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Should the focus be on ‘scale-ups’ rather than start-ups?

December 01, 2014 by Mark Williams

Should the focus be on ‘scale-ups’ rather than start-ups?{{}}A new report commissioned by the Information Economy Council (a joint initiative between the Government and the private sector) argues that resources should be focused on helping “scale-ups”, because this could “contribute a million new jobs and an additional £1 trillion to UK economic growth by 2034”. The report defines scale-ups are enterprises [with 10 or more employees] that have “average annualised growth in employees or turnover greater than 20 per cent a year over a three-year period”.

Significant growth

The scale-up report on UK economic growth was written by Canadian-born but UK-based serial entrepreneur and investor Sherry Coutu, who sits on the boards of the London Stock Exchange, Zoopla, LinkedIn and others. In the foreword she says: “If we take action now to focus on ‘scale-ups’, we will secure significant growth in jobs, taxes and wealth, and the competitive advantage of Britain for generations to come.

“This report explains how a boost of just one per cent to our scale-up population should drive an additional 238,000 jobs and £38bn to GVA [ie gross value added – a measure of economic output] within three years. In the medium-term, assuming we address the skills gap, we stand to benefit by £96bn per annum and in the long-run, we stand to gain 150,000 net jobs and £225bn additional GVA by 2034.”

She adds: “With the supportive government policies, industry structure, geographic placement and talent supply we enjoy in the UK, we [can] create unrivalled national competitive advantage by increasing the proportion of companies that scale-up.”

Big disappointment

As Coutu explains, although more new businesses per capita are started in the UK than even in the USA, few scale-up into large companies, with Britain (0.5%) having a lower proportion of larger businesses (ie 250-plus employees) than the USA (0.7%) and many other nations.

In 2013 in the UK, according to Government-endorsed entrepreneurial campaign group Start Up Britain: “526,446 businesses were registered with Companies House, beating the 484,224 businesses recorded in 2012 and 440,600 in 2011.” But, about half of all new businesses fail within three years and most (90%) are gone within 10 years; only 4% of start-ups achieve a million-pound turnover after three years.

According to Coutu, high-growth, scale-up companies “contribute a disproportionate amount of jobs and growth to the economy, so closing this ‘scale-up gap’ is the most effective thing government, business and academia can do to drive economic growth.”

Analysis by RBS has found that closing the ‘scale-up gap’ could create 238,000 more jobs and £38bn in additional annual turnover in the UK within three years, while (innovation charity) Nesta estimates it could “be worth up to £96bn per annum to UK economic output”. Professional services heavyweight Deloitte says implementing the report’s recommendations could deliver a potential £225bn in additional GVA and 150,000 net new jobs over the next 20 years.

More ambitious challenge

“Britain’s start-up community is flying,” Coutu comments. “The next stage of creating wealth, prosperity and jobs will come from focusing on scale-ups. We have the chance to identify and support the companies that are already creating new jobs and help them further drive the UK economy. People often ask if the UK could be home to the next global success story, like a Google or Facebook. The answer is yes, but we need to be more effective at identifying the companies that have the greatest potential, and making sure they can find the most talented people and serve more customers, in more countries, more easily.”

She adds: “Getting our ecosystem to produce a greater number of scale-ups is more ambitious and challenging than producing a greater number of start-ups or celebrating entrepreneurs.”

Blog written by Start Up Donut editor and freelance SME content writer Mark Williams.

Further reading

British talent unites to support Small Business Saturday

November 27, 2014 by Mark Williams

Shop small{{}}According to American Express: “Godfather of Pop Art, Sir Peter Blake, one of Britain’s best-recognised supermodels, Daisy Lowe, and BAFTA-winning filmmaker Heidi Greensmith have come together to encourage the public to shop small on Small Business Saturday, 6 December 2014.”

Small Business Saturday is a campaign that encourages people to shop in local, small, independent businesses across the UK.  American Express supports the initiative, together with small business organisations, trade bodies, local authorities and others.

American Express founded Small Business Saturday in the USA in 2010 and it arrived in the UK in December last year. The financial services heavyweight has commissioned the trio to “use their talents to shine the spotlight on the nation’s small businesses”.

Nation of shopkeepers

Sir Peter Blake, world-famous pop artist who is responsible for the iconic Beatles LP cover for Sgt Pepper’s Lonely Hearts Club Band, is “creating a bespoke piece of celebratory art featuring small businesses from across the UK”. He says: “Small shops and the Great British shopkeeper have been at the forefront of British culture for hundreds of years.

“The notion of a ‘Nation of Shopkeepers’ is embedded in our folklore and the wonderful variety of today’s independent shops, as well as the character that small businesses bring to a local area, make them an ideal subject matter for modern pop art. Having worked at a local butcher at the age of 13, I have also experienced the dedication and hard work that goes into running a small shop. It is for all these reasons that I am thrilled to be lending my support to a campaign that champions small businesses.”

Daisy Lowe “will lend her support at an independent shop on Small Business Saturday”, while Heidi Greensmith “has turned her camera onto three independent shops to give small businesses a share of the limelight in the lead up to the Christmas shopping rush”.

