1. SUPPORTING
HIGH - GROWTH
COMPANIES
by Ged Mirfin
“IT’S
A LIFE-
STAGE ISSUE NOT
SHANGRI-LA”
A JOURNEY TO
Research commisioned by ProjectEV and The Peel Policy Forum
3. Foreword
WELCOME to this research journal
ProjectEV commissioned this piece of bespoke research in partnership with
The Peel Policy Forum with a specific remit to establish a detailed knowledge
and understanding of the business landscape across the City Region. From
this we were able to further identify the needs and growth ambitions within
the market place.
I am pleased to say that this report which will be shared with other organisations
as well as disseminated by the projectEV team. The team will be tasked
with delving deeper into the particular aspirations, needs, and barriers that
businesses face in driving forward growth agendas.
This crucial up-to-date research will help to underpin and inform the
development of the project.
The key to future economic growth is
through private sector collaboration;
this research has been instrumental
in reinforcing our knowledge and also
helping us design a unique, collaborative
and responsive support environment.
ProjectEV is a dynamic high-growth business hub, which will create an array of
associated businesses hot-housed in a single incubator location. The project
will provide work spaces for 15 high growth businesses who will receive a
tailored bespoke programme of support over a 2 year period from a team of
dedicated, specialist business sector advisors and professionals. In addition,
support will also be provided for early stage start-ups to help them to become
established in this unique ecosystem.
The chosen businesses will induce and encourage a level of knowledge transfer
within the hub, stimulating cross-sector collaborations and commercial
partnerships. This mutual support structure will enable businesses to flourish
both increasing GVA and employment across the Liverpool City region.
If you would like to know more about the project then please visit:
www.projectev.co.uk.
Shazan Qureshi
Chairman
projectEV:liverpool
1
4. Summary
Within Public Sector Business Sector Support Networks there has been an obsession with hunting Gazelles -
an American expression coined originally by David Birch to describe small, fast growing companies (in reference to the
fact they can jump higher and run faster than their peers) that create many job opportunities. The problem is that they
have proved extremely difficult to track as they develop and expand from young, juvenile, start-up or spin-out firms into
adolescent businesses expanding their turnover and headcount as they venture further into the market jungle. Gazelle
hunters argue that if they could only track them from their lair then they would bring home more business trophies to hang
on the wall of the stock market boardroom.
Like the overextended metaphor above what started off as a potentially highly profitable academic exercise has become a
search for a veritable economic Shrangi-La with high growth companies located over the Zig of the next economic summit
or beyond the Zag of the next economic valley. Economic panic resulting from seemingly intractable economic dilemmas
has promoted a lazy academic approach based on highly caveated methodological approaches which ignore;
First, during a recession the process of growth is not unidirectional. In the current economic climate many gazelles are
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. Three years growth is now more likely two years growth and one year
of decline. Some gazelles are now not able to run as fast or jump as high. Just because a business does not conform
to the classic definition of a Gazelle, which is companies that have experienced at least 60% growth in employment and
additionally deflated turnover (turnover adjusted for inflation) over a three year period does not mean that they are not high
growth companies. In the present economic circumstances an annual growth rate of 10% or even 5% is a more than
acceptable rate of return.
Second, during an economic downturn businesses in certain industry sectors will inevitably face greater barriers to growth
than those in other sectors. There will always be businesses that buck the trend but they are the exception to the rule and
generally the consequence of the impact of the wider process of creative destruction with lost and displaced business lost
elsewhere being won by businesses adopting fundamentally different business models or being the beneficiaries of new
production technologies or technology marketing.
Third, high growth is a function of the life-stage (not chronological age) of a businesses as it reaches a particular level of
turnover and number of full time employees.
Fourth, there is a natural ceiling of turnover for businesses of a particular size as measured by employee numbers and
business infrastructure capacity. Businesses can be high performance and be considered to have maximised their growth
potential, plateaued out and be ready for the next phase of development in their development life-stage although meeting
the ability to take advantage of the next major business opportunity may require externally supported growth in the form
of venture capital or equity investment by a business angel.
