How SME owners' characteristics influence external advice and access to finance

Objectives: This paper aims to investigate the linkage between the use of external advice and access to finance for small and medium-sized enterprises (SMEs) in the UK, with particular consideration of differences in personal characteristics: gender, ethnicity and education. Prior work: There is little evidence on gender, ethnic and educational differentials in obtaining external advice, with the exception of a paper by Barrett (1995) comparing the use of external advice by men and women. In the UK an extensive programme of research into the use of external advice has been undertaken, primarily by Robert Bennett and Paul Robson drawing from the Cambridge Centre for Business Research survey of SMEs in manufacturing and business services. A large number of other articles investigate business advice, but few attempt to make comparisons by personal characteristics. Approach: The approach adopted for the research is a telephone survey conducted by the Barclays small business research team in late 2005 on behalf of the authors. These data are quantitative in nature and involve a large sample of 400 SMEs with specific questions analysed by gender, ethnicity and education level. The approach adopted is robust and empirically sound and is a long established research methodology. Results: We find that there appears to be a correlation between the provision of external advice and the ability to raise bank finance. Furthermore, there are clear gender, ethnic and educational differentials in the use of particular sources of advice which are explored in detail in the paper. Implications: The study is of much relevance to policy-makers and providers of external advice (whether private sector or Government backed sources of advice) in that it provides insight into differences by personal characteristics, and secondly into the correlation between business advice and accessing finance. Value: The paper is the first that compares sources of external advice by gender, ethnicity and educational level and is therefore a major contribution to the already highly-developed literature on external business advic