Finance, Training and SME Performance: An Evaluation Study of the Small Business Initiative (CBR project)


Aims and objectives

The aim of this project was to investigate the impact on small business performance of financial management training and in particular to evaluate the impact of the Small Business Initiative. The Small Business Initiative is a DTI-sponsored financial management training scheme for SMEs, completion of which is associated with financial incentives offered by participating commercial banks.


The analysis involved the comparison of the pre- and post-course growth, profitability and financial performance of participating firms compared to a non-participating control group, as well as the impact upon the introduction within businesses of a range of intermediate financial control systems and management practices. Attention was also paid to the attitude of banks to firms participating and not participating in the scheme and the consequent implications for access to finance of the scheme. The research design paid careful attention to problems of self selection in policy evaluation. This problem arises when “good” firms are also firms which choose to train.

The principal method of analysis was the econometric analysis of a complex panel survey data set compiled by repeat surveys of a sample of several hundred users and a matched sample of non-users of the SRI package. The econometric methodology used Heckman Two Stage estimation procedures to deal with “self selection” into training and robust multivariate regression techniques to deal with the problem of outliers due to the heterogeneity of small business performance.


The analysis revealed that the SBI training package had a significantly positive impact on self assessment of management competence, and upon the introduction of a wide range of financial management techniques. There was not a statistically significant impact on the probability of survival, or bottom line profitability or growth performance of firms undertaking SBI compared to non-users. However, the independent views of bank managers and personal business advisers concurred with the positive self assessment impact of the participants.

Project leader

  • Andy Cosh

Other principal investigators

  • Alan Hughes
  • Mark Cox

Project status




Cosh, A.D., Cox, M., and Hughes, A. (2001) Evaluation of the Golden Key Component of the Small Business Initiative, British Bankers Association, London.