business mentor

• Almost 4 in 10 were using someone who was a specialist mentor

• For 3 in 10 their mentor was providing other professional services

• 2 in 10 were mentored by a friend or peer

• 1 in 10 by other individuals, such as those with a commercial interest in their business (eg Business Angel)

Source: BIS analysis of the Barometer surveys (August 2011, November 2011 and February 2012)

Type of Business Mentor used by SME Employers

A specialist business mentor

36%

Somebody with commercial interest in business (eg

investor)5%

Other/Don't Know9%

A friend or peer22%

Someone providing other services (eg accountant or

lawyer)28%


9

Latest data indicates that 6% of SME employers are or have considered taking on a mentor

• BIS estimates that 11% of SME employers (130,000) had used a business mentor

• A further 6% (70,000) had considered doing so– For over half of

these, the reasons for non-use could be linked to difficulties finding a suitable mentor


Both responses may indicate difficulties finding a suitable mentor


Reasons why non-mentored SME employers are yet to take up mentoring

After consideration, mentoring not suitable for

business11%

Identified somebody, but decided not to use

them36%

Were unable to identify a suitable business

mentor28%

Have only started looking into this recently/Still in

process of deciding19%

Other/Don't know6%

10

Most SMEs are not involved in mentoring, whether this be as a mentor or mentee

9%Are

mentoring others

5%Are

thinking of becoming a

mentor


Many SME employers are also mentoring others

…and a further

There is overlap between these groups. When brought together we find that…

Just 20%of SME

employers are being

mentored or mentoring

others

8%Thinking

of mentoring or being

mentored

Amongst SME employers…

13%Have been

mentored in last year

6%Have at

least considered

being mentored

…and a further


72%Have not been

involved in mentoring during the last year and

have not considered doing

so

11

Those who are mentoring others are also deriving benefits



• Our survey data indicates that of SME employers who are mentoring others:

55% believe being a mentor had helped develop their own

leadership and management abilities

35% believe that being a mentor had led to

increased profits in their own business from being

able to reflect on their own strategy

12

Estimated that as many as 400 organisations are providing business mentoring in England

3) Mentoring Organisations

Source: GHK (2012) ‘Estimating the Provision of Business Mentoring’

• GHK commissioned to ‘baseline’ current provision of business mentoring in England

– Focused on identifying formal market – organisations or individuals that were advertising provision of enterprise mentoring

• The research excludes those helping friends or associates through informal mentoring or mentoring individuals on their own professional development

– Survey of organisations was conducted in January/February 2012 – Surveyed 183 mentoring organisations, which represented around 11,500 mentors

• Research confirms earlier assessment that the market for mentoring is very varied

• Very difficult to assess scale of market, but GHK estimated that in January/February 2012 there were:

– Around 400 organisations that provide some form of mentoring• Many of these were small with few mentors and some served particular clients

(eg Students at a University)– Up to 21,000 mentors operating through these organisations Many are therefore not

likely to be appropriate for the Mentorsme portal

13

Most organisations are small, but most mentors operate through a large organisation…

• Almost 60% of indentified organisations had fewer than 10 mentors

– Around a quarter had only one mentor

• Over 90% of mentors are provided by organisation with at least 50 registered mentors

– Half operate with organisations with more than 250 mentors

Size distribution of organisations and the mentors by the size of organisation they work within

0%

25%

50%

75%

100%

% of organisations by their size % of mentors within each size of organisation

250 +

50 to 249

11 to 49

2 to 10

1

Source: BIS analysis of GHK (2012) ‘Estimating the Provision of Business Mentoring’


14

…mentors tend to operate through more than one organisation…• 60% of organisations contain mentors that also work

through other organisations



Share of mentors who offer their services elsewhere by the number of mentors

Number of mentors

Share of mentors who also offer services elsewhere

0 to 10 57% 6% 7% 4% 27% 0%

11 to 49 15% 44% 19% 7% 15% 0%

50 to 249 16% 44% 14% 12% 14% 0%

250 + 29% 29% 29% 0% 0% 14%

All organisations 40% 21% 11% 6% 21% 1%

The smallest organisation are most likely to have mentors that do not also operate with other organisations

