ERC State of Small Business Britain conference 2016 full Event day Slide Deck. 30.11.2016

3. 10,000 Small Businesses UK
Charlotte Keenan
Goldman Sachs, 30th November 2016

4. Why 10,000 Small Businesses UK
 Goldman Sachs is committed to leveraging our capital, people and innovation to help
address economic and societal challenges, catalyze markets and transform communities
 Since 2001, through its global philanthropic efforts and Investing for Impact business, the
firm has deployed grants and investments to help bring economic growth, stability and
opportunity to communities around the world
 The institutional platform is dedicated to helping entrepreneurs grow their businesses and
create jobs by providing them with education, support services and access to capital.
 10,000 Small Businesses is an initiative to help small businesses across the UK and the U.S.
create jobs and economic growth through access to a practical business education and
business support services
— Practical business and management education is delivered through academic partners
— Guided by an advisory council Co-Chaired by Lloyd Blankfein, Michael Bloomberg,
Warren Buffett and Dr. Michael Porter
 With 28 sites across the U.S. and UK, including the U.S. national cohort, 10KSB has served
over 7,300 small business owners in the UK and US

5. How does 10KSB work?
 Highly practical course focused on skill development for business
growth co-taught by Oxford Saïd Business School, Aston Centre for
Growth, University of Leeds, and Manchester Metropolitan
University
 Rotates between residential and online sessions to provide ultimate
flexibility
— Each participant is assigned a personal business coach
— Over the 12 weeks, participants develop a customised Business
Growth Plan to direct business strategy and expansion
— 6-8 hours of online activities per week
 Taught in a collaborative, peer-learning setting
 Provides tools that can be immediately used in your business
 Provided for free to business owners, and fully-funded by the
Goldman Sachs Foundation
 The success of the program is due to the right balance of
formal learning, mentoring, and peer-to-peer support.
Participants of the programme will benefit from:
— Specialist workshops
— One-on-one business advising
— Access to professional experts
— Networking opportunities and
— A network of 10,000 Small Business graduates

6. Who are the participants?
 10,000 Small Businesses UK is offered at no cost to small businesses and
social enterprise leaders who want to grow their businesses, create local
employment and have scalable business models
 The following eligibility criteria also apply:
— Must be the primary owner, co-owner, or the most senior decision-
maker of the business
— Operating at least three years, with 5 to 50 employees and annual
turnover of at least £250,000
— Must be scalable and capable of generating additional local
employment
— Should not have extensive recent management education
— Preference will be given to those businesses operating in or on behalf
of disadvantaged communities or regeneration areas
An average of
£1.2m revenue
An average of 21
employees
of participants have no
university-level degree

7. Since 2010, 10,000 Small Businesses has helped over 1,000 small businesses in UK grow and create jobs
How do we know 10KSB works?
 From 2016, the programme has become national, accepting entrepreneurs from
across the whole of Great Britain
 The programme is proven to drive growth and job creation
 10KSB UK graduates are growing their staff at 31% per year and increasing
revenue at 81% per year.
 They are three times more likely to be creating jobs and two times more
likely to be growing revenue than other UK small businesses.
 Independent analysis shows that participants create 17% more jobs and
generate 19% higher revenues than they would have without the
programme.
1 Results taken from November 2016 Impact Report

8. Social enterprises
 One in six 10KSB UK participants run social enterprises, and
they collectively employ over 2,500 people with a combined
turnover of £112m.
 Social enterprises grow faster than other 10KSB UK
participants, with a mean employment growth rate of 43%,
compared to 29%.
 These social enterprises are twice as likely small businesses
to be led by women than men

9. Rana Harvey
rana.harvey@monstergroupuk.co.uk
07817 971533
Monster Group UK
York
Manufacturing
Monster Group is an online retailer, established in 2007, that develops products across different sectors, including
retail, food, industry and manufacturing. It includes the businesses Monster Chef, Monster Racking, Monster
Retail, Monster Scales and Monster Doodles.
Employees: 20 Graduated: 2012
Since Graduating: Job Creation: 14 Revenue Turnover: 331% increase
How has 10KSB UK changed your business?
 Reformed the company’s structure with Monster Group, which incorporated the existing businesses
 Reviewed workflows and productivity of the team
 Reduced the order process time to just 2 minutes
 Purchased a 90,000 sq. ft. warehouse to increase the group’s product offerings
 Opened a Research and Development centre to advance product development and competitiveness
“ I had never dreamed of developing an R&D site before I started the programme – I was
focused on driving international sales. The Strategy and Operations Management modules
changed all that.”

