Entrepreneur's Forum scale-up speech
I am a great lover of music from the late 1970’s. One of my favourite tracks is Ian Dury’s ‘Reasons to be Cheerful, part3’. His list includes everything from NHS glasses to a ploughman’s lunch!
After the shock of Brexit and the doom-laden commentary that followed, I’ve been reflecting that there are many reasons to be cheerful about how the economy is performing in the North East.
Last week businesses in Durham were invited to the opening of the new Salvus House. It is a place where new and existing firms can grow – in the jargon it is an ‘incubator’. The agency, Business Durham, has made an impressive job of Salvus House. It adds to other impressive successes in Durham recently; jobs have come as a result of inward investors, from Hitachi at Aycliffe to a new call centre operation call ResQ which will employ 200 people in Seaham.
Elsewhere in the North East, the news that Nissan has shaken off the Brexit blues by announcing an investment in new 4x4 vehicle production and the opportunities presented by the announcement of Heathrow expansion will provide a longer term boost.
One organisation that is an unashamed cheerleader for business success is the Entrepreneurs’ Forum. Its members are a large cohort of the North East’s scale up businesses, and these are the businesses the North East needs most.
My own business has scaled up. In PR there are numerous practitioners that work from home. They are all nice people, but like many of the self-employed, they are not scaling up their operation to create a business that adds to the secure employment of others. I understand this; I started my business from the back of a Fried Chicken shop in the late 1980’s, before the business expanded to my bedroom. Eventually, after winning 15 contracts, I realised I needed help and decided to hire. It wasn’t an easy decision as it involved obligations to somebody else and a sense of responsibility towards their income and financial well-being.
Just last month I spoke to a self-employed heating engineer who is working 80-100 hours a week. He was servicing my boiler at 8pm one night and told me he hasn’t had a holiday for two years. He has a van, the tools, relevant safety certificates but has got stuck in a rut unable to break free and scale up. He asked for some mentorship which, as a good Entrepreneurs’ Forum member, I was happy to provide. I reminded him of the quote from Mark Twain, who said: “The secret to getting ahead is getting started.” Today he is in talks with a similar tradesman who conducts electrical repairs, two skills that are aligned but not competitive – they are discussing sharing a secretary and marketing a joint operation that will take on an apprentice. They have begun the scale up journey.
The most frightening thing about any journey is the first steps and when a business is scaling up it feels there are many first steps - Registering for VAT, employing the first person, renting your first premises, the first legal dispute, the first bad debt; but scaling up is worth it.
Every year the Government publishes the UK business population statistics. It is no surprise that areas of the country that have the most businesses per 10,000 of population are also the most prosperous.
Last year the North East had a business population of 629 per 10,000, this year that figure has gone up by 50 to 679 per 10,000 of population. This is the highest increase of any region in the UK – with growth of 7.9%; ahead even of the mighty South East, which dominates the UK’s business population. Given that we have a population of over 2.5 million people that represents more than 12,000 new businesses in only one year. If every one of these were to scale-up a real dent could be put in our unemployment numbers. Businesses owned by Entrepreneurs’ Forum members have increased employment numbers, grown exports and are positive about opportunities in the post-Brexit economy. In a survey 68% of the companies have told the Entrepreneurs’ Forum they expected to increase the number of people they employ, 52% expect to see an increase in export sales in 2016/17, and the majority of companies also reported positive performance and expectations when it comes to stock level, capital expenditure, prices, remuneration, profit, and overall sales.
The biggest challenge identified is the skills gap, 30% highlighted a lack of skilled workers as their biggest issue. Putting this in perspective, 11% said this was competitive pressures and 10% said it was the effects of Brexit. In a testament to the resilience of the North East’s entrepreneurial businesses, only 2% said a lack of confidence or economic uncertainty was the top challenge.
If all this doesn’t provide the North East private sector economy with reasons to be cheerful I might as well, as Ian Dury said, “get back into bed!”