Passion and commitment

Her excellent film, Saturday, can be seen on YouTube. It “captures the passion and commitment of the business owners”, including 36-year-old Cardiff fishmonger, Nick Bryant, as he gets up early and prepares for the rigours of his day. Olivia Brewer and Nik Blake, owners of Bath clothes shop FOUND, then feature, “as they give their customers the personal stylist treatment”. Finally, we find out more about Babette Kulik, 47-year-old owner of London bookshop The Society Club. “She sources first-edition books and holds unique literary events for her eclectic mix of customers”.

“Small businesses are an essential part of the local community, not only providing a personally selected offering for their customers, but also as a place where local people can simply meet up, catch up and feel looked after,” comments Greensmith. “I set out to capture and celebrate the unique role small businesses play in our lives and hope the film inspires the public to shop small on Small Business Saturday."

According to American Express research carried out after last year’s campaign, “43% of shoppers on the day chose specifically to shop at local independently owned businesses because of Small Business Saturday”. They each spent an average of £33, generating £468m for small businesses throughout the UK. More of the same this year? That’ll do nicely…

Blog written by Start Up Donut editor and freelance SME content writer Mark Williams.

Further reading

How GREAT is your British business?

November 24, 2014 by Guest contributor

How GREAT is your British business?{{}}

The Government’s Business is GREAT Britain campaign and BT Business have come together to launch the GREAT Faces of British Business competition, which seeks to recognise British “businesses with exciting innovation, growth and export stories”.

Winning entrants will be crowned champions of their region, before going forward to compete for national honours. The overall winner will win an exclusive package worth more than £30,000, including a bespoke advertising campaign, national and regional media coverage, an iPad Air and unlimited BT Wi-Fi for 12 months, as well as a package of export support from UK Trade & Investment (UKTI).

Entrants must be UK-based businesses with up to 250 staff. There are three categories – best exporter, most innovative small business and best growth story. Firms can enter one or all of the categories, depending on relevance to their business. “All eligible businesses must state why they deserve to be named one of the GREAT Faces of British Business,” say the organisers.

Business minister, Matthew Hancock, says: “Small businesses have been the driving force of our economic recovery. This is a top opportunity to celebrate the enormous contribution they make to villages, towns and cities across Great Britain.”

Steve Rathborne, director of sales, BT Business, says: “BT Business wants to help and support small businesses to succeed. The UK has a pedigree of producing innovative and successful businesses and leaders. That’s why we’re supporting the Business is GREAT Britain campaign, to discover and champion the entrepreneurial talent and to give businesses an opportunity to boost their fortunes further.”

Launched in 2013, the Business is GREAT Britain campaign aims to celebrate and inspire small businesses. It is run by the Department for Business, Innovation and Skills and UKTI and “provides relevant advice and information for small and medium-sized enterprises looking to grow, hire, export, lead and access finance”.

  • Click here to find out about the competition’s terms and conditions and to download an entry form.
  • See this year's star small businesses with this online Advent Calendar!

Further reading

30-second guide to guarantor loans for business

November 20, 2014 by Guest contributor

30-second guide to guarantor loans for business{{}}Guarantor loans are a type of unsecured loan and they can enable you to borrow from £500 to £10,000. They are a relatively recent innovation in the UK unsecured loan market, with the first lender appearing in 2004.

They differ from normal unsecured loans in that they do not require someone to be credit scored before they’re considered for a loan. With traditional unsecured loans, a lender will make a decision as to whether to offer a loan based on the applicant’s credit history and their current credit score.

Not so with a guarantor loan. The lender says if the applicant can offer someone to guarantee the loan, then the so-called guarantor clearly believes that the borrower will repay the loan.

Why would you consider a guarantor loan?

A recent study by UHY Hacker Young accountants found that bank lending in the UK is still stalling, down 2.2% in real terms last year, with smaller businesses being hit hardest, as funding problems continue despite the recovery.

Demand for loans is increasing, but the banks are generally not granting new requests unless they are from existing customers with a good track record and security. Many smaller businesses that have struggled through the recession but are now on a more stable footing are still being left out in the cold.

Who could act as your guarantor?

Guarantor lending is about “trust” and so it’s a good idea to use your social network to find your guarantor. It’s crucial that you look for someone you know well and who trusts you.

By offering themselves as your guarantor they are potentially exposing themselves to the risk of you not repaying the loan, in which case, the lender can require the guarantor to repay it. Whoever you want to act as a guarantor will also need to meet certain financial criteria. Consider family members, relations, close friends, work colleagues and business mentors.

What are the criteria for obtaining a guarantor loan?

These vary by lender, but in general:

  • You must be aged 18 or over.
  • You must be a UK resident.
  • You cannot be currently bankrupt of on an IVA (individual voluntary arrangement).
  • You must have a UK bank account
  • You will need to provide a guarantor

Are you guaranteed to get a guarantor loan?

No. Even though lenders want to lend and even if you satisfy the criteria above, lenders are – quite rightly – required to abide by a responsible lending policy.