15

…for most organisations mentoring was not their main activity

• Mentoring is only the primary activity for a quarter of organisations– Only a handful of organisations only provide mentoring– For almost half (48%) mentoring accounts for less than a quarter

of their activity– There was little difference across size of the organisations – with

almost half of mentors in organisations where mentoring represents less than a quarter of activity

• Activities provided alongside mentoring were mainly other forms of business support– 82% general business advice– 54% coaching– 48% other forms of training (eg workshops)



16

Most provided at least some face-to-face mentoring and a majority charged at least some mentees for their services• Most mentoring organisations will look to cover both short term support on a

particular issue (91%) and longer term developmental support (86%)– Three in five also provided support in an enabling or networking capacity– Two fifths offered support to particular disadvantaged enterprise groups

• Almost all organisations provided at least some face-to-face mentoring (98%), with three-quarters also providing a web-based offer.

• Half of organisations charged for the mentoring provided (50%) with a further one in five (17%) charging ‘for some’ mentoring. One third of mentoring organisations provided all mentoring at no cost to mentees.

• Most organisations generated referrals through word of mouth recommendations (80%) referrals from other organisations (76%). – Many also used their own promotional activity, own website or web directories – Over one third of organisations were not listed on any web directories (39%)



17


Most organisations have seen an increase in demand and were looking to increase their capacity

• Most organisations have seen demand increase…– In the previous 6 months (ie since Mentorsme was launched) 80% had experienced increase

in demand: 41% significantly, 39% slightly

• …but there were mixed views on where this left the current balance of supply and demand

– Organisations disagreed on current supply and demand for mentoring: in balance/greater supply/greater demand

• Almost all felt there was scope for further growth– 90% of organisations believe potential exists to increase business mentoring levels; 53%

significantly

• The majority were planning to increase their own capacity– Capacity: 57% of organisations plan to increase capacity over next 6 months– Only 20% had previously faced difficulties recruiting mentors

• Current referrals come from a wide range of sources, but mentorsme was then still in its infancy

– Referrals: 80% word of mouth; 76% other organisations; 64% own web-site; 58% own marketing; 45% web directories


18

Organisations most likely to say that information failures are barriers to growth of mentoring



BIS is exploring the nature of these gaps with a group of mentoring organisations

• Although no gaps were apparent in the evidence on preceding slides, the majority of organisations see gaps in provision as a constraint

90%

67% 66%

7%

69%

62%56%

6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

A lack of understanding

about the business

benefits of mentoring

A lack of information on

standards

Difficulty in finding the

right organisation as

a company seeking

mentoring

Other Gaps in provision of mentoring

services

A lack of understanding

about the individual

benefits of being a mentor

Difficulty in finding the

right organisation as

a mentor

Quality of Mentors i.e.

Not qualified / Not

experienced / competent

enough

Demand Barriers Supply Barriers

19

A quarter of mentoring organisations require mentors to hold qualification or accreditation

Percentage of organisations that require mentors to have qualifications or accreditation

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

All

orga

nisa

tions

1

2 to

10

11 to

49

50 to

249

250

+

Not

regi

ster

ed

Reg

iste

red

Up

to 5

0%

Mor

e th

an50

%

Number of mentors Mentorsme Mentoring as % ofbusiness

% w

ithin

cat

egor

y

Organisations focused on

mentoring more likely to require qualifications or

accreditation

Likely that most organisations

value business experience over specific training

as a mentor



20

Most organisations do not focus on specific ‘life stages’ of firms


Mentoring providers were found to be more likely to target

– Early stage businesses– Those looking to grow– Micro businesses, but the percentage

targeting larger SMEs was greater than their share of the business population


36%

55%

44%

16%

30%

3%1%

0%

10%

20%

30%

40%

50%

60%

Pre-starts Start Ups (less than 3

years)

