Review of the Business Start-Up Award for the 18-30s

The Business Start-Up Award is a £1,000 grant, targeted at businesses started by people aged between 18 and 30. The Scheme was launched as a pilot exercise which ran from October 2004 to March 2006 and aimed to provide 4,500 grant awards to businesses with a lead partner in this age group during the pilot period; create 5,500 gross jobs at the end of three years; and generate net sales of £19.4m at the end of three years. The evaluation aimed to assess the impact of the Scheme as it approached the end of the pilot stage. It assesses its effectiveness in terms of its potential economic impact and its contribution to Scottish Enterprise goals under Smart Successful Scotland.

The methodology consisted of a survey of a sample of 400 businesses that have received an Award; consultation with key stakeholders in Scottish Enterprise; consultation with Business Gateway managers from a range of LECs, supported as necessary with discussions with contractors delivering Business Gateway services; and desk based research.

It finds that the Scheme appears to have been successful in encouraging business start-ups in the 18-30 category as starts in this group increased by 150% over the first 11 months of the pilot. It is suggested that the client group may suffer from an information failure in terms of where to go for finance with 41% of respondents stating raising the necessary finance as a difficulty encountered and 48% of those that had not tried to get finance from another source stating that they would not have known where to go for financial assistance prior to participating in the Scheme. The management and delivery of the Scheme was found to have been sound and the marketing of it highly successful. However, significant concerns regarding the economic impact and value-for-money of the programme are expressed. The Scheme appears to have fallen considerably short of its target for the generation of net sales and the quality of the businesses started are said to be questionable.

It is recommended that Scottish Enterprise and the Scottish Executive reflect upon the lessons learned from the pilot scheme in determining the future of the Award and suggests that there are significant reservations in recommending the continuation of the Scheme. If it is to be continued, it is recommended that it be targeted at those applicants that can demonstrate a business plan to a set of required standards set out clearly for Business Gateway Advisers to allow consistency in approach and to ensure that the funding is targeted at those businesses most likely to survive and grow, thus contributing to the Scottish economy.