Growing Our Way Out of Recession: Supporting Fast

Growing Companies

Thursday 12th November 2009Ged Mirfin – BLNW Chief Data Officer

Landes Land – Lead Data Warehouse Developer

Presentation to the Mersey Partnership 1st User Group Meeting

What is the BPI• Nationally Recognised “Business Objects” data

base covering businesses in the North West.• An evidence based data warehouse.• Used to inform decision makers about planning

interventions or policies.• Compliant with Data Protection legislation • Is the central repository for Business Link data

and Management Information• A system that can map commercial business

classification systems to the language used in Local Government and Business Support

• The first B2B profile driven database in the public sector

The Business Barometer is Changing from Stormy to…?

80

100

120

140

160

180

200

220

240

Year 0 Year 1 Year 2 Year 3

Per

cen

tag

e UK Average

Gazelle Low

Gazelle High

Which companies will lead us out of recession?

Can public sector support agencies identify these

companies…

... and should we?

Which Companies Will Lead Us Out Of The Recession?

• Some Economists believe that 50% of new jobs will be from less than 1% of a regions company base.

• High Growth companies (Gazelles) will increase Turnover by between 25% and 30% in the next 4 years.*

• Although Employee Growth will lag behind it is likely to be in the region of 20% per annum.*

• Can Public Sector agencies stimulate growth and ensure that Gazelle Companies fulfil their maximum potential?

• Can Public Sector support agencies engage effectively with these companies and should we try?

*NESTA – “Measuring Business Growth: High-Growth Firms and Their Contribution to employment in the UK” – Oct 09

Tracking Gazelles• Route out of recession is to back gazelles

• A gazelles are defined as small, fast growing companies (in reference to the fact they can jump higher and run faster than their peers),

• Gazelles according to one accepted definition are defined as companies that have experienced at least 60% growth in employment and additionally deflated turnover (turnover adjusted for inflation) over a 3 year period.

• But…they are extremely difficult to spot

• In the current economic climate especially so….

• Many Gazelles caught in the cross-hairs as the economic recession continues to find its mark wounding some, badly disabling others and bringing an unfortunate minority to their knees

• 3 Years Growth is now more likely 2 Years Growth and 1 Year of Decline

• Some Gazelles are now not able to run as fast or jump as high

• Even in more favourable Economic conditions trained Business Hunters found Gazelles difficult to target:

Conserving Gazelles

Young (Late 20s/Early 30s), Highly EducatedBusiness Owners

Scientists and/or Academics

Prominent Markings to look for:

IndependentBusinesses

Niche activities or Specialised Product Offerings within Older or Traditional Industries

High Technology Knowledge –Based Businesses

Advanced Manufacturing using Precision Technology

Entrepreneurial

Based on Specialist Industrial Parks & Technology Centres

Newer Businesses do not have SIC Codes

Opposite Ends Risk Spectrum 75% Low/25% Very High Risk

•Commercial MOSAIC segmentation system includes:

•Demographics – Age of business, number of employees, turnover, principals’ background•Classification – Businesses with shared demographics are grouped together•Propensity – Broad description of the classification that indicates a business’ likely behaviour, for example, in its purchasing.

What is Commercial Mosaic?•Commercial MOSAIC is a business classification system•Categorises UK businesses into 13 groups and 50 distinct types, based on key variables that influence business behaviour•It uses a descriptive naming convention

The Family or Genus GazelleCommercial Mosaic

GroupCommercial Mosaic

TypeFeatures

Monumental Monoliths Farsighted High Flyers

Directors under 30 & Well EducatedHighly productive and skilled work forceMature businesses -64% Employ >100Large Range Business Activities inc. Food, Manufacturing, Textiles, Recreation, Sport, Luxury Goods – Niche BusinessTrade Specialist Industrial Centres or Retail Parks

Specialist Suppliers Hi Tech Highlights

Highly specialised type engaged manufacture specialist equipment and precision instruments esp. telecomms & ITMedium Sized BusinessesIndependentBased Specialist Industrial & Technology Parks

Independent Entrepreneurs Developing Dynamos

Newer Independent BusinessesHigh Risk – 30% Chance FailureWide Range Activities: Specialist Wholesale, & Retail, Business Support Services & RecreationSmall Business but with Very High Amounts of Turnover from Highly Skilled & Productive StaffEspecially Prevalent in North West

Independent EntrepreneursFledgling High Fliers

New Independent Businesses. One Third 2 to 3 Years OldSo New many not have SIC Codes assigned to themHigh Risk – 346% Chance FailureWide Range Activities: Specialist Wholesale, & Retail, Business Support Services & RecreationOne Third Grow to Employee Much Larger Nos. of EmployeesAs Specialist Suppliers first move is generally to specialist industrial parks

Energetic Enterprises Professional Professors

Independent Low Risk High-Tech BusinessesEngaged Diverse Range of Activities but esp. R&D and Chemical Processing, Especially Prevalent in Northwest Trading from Specialist Industrial & Technology Centres near Universities & Hospitals

Energetic Enterprises Support Supremos

New “Knowledge-Based” BusinessesEspecially Prevalent amongst Digital & Crossover Media, Support Services to Financial Industry – High SalariesLow Risk Businesses in Areas of High Prosperity. Serviced Offices

GazellesA gazelle company is an American expression for small, fast growing companies ( in reference to the fact they can jump higher and run faster than their peers), that creates many job opportunities. Fast growing firms ("gazelles")

are defined as companies that have experienced at least 60% growth in employment and additionally deflated turnover (turnover adjusted for inflation) over a 3 year period.

