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A Presentation originally delivered to Lancashire County Council analyzing High Growth Businesses in the County of Lancashire
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Growing Our Way Out of Recession: Supporting Fast
Growing Companies
Friday 12th November 2009Ged Mirfin – BLNW Chief Data Officer
Landes Land – Lead Data Warehouse Developer
Presentation to Lancashire County Developments Ltd.
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
Action Plan Themes: Intensively Assisted GazellesTheme Occurances % Theme Occurances %Sales & Marketing 18 12.68% Export 6 4.23%
Training, Skills & Workforce Development 16 11.27% Staffing, Recruitment & HR 4 2.82%
Supply Chain Membership & Network Access 15 10.56% Graduate Placement 3 2.11%R&D, Innovation & NPD 12 8.45% Environmental Directives 3 2.11%
Business Diagnostics, Benchmarking & Planning 12 8.45%
Knowledge Transfer Programme 2 1.41%
Raising Finance, Capital Expenditure & Debt Refinancing 10 7.04% IPR 2 1.41%
Leadership, Management & Business Coaching 8 5.63% Subsidiaries 1 0.70%Process Improvement, Efficient & Lean Manufacturing 8 5.63% Health & Safety 1 0.70%CRM & Database Management 7 4.93% IT 1 0.70%
New Market Entry & Market Research 6 4.23% Succession Planning 1 0.70%
New Premises, New Build & Business Relocation 6 4.23% Total 142 100.00%
Action Plan Statistics
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
Locating Gazelles: Geography & Sector
• Key Segments (82.45% of Total) include: Developing Dynamos (29.1%) - Newer Independent Businesses involved in Specialist Wholesale, & Retail, Business Support Services & Recreation employing Highly Skilled & Productive Staff; Support Supremos (28.64%) New “Knowledge-Based” Businesses Especially Prevalent amongst Digital & Creative Sector - Crossover Media Businesses and Hi-tech Highlights (24.71%) Highly specialised type engaged in the manufacture of specialist equipment and precision instruments especially telecommunications & IT, based on Specialist Industrial & Technology Parks.
Gazelles – Defining Features• Gazelles concentrated in Strategic
Investment Areas - 62.36% in Objective 1 & 2 Zones
• 58.43% however are concentrated in Wards exhibiting Average or Above Prosperity
• SIC is virtually useless when it comes to identifying Gazelles 25.17% of the Gazelles we identified have SIC Codes beginning with Other or Ending with the phrase Not Elsewhere Classified!
• 65.13% of the Gazelles we identified had a turnover less than £5M.
Lancashire
• 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
How can we work together to ensure that we combine BLNW’s intelligence with
the experience we have in the region?