This paper will examine the notion that high growth is a function of the life-stage of the development of a business. It will do
this in relation to Merseyside. It seeks to fulfil two closely inter-related objectives. The first, is to critically re-examine public
sector thinking on high growth companies principally to test whether the North West Development Agency growth sector
based model was a valid one in terms of a one-size fits all approach for Merseyside in general and Liverpool in particular
and whether it is possible to identify any serious omissions in terms of growth promoting business support activity. In doing
this I re-assess the basis on which I formulated and tested some of my own methodological assumptions about high
growth companies that underpinned business economy data research projects I carried out for Business Link North West,
then a wholly-owned subsidiary of the NWDA, between 2008-2011.
The second, is to identify those sectors that will potentially best benefit from a programme of accelerated “super growth”
support to be provided by Project EV (Enterprise Village). Project EV is a £2M Private Sector funded scheme backed by
ERDF Match Funding led by the consultancy, Rejuvenate Your Business and supported by advice from partners from
the legal, accountancy, financial and marketing communications sectors to the value of £250,000 over a three year
period. Located in fully serviced office facilities in the Albert Dock 15 selected companies will be situated in a co-working
collaborative physical space and working environment where an extensive network of 100 mentors will provide support
training and coaching.
Ged Mirfin
Business Economist
Peel Policy Forum
Peel Policy Forum Email Address: Ged@peelpolicyforum.co.uk
Personal Email Address: ged@mirfin5064.freeserve.co.uk
5. Contents
INTRODUCTION p1.
CHAPTER 1
-Methodological
Excursions
p4- 11.
CHAPTER 2
-Merseyside
in Perspective
p11- 17.
A Distorted Economy
Hidden Sectors
The Life Stage Problem
Accelerating Busineses
CHAPTER 3
-The Merseyside
Economy:
p18- 22.
Beyond the Public Sector Re-Generation Game
An Economy Built on Making Things & Attracting Visitors
Understanding Blockages
Why We can’t rely on Digital Strategists
CHAPTER 4
-Are You Enterprise
Village Ready?
p22- 31.
Sprinting Businesses
Blocked Growth/The Glass Ceiling Effect
The Need for Nurture & Business Capital
CONCLUSION p32.
ACKNOWLEDGEMENTS p,35
6. CHAPTER 1
Introduction
In November 2009 I delivered a Paper with colleagues from Business Link North West at the International Enterprise
Promotion Conference in Harrogate on “Data Driven Evidence-Based Decision-Making”1. The paper was an attempt
to show that high quality business data could be used intelligently to identify and deliver business support both to
businesses that were struggling as a direct consequence of the economic downturn as well as more importantly the kind
of high growth companies that were generating the level of turnover growth necessary to drive an increase in the level of
employment or rather a reduction in the level of unemployment.
The belief was that public sector agencies could stimulate growth ensuring that high growth companies fulfilled their
maximum potential. On that basis public sector agencies like the NWDA drew on gazelle theory. High growth companies,
it was argued in a report published by NESTA entitled, “Measuring Business Growth: High-Growth Firms and Their
Contribution to employment in the UK”2 would increase Turnover by between 25% and 30% in the next 4 years. The
clincher was that some economists believed that 50% of new jobs will be from less than 1% of a region’s company base.
Although employee growth, it was argued, would lag behind it was likely to be in the region of 20% per annum. Finding
gazelles, however, was much more problematic. A consultative approach was adopted, as I engaged in a focus group
dialogue with Business Link’s outbound advisor team. The kind of characteristics high growth Businesses exhibited were
some of the following:3
• Young (late 20s/early 30s), highly educated business owners
• Niche activities or specialised product offerings within older or more traditional industries
• Based on specialist industrial parks & technology centres
• Independent businesses
• Entrepreneurial
• Advanced manufacturing using precision technology
• Opposite ends of the commercial risk spectrum 75% Low / 25% Very High risk
• Scientists and/or academics
• High technology knowledge–based businesses
• Newer businesses do not have SIC Codes
The Failure of SIC Codes
Easier said than done then! Utilising SIC (Standard Industry Classification) Codes it would have been virtually impossible.
