There is a relationship between the odds of a business surviving and if they took on an apprentice. It was found that of the businesses that survived 15 years, 75% of them either currently had an apprentice or had previously employed one. It was found that some businesses have an aversion to taking on an apprentice. If those businesses took on an apprentice, they may have a better chance of not going out of businesses within their first 15 years of operation.
There are several reasons why a business should take on an apprentice, with benefits both for the business and the industry. This report is a follow on from Employer training engagement with ITOs. In that report, the engagement of businesses with apprentices was explored based on business size, while in this report the focus is more on business maturity. It is useful to understand the likelihood of a business taking on an apprentice based on their maturity to assess if there is the capacity for more businesses to take on apprentices. This report also demonstrates the survival rates of businesses that took on an apprentice against those who did not.
The chart below tracks businesses from their birth year based on whether they are still in business or not. Of those that are still in business, they are classified by if they have employees, and if so, do they have an apprentice or have previously had one. In the birth year, most businesses are sole traders. It can be observed that after 10 years, 71% of businesses go out of business. After 15 years only 22% of businesses survive. Just over 9% of businesses will take on an apprentice in their first year, which increases slightly to 13% in the second year as more businesses take on an apprentice.
If the chart is narrowed down to include businesses that have employees only, therefore excluding sole traders and out of business, most businesses that are still in business have an apprentice or have had one in the past. Of the businesses with employees, a business that was born in 2003 was three times as likely to still be in business after 15 years if they have had an apprentice within their lifetime. The construction sector saw a higher proportion of businesses survive that had had an apprentice at some point than the manufacturing sector. Overall, manufacturing had a higher survival rate of businesses after 15 years.
This Sankey flow chart demonstrates the transition of businesses between being a sole trader, an employer without an apprentice, an employer with an apprentice and out of business. Maturity demonstrates how many years the business has been in operation.
This chart takes the information from the above Sankey flow chart and works out the percentage of those who are not currently employing an apprentice that will take one on in the following year. This information demonstrates that there is a downward trend, meaning the longer a business has been in operation without an apprentice, the less likely they are to take one on in the following year. Businesses that are more inclined to take on an apprentice are more likely to do so within the first few years of operation. This result also demonstrates that there are some businesses with no interest in taking on an apprentice. The trend for sole traders is largely due to fewer sole traders transitioning into an employer, rather than them having an aversion towards employing an apprentice.