The effect of business coaching and mentoring on small-to-medium enterprise performance and growth

This thesis establishes the extent to which business coaching is a driver of growth in small-to-medium enterprises (SMEs). Business coaching is defined as a collaborative relationship between experienced coaches and entrepreneurial leaders, focussing on business goals, entrepreneur development, and contribution to firm growth. Incorporating four inter-related studies using quantitative and qualitative techniques, this thesis addresses four questions: How does business coaching contribute to entrepreneurs’ performance and firm growth? What difference, if any, does a structured programme make to entrepreneurs’ perceptions of business coaching? What contribution, if any, does business coaching directly or indirectly make to firm growth? What have been the experiences of fast-growth entrepreneurs when receiving business coaching?

A comprehensive review of literature on coaching, mentoring, business management, consulting, and psychology reveals that these disciplines have a significant influence on, or have been adopted by, business coaching. However, there is a dearth of empirical research on business coaching, with extant investigations being largely case studies involving limited controls to rule out competing factors. Moreover, research to measure systematically the effect of business coaching on performance change, effectiveness, goal achievement, or entrepreneur efficacy has not been undertaken.

Study 1 involved interviewing two business coaches, and two entrepreneurs from lifestyle and fast-growth firms to explore the plausibility and classifications of assumptions pertinent to business coaching. Informing the next stage, Study 2 sought to establish measures for business coaching, and answer question relating to start-up entrepreneurs’ perception of business coaching when coupled with a structured training programme. Findings reveal that a structured training and business coaching programme positively influenced experiences of entrepreneurs who had previously received business coaching, with an important ingredient appearing to be the appropriate matching between business coaches and entrepreneurs.

Study 3 comprised 200 fast-growth entrepreneurs, 50% of whom used business coaches. Confirmatory factor analytic methods established clear links between business coaching elements including coaching styles, entrepreneurial level of confidence, and firm growth. The hypothesised model revealed that business coaches acting as sounding boards and effective listeners, tend to focus on vision, goals, strategy, customers, and production, thereby empowering entrepreneur’ self-efficacy, and ultimately leading to firm growth. In Study 4, 39 fast-growth entrepreneurs identified that rather than focussing on bottom-line results, they seek mainly to absorb business coaches’ experiences and knowledge, develop leadership and business skills, share points of view or ideas, and gain new perspectives. While apparent that particular coaching styles appeal to different entrepreneurs, having trusting relationships appropriate for their stage of firm growth, leadership need, and personal development are considered paramount.

This thesis suggests that specific components of business coaching impact entrepreneurs’ self-efficacy enabling them to solve problems, find appropriate solutions, and handle situations, resulting in firm growth. Following a systematic and comprehensive method of measuring outcomes, the thesis culminates in a Business Coaching and Firm Growth model. Providing evidence for the positive association between business coaching’s effectiveness and firm financial growth, these findings have both practical and theoretical implications, and form the groundwork for future research on outcome-based business coaching.