Established Exiting All of the above

Other High Growth

54%

66%

44%

25%

4%

20%

1%0%

10%

20%

30%

40%

50%

60%

70%

0 employees (someone

working for themselves)

1-9 employees

10-49 employees

50-249 employees

Large employers

All of the above

Other

Organisations by size target

Organisations by stage target

51%

31%

25%26%

43%

2%

0%

10%

20%

30%

40%

50%

60%

Grow Survive/Crisis management

Restructuring Access Finance All of the above None of the above

Organisations by strategy target

21

Most organisations do not focus on specific types of firms or entrepreneurs



• Two fifths of organisations offered support to particular disadvantaged enterprise groups…

• …but just 16% of organisation explicitly target specific types of entrepreneurs– A further 5% sometimes do so

• When targeting support, female owners, social enterprise and owners from BME groups were a key focus– Many other groups were also

targeted including areas of deprivation, ex-offenders, age specific (eg 50+) and people with learning difficulties

Whether organisation targets particluar types of entreprenuer

No, 79% Sometimes, 5% Yes, 16%

93%

77%

57%

43%

40%

40%

33%

33%

20%

17%

10%

7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Female owners

Social enterprise

Owners from BME (Black and Minority Ethnic Groups) communities

Within an area of deprivation

Owners with a learning difficulty and/or disability

Those out of work (e.g. if the organisation works with pre-starts and start-ups)

Ex-offenders

Age specific e.g. young people

Age specific e.g. over 55's

Other

Charity

Lone Parents

22

There are many women mentors and mentors from minority ethnic groups • Most large organisations (those with at least 10 mentors) have mentors who

are from BME groups– Organisation without any mentors from BME groups tend to be the smallest

• Three quarters of mentoring organisations have at least one female mentor.– Almost all of those without female mentors are small organisations– In over a third of organisations, between a quarter and a half of mentors are

women• Of the volunteers trained through Get Mentoring, 11% are from ethnic

minority groups and 41% are femaleShare of mentors in organisation who are BME by size of organisation

0%

10%

20%

30%

40%

50%

60%

0% 1-25% 26-50% 51-75% 76-100%

% of mentors who are BME

% o

f al

l org

anis

atio

ns

1

2 to 10

11 to 49

50 to 249

250 +

Share of mentors in organisation who are women by size of organisation

0%

10%

20%

30%

40%

50%

60%

0% 1-25% 26-50% 51-75% 76-100%

% of mentors who are women

% o

f al

l org

anis

atio

ns

1

2 to 10

11 to 49

50 to 249

250 +



23

Take-up amongst SMEs led by women and BME groups are higher than for all SME employers…


• Women-led SME employers are more likely to have used a business mentor in the last year– 15% of women-led SME employers had used a

business mentor, compared to 11% for all SME employers

• Black and Minority Ethnic Group (BME) led SME employers are more likely to have used a business mentor in the last year– 14% of BME-led SME employers had used a

business mentor, compared to 11% for all SME employers


24

Use of mentoring appears to vary by region – but no evidence there’s a lack of supply

4) Region

The percentage of businesses in each region that used a mentor

0%

2%

4%

6%

8%

10%

12%• SMEs in some regions are more likely to use a mentor than those in others

– Use in North East particularly low. Potentially an erroneous result due to small sample, but other surveys have shown that general use of business support is below average in this region

• More than two thirds of mentoring organisations operate at regional or local level

• Expected that there is a mentoring organisation based in each LEP

• However most mentors (64%) work for national organisations

Spatial coverage of organisations, percentage of organisations and by number of mentors

Local area, 21%Local area, 13%

Regional, 48%

Regional, 23%

National, 31%

National, 64%

0%

25%

50%

75%

100%

% Organisations % Mentors

Source: BIS analysis of SBS 2010 and GHK (2012) ‘Estimating the Provision of Business Mentoring’’

