A paper which explores the concept of growth. It argues that there is no automatic link between growth and employment. It further argues that emtrepreneurs are not necessarily driven by a desire to grow big buinesses with large numbers of employees. The paper goes on to look at whether growth is automatic looking in detail at the barriers to growth. It finally addresses the issuesof whether entrepreneurs are born and not maade asking whether it is possible to teach entrepreneurialism. It concludes by focussing on the concept of linkage between a whole series of factors and the role that chance or uncertainty plays in all this. This is why wellhead strategies are important - small turns in the tap of growth by very big companies can massively benefit and lead to subsequent growth in the direct and indirect suply chain. This cascade model is particularly relevant to Lancashire which is home to a range of wellhead companies.

1. The Growth Aspiration
Achievement Gap
By
Ged Mirfin

2. For the vast majority of Business Owners, based on a large tranche of research, growth is
not an objective. Whateverassistance is available from growth hubs or accelerators,
recruiting and hiring additional employees is not their objective.
In one of the largest studies of its kind conducted by the Cambridge Small Business
Research Centre in an article entitled "Identifying Fast Growth Small Firms" Hakin found
that at any one time 55% of firms had no plans for growth in even the most favourable
economic conditions.
In comparison 15% of Business Owners were looking for significant expansion. The study
reported that of these 22.5% of small firms within manufacturing and business services
saw their objective as being to grow substantially whilst 64% sought moderate growth.
The key issue is that the proportion of firms seeking growth is much much higher than the
proportion of firms actually achieving growth. Indeed those Business Owners which are
not actively seeking growth are reluctant toadmit this to researchers. This leads to an
over estimation of the amount of growth potential which is present in the economy. It
also calls into question the amount of dedicated resource which is being invested in
cultivating a growth mindset campaigns within growth accelerators and business hubs.
The latest defence of such growth acceleration now offers the assertion that growth is
somehow organic - that businesses grow within themselves because it is independent of
external stimuli or forces. The reverse is also true - that long-established businesses grow
primarily by means of merger or acquisition. Whicheverexplanation one subscribes to it is
clear that growth measures are not correlated with each other.
What we need to do better is to understand the constraints - the barriers to "growth
achievement". There is a failure to understand both the risk and opportunity structures
which are inhibiting business growth. This raises a number of questions in itself about the
nature of growth and where it comes from. Is entrepreneurialism simply another way
therefore of characterising someone who is a "go-getter" or "willing to have a go"?
In their groundbreaking study "Barriers to Growth in Small Firms" Barber, Metcalfe and
Porteus identified three categories of barriers to growth: Management and Motivation,
Sources of Finance and Market Opportunities and Structure. Lack of motivation was
something which was an entirely internal barrier togrowth. What however constitutes
motivation? The concept lacks definitional precision. There is a difference between
negative and positive motivation - the difference between avoiding unemployment as a
reason for establishing a firm and a conviction in achieving success - the desire to make
money or establishing a nice lifestyle for one's self and one's family. The problem is that
motivation is difficult to establish or prove because it is individual to the business owner.
Indeed many entrepreneurs claim not tobe motivated by financial gains. In an article
entitled "Finding the High-flying Entrepreneurs: A Cautionary Tale" Birley, Muzyka, Dare
and Russell offer 5 typical reasons why people set up in business. First, freedom to take
advantage of an opportunity. Second, tocontrol their own time. Third, it made sense at