Copyright © 2014 David Silverman. David Silverman is managing director of

Further reading

IP funding competition

November 17, 2014 by Mark Williams

StudentshIP Enterprise Awards 2014{{}}

Enterprising university students who enter the StudentshIP Enterprise Awards 2014 could win funding for their projects thanks to a competition launched in October, but the deadline for entry is fast approaching.

The StudentshIP Enterprise Awards 2014 will provide funding worth between £10,000 and £100,000 for projects that “bring together enterprising students, businesses and their local community to work on innovative projects. In-house projects or collaborations with other universities or businesses that create, manage or exploit intellectual property will all be considered.”

The awards encourage the practical application of intellectual property (IP) skills by higher education students working in collaboration with higher education institutions and/or businesses. The main purpose is to recognise and reward “student-centric projects that support the use and understanding of IP in student enterprise activities”.

Minister for IP, Baroness Neville-Rolfe, says: "This new competition will encourage enterprising students and academics to collaborate, so that their ideas for creating and exploiting intellectual property can be turned into reality."

The competition is open until 12 December 2014. Finalists will be announced in January and the winners declared in March 2015. An application form can be downloaded from the website, as well as guidance and terms and conditions.

Not all graduates dream of a job with a large corporate in London

November 17, 2014 by Mark Williams

Why bright students are drawn to small businesses - Mortar boards being thrown into air{{}}

“More than ever, students go to college [university] because they want to get jobs – good jobs,” states Navneet Kapur (“Product Innovator, Higher Ed Data Vigilante at LinkedIn, San Francisco Bay Area”), writing on the LinkedIn Official Blog. “To that end, students and parents want to know which schools give them the best chance at getting a desirable job after graduation. This is where we can help.”

He continues: “By analyzing employment patterns of over 300 million LinkedIn members, we figured out what the desirable jobs are within several professions and which graduates get those desirable jobs. As a result, we [can] rank schools based on [graduate] career outcomes.”

Kapur goes on to define a “desirable job” as a “job at a desirable company for the relevant profession. We let the career choices of our members tell us how desirable it is to work at a company.”

University challenge

According to LinkedIn’s UK University Rankings, if someone wants to become an investment banker, they will greatly improve their chances if they study at the LSE (London School Economics and Political Science, which, perhaps somewhat less predictably, also comes out on top for wannabe marketers), UCL (University College London), Cambridge, Oxford or Warwick universities.

If they dream of working in finance, getting on a relevant course at the LSE, UCL, Cambridge, Imperial College London or the University of Warwick would be a wise first step. And, for a career in the media, best head for the universities of Leeds, Oxford, Nottingham, Cardiff or Durham.

No doubt LinkedIn has the very best of intentions with their university rankings, but they ignore two key points. Firstly, many graduates build great careers after taking positions with small businesses, where they can also find (equally if not more) “desirable” jobs. Secondly, UK universities are now a fertile breeding ground for enterprise, with starting a business continuing to prove an irresistible attraction for many students.

Small is beautiful

“Many of our graduates welcome the opportunity of working for smaller businesses,” says Hannah Newmarch, head of employer partnership services at the University of the West of England (UWE) in Bristol. “We support SMEs in our region that want to recruit graduates and we help to fill hundreds of vacancies each year.”

Not all UWE graduates are attracted by the prospect of working in London, either, as Newmarch explains. “Each year, about half of our graduates stay in the West of England region, which is home to almost 37,000 SMEs; there are far fewer large corporate employers here. Many graduates make their decision based on the role and not necessarily just company size. Many end up at small firms doing exciting, innovative work in sectors that are buoyant in our region, such as media and engineering.”

Choosing to work for a smaller business can offer many benefits, she says. “In an area such as Bristol, where many SMEs are highly successful, students recognise that opting to work for a small business can bring them more responsibility, greater experience and other career opportunities sooner. Many students now recognise these benefits. Earlier this year we held an SME-only employer fair and more than 700 students attended.”

Enterprise culture

As Newmarch also stresses, enterprise culture is thriving at UWE and other UK universities. “In 2013/2014, 241 UWE students/graduates set up their own business. It remains a challenge, of course, but we provide a ‘safe place to fail’, so students can test and develop their ideas with mentoring and support from our staff.

“As well as learning about enterprise, they can develop their networks and hone skills such as leadership, commercial awareness, personal branding, etc. They might not set up a business on graduation, but they may start up after gaining experience by working for someone else.”

Newmarch says the last thing many graduates want is to end up a very small cog in a large wheel. “Running their own business gives many people more autonomy and greater opportunity to pursue their passion, using knowledge and experience gained at university. Some of our former students who are now successful entrepreneurs return to give inspiring talks to our students.

“Whether working for a large or small business, not everyone wants to live in London. Bristol was recently voted the best place to live in the UK. It has one of the largest economies in the UK and there are exciting opportunities for growth here. Why would you want to go anywhere else?”

Blog written by Start Up Donut editor and freelance SME content writer Mark Williams.

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