11. Professor Mark Hart
ERC

12. Dashboard – Focus on Geography of
Growing Firms
• Video highlighted the wide range of variations in the well-known OECD
High-Growth Firm (HGF)
• However, while useful it is restrictive – need to understand the various
types of firms that are growing and where they are concentrated
• Greater granularity in growth metrics better informs the development
of local and regional economic policy

13. Firm Survival and Growth
13
Start-ups achieving
at least £1m T/O
after 3 years
Established
businesses growing
from £1-2m to
£3m+ T/O

14. Fast-Growing Firms (2012-15)
• Fast-Growth is defined as annualised average growth in
employment of 20% or more over a three year period.
• Overall, Scotland, Wales and the southern and western parts
of Northern Ireland perform well with above average
proportions of these businesses.
• In England, London has the highest proportions of fast-
growing businesses but all the other local areas with above
average proportions of fast-growing businesses are in the
North, South West and the Midlands.
• The data shows quite clearly that some of the fastest
growing businesses in the UK are delivering jobs and
revenues for their owners outside London and the South
East which has been a consistent finding since we started
tracking this metric by local areas in the UK.

15. Driving Business Support Interventions
• Does confirm the value of locally differentiated policies reflecting the
local realities of business dynamics
• Something long recognised in Scotland, Wales and Northern Ireland but
constantly being re-worked in England!

16. A Simple Story of Productivity! – 2008-15
Turnover Growth
Job
Growth
Zero
Zero
‘Green Zone’
+
+
+
-
-
-
Only one ‘space’ where growth
in T/O; Jobs and productivity
are all +ve – the ‘green zone’
But sparsely populated with
firms – approx. 10%
…and more than half of them
where there is very little
growth – the blue triangle
Rule of thumb – 3 out of 4
firms which grow turnover
grow productivity; 1 in 5 firms
which grow jobs grow
productivity

17. Productivity and High-Growth Firms?
• Only 20% of 10+ employee firms in the ‘green zone’ are HGFs (T/O
definition)
• Only 5% of 10+ employee firms in the ‘green zone’ are HGFs (Jobs
definition)
• So from a productivity perspective HGFs are not an important group of
firms – main problem here is both a definitional one and the focus on
jobs!

18. Creating a Growth Pipeline
• A single-minded preoccupation with HGFs may not be a sensible focus
for policy-makers - not only is it somewhat arbitrarily defined, it has the
disadvantage of rendering invisible the reality of growth for the majority
of businesses
• And now we know they are less important for productivity growth than
one might have imagined!
• It would be more informative to concentrate on the importance of
creating a growth pipeline at local level and monitoring its development
over time.

19. A Fresh Look at the SME Population
• Build a growth pipeline around the following:
– Potential and Nascent Entrepreneurs
– Lone Rangers and the unwilling self-employed
– Steady Eddies – limited entrepreneurial intensity and low risk tolerance
– Rising Stars – strong growth ambition but in need of leadership skills to
implement innovation and internationalisation and engage in external networks
– Leading Lights – established firms with sustained growth ambition based on core
management competencies

20. Thank you!
Questions and comments?
More information at http://enterpriseresearch.ac.uk/
Contact us about this research: Mark Hart mark.hart@aston.ac.uk
This work reflects the joint effort by the research team of the ERC, including
Michael Anyadike-Danes, Karen Bonner and Mark Hart.
This work contains statistical data from ONS which is Crown Copyright. The use of these data does not imply the
endorsement of the data owner or the UK Data Service at the UK Data Archive in relation to the interpretation or
analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.

22.  Lee Hopley (EEF)
 James Phipps (Nesta)
 Susanna Lawson (OneFile Ltd & Goldman Sachs 10,000
Small Businesses alumnus)
 Sarah Middleton (Black Country Consortium Ltd)
 Chair: Professor Mark Hart (ERC)

23. Liam Byrne, MP
APPG on Inclusive Growth

24. THE ALL PARTY
GROUP ON
INCLUSIVE GROWTH
Reconnecting wealth creation and social justice
www.inclusivegrowth.co.uk

25. The APPG on Inclusive Growth Mission:
The APPG aims to create a space in parliament to connect
reformers and thinkers in politics, business, trade unions,
finance, churches, faith groups and civil society to forge a
new consensus on inclusive growth and to identify practical
next steps for reform.