3. the time. Fourth, economic and financialsecurity. Fifth, businesses are often vehicles for
meeting family, personal, social or environmental objectives.
The problem is that not everyone is an entrepreneur. Are entrepreneurs born and not
made is the question posed by the old conundrum are individuals born with iherent
entrepreneurial skills or are entrepreneurial skills acquired throughout the course of
owning and running a business? If an entrepreneurial mindset is something which is
inherent within individuals (and no this is not simply a propensity for risk taking behaviour
- if that were the case all we would have to do is to encourage gambling in growth
accelerators in the belief that some gambles will ultimately pay off even if the majority
don't) then we are unlikely to be able to teach entrepreneurial skills - no matter how
much we try.
There is another more fundamental issue and that is the lumpy nature of the concept of
growth. Overall there is no consistent or accepted way of measuring growth. Indeed
according to Gibrat's Law Growth is a random variable implying a powerful role for chance
or luck.
Growth can refer to an increase in amongst other things: sales, profits, financial ratios,
employment, market share, the income and emolluments of Directors, Business Owners
and Shareholders or a Combination of all adjusted for the Cost of Sales, Inflation and
Capital Investment. Ultimately one can end up with a very sophisticated measure of
Growth (GVA) that the layman will neither understand nor make sense, particularly if one
ends up with a perception that Growth is based on the precarious and uncertain delivery
of a wafer thin sales margin within increasingly competitive marketplaces and/or huge
levels of capital investment which need tobe paid back in the distant future. Growth, but
at what cost? Nor is there a linear relationship between different stages of growth. Much
depends on the period of time over which growth is being measured.
However, as Paul Ormerod points out in his excellent book "The Death of Economics"
growth is neither automatic, nor predictable because growth in one period within a
timescale is not necessarily related to growth in another period either following or
proceeding because of the different internaland external factors that may or may not be
in play. Such an approach calls into question the relevance of macro-economicanalysis by
idenifying the need to identify linkages between a whole host of micro-economictrends
not all of which will ultimately be related to each other and several of which may actually
have a negative impact on each other. There is therefore no such thing as evolutionary
growth where growth in one period is associated with growth in a later period.
Sales are the most commonly used and easily understood measure of growth.Sales is a
concept which applies to all businesses. Sales are the primary source of growth for
businesses. A growth is sales proceeds and is necessary for growth in the assets of the
firm. It is also apriori/pior to an increase in the numberof employees working within or
for a business.
Another measure is bigness either in the Turnover, the number of Trading Locations of a
Business but the key measure of size or bigness is the number of employees working for a

4. business and is the ultimate determinant of the measure of business size whether the
business is Small (less than 10); Medium (10-50); Large (50 to 250); Very Large (over 250).
The current policy agenda is dominated by the notion that it is Small businesses that are
the ultimate source of employment growth. Never matter that Small businesses that grow
to become Medium sized or Large businesses are both extraordinary and also part of a
trend which has existed since time immemorial. All businesses unless they are off-shoots
or spin-offs start Small and grow Large.
As Paul Ormerod reminds us the relationship between growth and employment is at best
indeterminate at worst there is no direct correlation between the two. We should
disaggregate the relationship between growth and emloyment and admit that changes in
the rate of growth will not automatically lead to changes in either employment or for that
matter unemployment. Employment creation activities should be regarded as a discrete
and separate policy sphere from growth promotion or should that be acceleration
promotion. The problem is if you can't really be expected to be able to change the
mindset of business owners significantly how do we achieve growth?
As on this question and much else beside I pay particular regard to what Malcolm Evans,
the CEO of the UK Manufacturing Acceleratorwrites and has to say. He put the point to
me in a very simple way a couple of years ago. We can either expand a vast amount of
effort carrying out a lot of very small and largely unproductive activities trying to improve
trading conditions on the ground which have yet to be proved tohave any significant
impact whatsoever apart from drawing attention and advertising the efforts that are
already taking place within a small number of businesses that are successfully utilising
business support services without all the froth and self justification that growth hubs and
business accelerators require to justify their existence. Or we could do a number of small
things which have a very significant effect on trading conditions indeed which will
ultimately effect the growth potential of a very large number of businesses. He has
dubbed this a "wellhead" strategy. A few turns of the taps on the pipeline fuelling
business growth will get the economy flowing much faster.
To quote Malcolm from a pivotal and hugely influential article entitled, "Cluster Not
Bluster - A Strong Way Forward for NW Digital", "Wellheads anchor investment capital
deep into a region, they drive a far reaching research & development agenda, they
develop and shape an exponentially deepening skills agenda and knowledge base and
they feed a succession of startups and breakouts which challenge, sharpen and renew."
I wholly concurr. Achieving growth is about a small number of policymakers delivering
significant impact both in terms of Access to Finance for Large & Medium Sized Business,
Foreign Direct Investment from Multi-National Corporations locating intothe North West
Region and Strategy Advisers working with Large Prime Businesses so that the benefits of
Economic Growth are cascaded down to the Primary Supply Chain and ultimately tothe
Secondary and Tertiary Supply Chain. The key to the spread of economicgrowth therefore
is economic enablement, driving the key economicenablers: capital, skills, transport and
that is most effectively delievered by working with and through the Wellheads - the Prime
Businesses that dominate the Commanding Heights of the Economy of the Region tofinish
with a Corbynesque flourish. It is another thing altogether to actually deliver economic

