Re-evaluation 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 years, with the aim of increasing the number of businesses started by that age group. The evaluation follows up on a review undertaken at the end of the pilot stage of the award, and aims to gain an insight into the performance of the businesses supported and to look at their sustainability and growth over a longer time period.

A follow-up interview survey was carried out with one hundred of the companies interviewed for the original review. An analysis of monitoring data on award activity, collected by Scottish Enterprise, was also conducted.

The Business Start-up Award has a strong policy and strategic fit with the Enterprise Network’s goals, and appears to be contributing to addressing the gender imbalance in the start-up arena. Of the 100 respondents in the survey, the support has generated 16 additional start-ups and helped an additional 57 start-ups start sooner, on a larger scale or higher quality. Taking into account deadweight and displacement, the overall net turnover impact for 2005/06 was between £9,786 and £24,650 per company. The net employment impact for 2005/06 was between 0.08 and 0.49 FTEs per company and the net pre-tax profit was between £7,122 and £10,184 per company. Taking into account the direct, indirect and induced impacts the net impact per company rises to 0.5 FTEs and £31,405. In terms of value-for–money, the impact results for 2007 seem reasonable. There is a strong indication that the companies are growing and appear to be profitable, and have exceeded the target for turnover set by the award. However a small number of companies have a disproportionately higher turnover that brings up the average.

It is recommended that the Business Start-up Award is not continued as a volume intervention, but that it is targeted more effectively at those businesses most likely to survive and grow thus contributing to the Scottish economy. This could be done by imposing more rigorous eligibility criteria to ensure that business plans are to a required standard.