26. We have a problem….

27. And its bad for workers
In the UK
productivity and
pay link broke
down in 90s

28. Workers are right to be angry….

29. Some, however, are doing rather well
Top 1% takes
bigger slice of
national
income

30. In a democracy anger isn’t abstract: Brexit

32. The APPG brings together a cross-party
group of leading MPs and Peers
Liam Byrne MP
Rushanara Ali MP
Rt Rev Bishop of Birmingham
Members of the APPG include:
Dame Caroline Spelman MP Lord Wrigglesworth
Alison McGovern MP Chris White MP Seema Malhotra MP

33. Previous events
Our 2014-2015 work
programme constituted
seminars, private discussions
and a distinguished speaker
series including:
• His Grace the Archbishop of
Canterbury
• Angel Gurria, Secretary-
General of the OECD
• Sir Charlie Mayfield, CEO of
John Lewis Partnership
• Mike Rake, Chairman of the
CBI
• Xavier Rolet, CEO of the
London Stock Exchange
His Grace the Archbishop of Canterbury addresses the
APPG
Angel Gurria, Secretary General of the OECD Sir Charlie Mayfield, Lord Baker & Lord Wrigglesworth

34. National media coverage

35. Current partners
The Group has partnerships with
leading cross-party think tanks who
jointly published a collection of essays
for the group in March.
The Group also has partnerships with
leading business and civil society
organisations, including Oxfam and the
City of London Corporation.
SPERI is the Group’s Secretariat, which
aims to develop new ways of thinking
about the economic and political
challenges posed for the whole world.

36. Our agenda is shaped around the key reforms required to deliver growth,
productivity, and a fairer distribution of wealth
3. Enterprise / Regulation
5. Demand side:
trade reform
1. Supply side:
science & technology
2. Capital: Patience 4. Labour: skills & pay
6. Place: regional balance 7. Tax: Fair / sustainable

37. WWW.INCLUSIVEGROWTH.CO.UK

39. Cliff Prior
Big Society Capital

40. GROWING SOCIAL VENTURES
Cliff Prior, Chief Executive, Big Society Capital
@cliffprior
@BigSocietyCap

41. About Big Society Capital
• Big Society Capital is an independent financial
institution with a social mission, set up to help to
develop social investment in the UK.
Champion for Social
Investment
Wholesale
Social Investor

42. As a champion
Business Impact
Challenge
GET IT Public service
reform
Transparency
Research Council Charity Bonds Social Pensions Crowd Funding
Working with charities
& social enterprises
Working with investors Social impact tools
CURRENT PROJECTS
CORE ACTIVITIES

43. As an investor
Co-development
Applications
Drawn down by
charities and social
enterprisesInvestment into
intermediaries
£289 million
+ £505 million co-investment £110 million
+ £175 million
co-investment

44. Our focus
Finance for small &
medium-sized
charities & other
social sector
organisations
Capital that allows
innovation in tackling
social problems to
quickly grow and
replicate
Mass participation in
social investment
.
Greater financial
scale in order to
finance social issues

45. THE SOCIAL CHALLENGE IN THE UK
Housing & local
facilities
Communities Education
Income & financial
inclusion
Health &
social care
Employment & training
Family, friends and
relationships
Criminal justice
Arts, heritage, sport
and faith

46. What is social investment?
Social investment is repayable money to help charities and social
enterprises to do more of their important work.

47. ONE tool for SOCIAL VENTURES
Trading Donations
Bank
Finance
Contracts/ Payment
By Results
Social
Investment
FINANCIAL TOOLKIT
To build innovation, growth and sustainability

48. Examples of how it works
48

49. Social sector info
49
£39bn income
£38bn spend
declined since 2007
peak of £41bn
900k civil society orgs
161k charities
70k social enterprises
Social enterprises contribute
£24bn to economy
and employ 1mpeople
Charities & social enterprises
are regulated organisations:
asset locked / (part) profit locked
52% of social enterprises grew in last year
40% of mainstream sme’s grew in same year

50. Social Investment Market Size
50

51. 52
£39bn income
£38bn spend
declined since 2007
peak of £41bn

52. THE RISE OF THE MISSION LED BUSINESS
53

53. CONTROVERSIES
54

54. CONTROVERSIES
55
Regulated, no/limited private gain
Can’t give equity investment – slows
down growth
Will they still be
social tomorrow?

55. CONTROVERSIES
56
Regulated, no/limited private gain
Can’t give equity investment – slows
down growth
Will they still be
social tomorrow?
?

56. 57

57. 58

58. 59

59. Business finance in disadvantaged areas
60
Banks still not reaching
disadvantaged areas enough.
CDFIs help but are poorly
supported and reliant on
EU funds/guarantees which
will disappear with Brexit

60. A CALL TO ACTION
61
• Traditional social sector is struggling but resilient
• Social investment can help some to do more
• Growing movement of social entrepreneurs and profit with
purpose businesses
• Increasing interest in inclusive business
• New social needs including the people “left behind”
• SME business finance in disadvantaged areas needs an
urgent reboot

61. www.bigsocietycapital.com
• Big Society Capital Limited is registered in England and Wales at Companies House number 07599565. Our registered office is 4th Floor, New Fetter Place, 8-10
New Fetter Lane, London EC4A 1AZ. Big Society Capital is authorised and regulated by Financial Conduct Authority number 568940.
62
Thanks for listening
@cliffprior
@bigsocietycap
www.goodfinance.org.uk
#socinv