SIC Codes were felt both to be too unsophisticated to target growth sectors like Digital & Creative or Energy and
Environmental Technologies Services with sufficient precision. SIC Codes, are used as part of the statutory returns filed
at Companies House, often by the company accountant or business registration agent. The problem is significantly
exacerbated, with regard to some of the big catch-all SIC Codes which begin, “Other,” and end in “Not Elsewhere
Classified”. Such imprecise SIC Codes cover a multitude of sins and, of course, business activities.
More problematically the “Business Activity” of a Company changes over time. Often therefore SIC Codes quickly come
to bear little relationship to what the company does or the sector in which it actually operates. Unfortunately, lacking
more sophisticated business classificatory and mapping systems, public sector bodies opted for a fairly unsophisticated
approach mapping SIC Codes to target sectors. In the NWDA’s case there were six, what were dubbed RES (Regional
Economic Strategy) Sectors:
• Advanced Engineering
• Bio-Medical
• Business & Professional Services
• Digital & Creative Industries
• Energy & Environmental Technologies Services
• Food & Drink
A seventh catch-all other category was introduced to capture all miscellaneous companies outside of retail and wholesale,
which were exhibiting growth characteristics. Such an unsophisticated approach was at best unrefined and primitive. At
worst it was symptomatic of the worst kind of forced artificial categorisation. The result was a crude and naïve overview of
the Merseyside economy which ignored many of its subtle complexities and failed to promote an in-depth understanding
of the subtle inter-relationships that existed between the key pillars of that economy.
Coarse imprecise analysis was the ultimate consequence of working with unrefined data. It is hardly surprising therefore
that Local Enterprise Partnerships (LEPs) have been unable to achieve significant traction. It is not that the business
economy data available to them is scarce (read unavailable)4, it is that the reports that were placed amongst huge
volumes of other paperwork in the skips during the clearing of NWDA Offices in Warrington because the Regional Spatial
Strategy was based on a one size fits all strategy aren’t especially useful to the economic development approach that is
currently being pursued in the sub-regions.
CHAPTER 1
7. Data-Driven Evidence-Based Policy making
A very arrogant form of data analysis was pursued in which decision-makers trusted to their own intuition. There was a
tendency to rely on the infallibility of their own “judgemental opinion” because it was simple and convenient. This resulted
in a “Traditionally it has always been done that way mentality”. No one was able to prove conclusively otherwise or show
policymakers they are wrong. The result has been badly formulated and more poorly applied policy. This works fine in a
benign economic environment. In a harsher climate when assumptions are being fundamentally challenged it is much
more difficult to defend the indefensible and to find a solution when you are sometimes forced to justify not only your
very existence but the funding rationale. There is thus a need for hard evidence: high quality validated quantitative data.
Development of quantifiable measures & indices to assess policy performance and draw comparisons across similar
circumstances, geographical boundaries or peer groups through data segmentation and benchmarking means that
“best practice” can be identified & widened.
I like to think that the “Data-Driven Evidence-Based Decision-Making” approach based on the Business Performance
Index piloted at Business Link North West in which data was used to better understand what was actually going on in
the business economy rather than what was assumed to be going on promulgated a culture shift in favour an approach
based on the use of high quality validated quantitative data.
Experience-influenced Evidence-based
AIM: CHANGE FROM
Experience
ANECDOTAL &
JUDGEMENTAL TO
EVIDENCE- BASED
Opinion-based Evidence-influenced
Evidence / Information
Fig 1.The 4 Box Matrix Test: Are You A Data-Driven Evidence-Based Policy-Maker?
