This paper investigates the role of the graduate in the small firm sector. It attempts to ascertain to what degree barriers to graduate recruitment still exist in the sector and looks at ways in which academia and industry can develop closer links in order to increase graduate skills. The authors’ hypothesis was that barriers to recruitment were gradually being overcome and that graduates had an entrepreneurial role to undertake in the small firm sector. The empirical research was undertaken amongst small firms based in Scotland, a combination of users of graduates and non users. In order to better equip graduates for the employment market, the research aimed to ascertain to what extent graduates’ skills were compatible to the needs of industry. The research results demonstrated that in a high proportion of firms graduates were undertaking an entrepreneurial role by providing the firm with new ideas and an objective viewpoint, but the majority of respondents felt that graduate skills were not entirely compatible to their needs. It is essential therefore that the links between academia and industry be established in such a way as to foster greater integration of the small firms’ requirements into the curriculum and that academics continually monitor the needs of this sector. The Local Enterprise Companies have gone some way to bridging this gap by providing an interim training facility for the small firm sector.