A lack of good management skills in small IT firms is hindering their growth, according to a new report by the Confederation of British Industry (CBI).
The report highlights the need for better management teams in the UK's small, growth-oriented technology-based firms, to attract finance and overcome the difficulty of breaking into new markets.
Its publication comes as the Labour partyplans to launch an initiative aimed at improving the competitiveness of small IT companies. The plan includes the setting up of a database of "technology angels" - informal venture capitalists keen to invest in small firms. Labour leader Tony Blair is also expected to launch a Michelin-style guide aimed at tackling skills shortages in small firms.
Sponsored by venture capital group 3i, the CBI report says a strong management team is crucial to the success and growth of smaller, technology-based firms, but that finding experienced managers who also understand the technology and its markets can be especially difficult.
The CBI has come up with a series of recommendations, including: creating teams of experts to work with companies having difficulty raising finance because their management team needs developing; setting up sector specific networks/databases of experienced industrialists who could be matched with small high-tech firms requiring management input; and local business links to help build management teams around new technological developments.
The report also urges the government to increase the number of technology specific lenders as part of its Loan Guarantee Scheme to assist small technology firms in raising capital for research and development.
Tax breaks for owner-managers wishing to invest in their own businesses would further help, said the CBI.
Adair Turner, the CBI's director general, commented: "The technology sector plays a vital role in the UK economy, forming a seedbed for innovation, leading the way in new technological developments and creating sources of new growth.
"However, despite the importance of this sector, it appears that the UK may be failing to exploit fully the wealth-creating potential of its tech stars (small tech firms). Having a strong domestic technology sector is essential to the long term health of an economy."
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