5. enablement. The Northern Powerhouse will only ultimately succeed if those big
infrastructure projects materialize within a defined timescale that will cascade growth
right across the region and sustain and perpetuate the nascent growth that is already
present in the economy. This means moving quickly from the ephemeral visions contained
within blueprints for growth toactualy putting bricks in the ground. In the meantime
there is a real danger that we can all look very busy supporting business aspirations that
will never materialise.
From an information perspective Lancashire is home to a significant number of well
established private sector employers in the county that employ large numbers of people.
They range from some old established firms to large multi-nationalorganisations. Many
retailers and financial institutions such as Tesco, Asda, Marks and Spencer, HSBC etc., are
major employers in the county but it is impossible to derive figures for the number of
people they employ in the county. One financial institution with a national presence is the
Co-operative Bank which employs many hundreds of people in Skelmersdale. Among the
well established locally owned companies that are significant employers, Booths has its
headquarters in the county and a number of supermarkets in Lancashire. James Hall & Co
is a major wholesale distribution company in Preston. The most important multi-national
company in the county is BAE Military Air Solutions. The company has two major sites at
Warton on the Fylde coast and Samlesbury between Blackburn and Preston. In 2011, the
two sites were designated as local enterprise zones and this will attract additional
employees to the sites. Eric Wright Construction is an important employer in the
construction sector with its HQ in South Ribble district.
Other significant private sector employers in the county include Leyland Trucks, Rolls
Royce with a site in Barnoldswick and Aircelle in Burnley Barnoldswickis also home to
Silentnight which is said to be UK's largest manufacturer of branded beds. The nuclear
industry has a very important presence in Lancashire. In particular, EDF Energy operates
Heysham 1 and Heysham 2 nuclear power stations whilst nuclear fuel is manufactured at
the Westinghouse Springfields site near Preston. The Nuclear Industry Association
produces a yearly jobs map that lists all the companies and employee numbers that are
connected with the nuclear industry. Analysis of the results highlights the employee total
for the two EDF nuclear power stations in Lancashire and the employees at the
Springfields site. Both figures in January 2012 were in excess of 1,000 employees. The
manufacturing sectorin the county contains a number of sites belonging to major national
and multinational organisations. These important local employers include Burton's Foods,
Fox's Biscuits, Warburtons, Cott Beverages, Graham and Brown, Eka Chemicals in
Blackburn (part of Akzo Nobel) Ashi Glass Fluoropolymers, Andrew Industries, Turtle Wax,
Synergy Health UK LTD, Tensar International, Trelleborg Offshore, Hanson Heidelberg
Cement Group, Victrex, Dixon Group Europe, TRW, Alstom Transport, Cobble Blackburn
and Accrol Papers. A fast moving private sectorcompany that now is now a major local
employer in East Lancashire is the business telecoms service provider Daisy. Another is
Homeserve in Preston an emergency insurance group that employs a large number of
people at its claims management centre. The county has a very important agricultural
sector that encompasses a range of farming, fishing and horticultural activities. Many of
the businesses are well established, but as with a number of other sectors it is a challenge
to identify the largest employees. Of note however are Flavourfresh Solfresh Group of

6. Banks, West Lancashire, a leading UK salad producer, and HuntapacProduce Ltd, growers,
packers and distributors of organic and conventional root vegetables, brassicas and
salads. Agency staff, hired during the busier parts of the growing season, will significantly
add to the permanent workforces at these and other majorlocal employers in the sector.