Baby Gazelles:

Young, and usually small, high growth

enterprisesYoung, start-up or spin-

out firms.“Adolescent” High-Tech

Companies.

Developing Dynamos, Fledgling High Flyers,

Professional Professors

Galloping Gazelles:

Fast-expanding “little giants”. Dynamic SMEs

often in newindustries that generate large numbers of new

jobs.The subset of high-growth enterprises

which are 3 but typically

5 years or older.

Hi-tech Highlights, Support Supremos

Large Gazelles:

Gazelles who turn into major corporations. Grow very quickly from Start-Ups into

LargeOrganisations

Farsighted High Flyers

“Early Start-up phase:

Up to 3 Years”

“Early Maturity Phase:

3 to 7 Years”

“Late Maturity Phase:

7 to 10 Years”

How do you Identify a…North West Actively Trading Business Locations (425,770)

MOSAIC Gazelles (66,700)

Age Over Three Years (18,491)

Turnover Above £400k (1,465)

Employing 10+ (440)

…company that is in a potential high growth classification…

…that is mature…

…with a reasonable turnover…

…employing 10+ people?

The Power of the BPI: Identifying High Growth Potential Companies

-This information is based on data provided by Experian. The data has been subject to further analysis by Business Link North West  

What do these look like?

North West Actively Trading Business Locations (425,785)

MOSAIC Gazelles (66,702)

Age Over Three Years (18,490)

Turnover Above £400k (1,464)

Employing 10+ (440)

The Power of the BPI: Identifying High Growth Potential Companies

-This information is based on data provided by Experian. The data has been subject to further analysis by Business Link North West.  

The power of the BPI: identifying potential high growth companies

-This information is based on data provided by Experian. The data has been subject to further analysis by Business Link North West  

The size of the prize – economic impact

Estimate Estimate

11,125 £445m

Current Headcount Current TurnoverEstimate Estimate

120% 100%

3 Year Headcount Growth 3 Year Turnover Growth

25 £1.0m

Average Headcount Average Turnover

445

High Growth Companies

Estimate Estimate

13,350 £445m

New Jobs New Turnover

The difference with Gazelles is not the type of question they ask it’s the complexity of the issue they face…

Category of Assistance

R&D, Innovation and NPD

Sales & Marketing

Training & Skills

New Machinery, Process Improvement, Retooling

Capital Expenditure

Relocation & New Premises

Export

Relationship Management, Networking, Membership Cluster Organizations/Networks

Gazelle Specific Example

Collaborating with local Higher Education Institution in Grant Funded R & D Knowledge Transfer Project

Market Scoping Research Project on Need for Specialist Footwear for those who suffer general foot discomfort in order to offer products into the mainstream market

Training of Specialist Staff working in the construction, manufacture and assembly of equipment in the Nuclear Industry

Improvement Production Processes in Specialist Marine Manufacturing Company producing products for the offshore oil extraction industry

Access to Finance for Relocation Precision Manufacturing Plant

Consolidation of Manufacturing Plant on Single Site Location including relocation Welsh Manufacturing Plant to North West

JV in Eastern Europe

Obtaining Membership of and Maximising Network Opportunities through the Northwest Aerospace Alliance

• Gazelles require complex kinds of support placing much higher levels of demand on Public Sector Agencies

• Gazelles are “Elite Businesses”.

• Supporting them is resource intensive requiring prioritisation at the expense of existing Business Sectors!

• Should We Be Doing This?

Issues

Measuring Impact Over Time

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20

40

60

80

100

120

01/0

3/09

15/0

3/09

29/0

3/09

12/0

4/09

26/0

4/09

10/0

5/09

24/0

5/09

07/0

6/09

21/0

6/09

05/0

7/09

19/0

7/09

02/0

8/09

16/0

8/09

Date

Commercial Delphi Score Trends

Britplas Ltd (IntAssisted)

Stanley Securities CCTV Ltd (IntAssisted)

Arena PlasticsLimited

Distant Horizons UKLtd

ServiceAir UK

Sample of 5 companies Commercial Delphi risk score over last 6 months

Benchmarking Against Sector Performance

Commercial Delphi Risk – Sample of Companies Intensively Assisted Compared to the Merseyside and Greater Manchester Average (Last 12 Calendar Months)

How can we work together to ensure that we combine BLNW’s intelligence with

the experience we have in the region?