64. Professor Jun Du
ERC

65. Two curious facts
An entrepreneurial state with
high growth records…
and a baffling
productivity puzzle!

66. Fast Growing Firms: to define and identify
High growth firms, in
employment
(OECD, 2007)
High impact firms
Growth heroes
(Du and Bonner 2015)
Top performers
Millennium 2000 firms
(Hart et al 2016)
High growth entrepreneurs
Gazelles
High employment growth
firms
(Clayton et al, 2013)
High growth firms, in value

67. Employment based Productivity based
Bigger
firms
Micro
firms
Bigger firms Micro firms
% in total survivors 1.2 1.7 2.1 0.5 5.2 1.2
OECD-HGFs Small
HGFs
Growth
Heroes
Super
Growth
Heroes
Growth
Heroes
Super
Growth
Heroes
Jobs (stock)
Jobs (net job
creation)
Turnover (stock) ££££ £ ££ £ £ £
Turnover (growth) ££ £££ ££ ££ £££££ ££££
Productivity (level) ★★★ ★★★★★ ★★ ★★★★ ★★ ★★★★
Productivity (growth)   ★★★ ★★★ ★★★★ ★★★
Summary of Findings

68. Fast-Growing Firms and Productivity: beyond
single firms
• Growth persistence is not at firm level, but at regional
level
– The predictability of high growth episodes remains limited
– firm growth is typically highly discontinuous and high
employment growth is not persistent among firms
– Recent research on growth persistence beyond single firms – at
regional level
• Regional and industrial externalities
– Knowledge spillovers within and across industries
– Localisation externalities
– Urbanisation externalities

69. What does it mean for a region to have
more fast-growing firms?

70. Finding - Industry Externalities on Productivity Growth
Suppliers SGHs OECD HGFs
Prof serv Overall ★★★ ★★★
Manufacturing
Overall ★★★ ★★★
Low tech ★★★ ★★★
High tech ★★★
Large ★
Small ★★★ ★★★
Old ★★★ ★★★
Young ★★★ ★★★
Horizontal sector SGHs OECD HGFs
Prof serv ★★★ ★★★
Manufacturing
Overall ★★★ ★★★
Low tech ★★★ ★★★
High tech
Large ★★★ ★
Small ★★ ★★
Old ★★★ ★★
Young ★
Customers SGHs OECD HGFs
Prof serv Overall ★★★ ★★★
Manufacturing
Overall ★★★ ★★★
Low tech ★★★ ★★★
High tech
Large
Small ★★★ ★★★
Old ★★★
Young ★★★
H
S
C
+
+
+

71. Finding: Regional externalities of super
growth heroes on productivity growth

72. Key Messages
Beyond job creation and productivity improvement within their own
organizations, fast-growing firms have externalities to other firms in the region,
within and across industrial sectors.
Horizontal effects:
• Competition-led efficiency improvement with positive productivity
spillovers
Vertical effects:
• Improved productivity and efficiency – knowledge spillovers effects
• Increased demand for services and products – positive market creation
effect
• Competition-led crowding out effects for skills and labour in the upstream
sectors
Regional disparity:
• Advantageous urban areas
• Interestingly, the areas of more high growth incidences are not
necessarily those which benefit most from it!

73. Thank you!
Questions and comments?
More information at http://enterpriseresearch.ac.uk/
Contact us about this research: Jun Du j.du@aston.ac.uk
This work reflects the joint effort by the research team of the ERC, including
Jun Du, Karen Bonner, Enrico Vanino, Mark Hart and Michael Anyadike-
Danes.
This work contains statistical data from ONS which is Crown Copyright. The use of these data does not imply the
endorsement of the data owner or the UK Data Service at the UK Data Archive in relation to the interpretation or
analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.

74. Phil Smith (Cisco UK and Ireland)
Professor Stephen Roper (ERC)

75. The UK Productivity Council
How Good Is Your Business Really?
Phil Smith - Chairman, Cisco UK & Ireland

76.  Jenny Cridland (BAE Systems)
 Jun Du (ERC)
 Richard Evans (Mechatronic Ltd & Goldman Sachs
10,000 Small Businesses alumnus)
 Joe Marshall (NCUB)
 Chair: Michael Anyadike-Danes (ERC)

77. Tony Moody (BEIS)
Matt Adey (BBB)

78.  Tony Moody ( BEIS)
 Matt Adey ( BBB)
 Kevin Davis (The Vine Trust & Goldman Sachs
10,000 Small Businesses alumnus)
 Chair: Ute Stephan (Aston University, ERC)

79.  Stephen Roper (Director, ERC)
 Mark Hart (Deputy Director, ERC)
 Vicki Belt (Deputy Director, Impact & Engagement,
ERC)