25

BIS is supporting activity that promotes the use of business mentoring

5) Policy Response

ConnectingBoosting Supply Raising Demand

16,000mentors already available

Over 2,000searches for a mentor each week

Access to 100mentoring organisations

200 new visitors every day

Target of 40,000mentors nationally

Over

5,500already trained

More than

10,500people have already registered

Creating up to 10,000new mentors

Almost 1 in 5employers currently aware of site

Training

15,000mentors

High Growth Coaching Programme

Over 40%female entrepreneur

11% from ethnic minority groups

22,000

11,000

14,000

111

Mentors already accessible

26

Organisations registered with Mentorsme are optimistic about potential benefits to them

• Organisations registered on Mentorsme were surveyed in January and February 2012, six months after launch. Results were encouraging:– Most organisations viewed their engagement with the Mentorsme portal

as positive (44%), with only 14 per cent having a negative experience– Almost two-thirds of organisations would recommend the mentorsme

portal to other businesses• Registered organisations identify the added value of the site as a credible and

impartial ‘one stop shop’

– Mentorsme was yet to generate a significant volume of traffic• Awareness of the website was still growing and half of those surveyed joined

after the launch, despite this 38% were already receiving referrals – This may be an underestimate the impact of Mentorsme as it does not

make direct referrals

– Since the survey was conducted use and awareness of the portal has increased.


5) Policy Response

27

Mentorsme now provides access to 111 mentoring organisations and up to 22,000 mentors

• The number of organisations available on mentorsme has almost trebled since launch…

• …and the number of mentors available has more than doubled

40July 2011

Organisations available on Mentorsme

111September

2012

Mentors available through Mentorsme

10,000

July 2011

22,000 September

2012

Source: BBA and SFEDI

5) Policy Response

28

Awareness and use of the Mentorsme portal are increasing

• Latest data indicates that almost a quarter of SME employers are now aware of Mentorsme

• Since launching in July 2011, Mentorsme has had over 90,000 unique visitors…

• …with more than 100,000 searches completed since October 2011

Percentage of SME Employers that are aware of Mentorsme(Source: BIS SME Barometer)

0%

5%

10%

15%

20%

25%

Aug 11 Nov 11 Feb 12 Jun 12

Source: BIS SME Barometer and analysis of BBA monitoring data for mentorsme

5) Policy Response

Visitors to mentorsme.co.uk(next update: 25.09.2012)

0

20,000

40,000

60,000

80,000

100,000

120,000

02-A

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Total searches (since 5thOctober 2011)

Number of unique visitors to sitesince launch

29

The Get Mentoring campaign and Bank Volunteers are increasing the availability of mentors…

• The Get Mentoring Campaign was launched in November 2011 with the objective of recruiting and training 15,000 new volunteer business mentors. By 12 September 2012:– 14,390 volunteers had registered and of these

9,766 had completed their training

• Over 1000 employees at British Banks are now trained business mentors and available to support new and existing small businesses

5) Policy Response

Source: BBA and SFEDI

30

…with the Get Mentoring campaign increasing the number of mentors in all LEPs

0

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Number of trained mentors (LHS)

Trained mentors per 10,000 registered enterprises (RHS)

Across England 36 trained mentors per 10,000 registered SMEs

Highest number of mentors have

been trained in London and the

North East.

However, as a proportion of the

registered business

population high numbers have been trained in the North East

and Tees Valley

This may address the apparent low

level use of mentoring in the

North East

5) Policy Response

Source: SFEDI and BIS analysis

31

BIS will continue to collect evidence on the use of mentoring and the impact of programmes it supports

• Small Business Survey 2012– The survey is underway and will provide the next

full assessment of use of business mentoring by enterprises of all sizes

• Mentorsme– Monitoring the use of the portal is on-going– The BBA and BIS are working with mentoring

organisations to consider further improvements to the site

• Get Mentoring– SFEDI are conducting research and evaluation to

understand outcomes

6) Next Steps

32

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Department for Business, Innovation and Skills1 Victoria StreetLondon SW1H 0ETTel: 020 7215 5000

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Documents

1 Enterprise Mentoring Summary of Evidence on the Provision and use of Mentoring by Small and Medium sized Enterprises 20 September 2012