The fact that the NWDA took the decision to decommission an incredibly valuable and analytically powerful strategic data
asset, however, indeed suggests not only the adverse but also that the lessons were not learned. Retaining the data
assets that existed within the RDAs and Business Links would have been extremely beneficial for LEPs, especially when
it comes to the bidding process and Green Book predictive analytics which needs to underpin Regional Growth Fund
bids. Sadly key decision-makers, several of whom now sit on LEP Boards5 chose not to make the retention of Strategic
Assets a priority and make such assets available to LEPs across the UK.
FOOTNOTES & URLS
1. MIRFIN G. & GEOGHEGAN N. “Business Link Northwest’s 3. MIRFIN G. & GEOGHEGAN N. “Business Link Northwest’s
Business Performance Index: Data Driven Business Support”: Business Performance Index: Data Driven Business Support”
Monday 16th November, 2009 Track S Supporting Small Business http://www.slideshare.net/CllrMirfin/iep-conference-final-version2
Development Worldwide, Presentation to the 1st International http://www.enterprisepromotion.org/view.php?abstract=842
Enterprise Promotion Convention: best practice and innovation in http://enterprisepromotion.org/search_2009.php?field=track&q=S
the creation of small businesses world-wide, Harrogate International 4. MIRFIN G. “The possibilities of data linkagae and sharing
Convention Centre, Harrogate. strategies in the Public Sector” in “CROSSBOW MAGAZINE” A 4th
slideshare.net/CllrMirfin/iep-conference-final-version2 Way: Ideas for a New Conservative Manifesto, Special Conference
enterprisepromotion.org/view.php?abstract=842 Edition, September 2012 pp53-54
enterprisepromotion.org/search_2009.php?field=track&q=S bowgroup.org/magazine/crossbow-magazine-conference-2012
2. ANYADIKE-DANES M., BONNER K., HART M. AND MASON C. 5. MIRFIN G. “The possibilities of data linkagae and sharing
Anyadike-Danes M., Bonner K., Hart M. and Mason C. “Measuring strategies in the Public Sector” in “CROSSBOW MAGAZINE” A 4th
Business Growth High-growth firms and their contribution to Way: Ideas for a New Conservative Manifesto, Special Conference
employment in the UK” NESTA Research report: October 2009 Edition, September 2012 pp53-54
http://www.nesta.org.uk/library/documents/Measuring_Business_ bowgroup.org/magazine/crossbow-magazine-conference-2013
Growth_web.pdf
5
8. Data Driven Evidence-Based: Making an Impact
DECISION MAKING BASED ON
DATA DRIVEN EVIDENCE-BASED
INTUITION, JUDGEMENTAL OPINION
DECISION MAKING
OR TRADITION
Joined-Up programmes based on highly focussed
Disjointed programmes and policy initiatives targeted-strategies to address identified need
based on documented evidence
Budgetary decisions based on prior practice and Budget allocations to programmes based on data-
historic priorities informed needs
Spending allocations based on volume of voices
Spending allocations based on market failure gaps
of special interests and eligibility criteria of existing
as indicated by the data
regimes
Detailed reporting on a range of indices to relevant
Generic reports to all stakeholders based on
stakeholders on a regularised basis- weekly,
historic aggregate data inappropriate for policy
fortnightly, monthly, quarterly, half yearly based on
making at a micro-economic level
agreed service level agreements
Goal setting based on accurate estimates of
Goal setting by board members, administrators,
the financial consequences of proposed policy
project managers with special treatment given to
options allowing for prioritisation thus helping
pet projects and initiatives or the current fads of
to predict the impact of policy options to
the day
stakeholders in a “winners and losers” format
Highly focused report back and monitoring forums
Death by committee: Undue focus on ensuring that ensure that not only is money spend well but
that money is spent and that it is seen to be spent that the impact of spending money can be tracked
and measured
Fig 2. Data-Driven Evidence-Based Policy Making: Making An Impact
In situations like this a more strategic approach planning the transfer of data assets and data bases to the LEPs to
aid them in their very difficult task of addressing the one size does not fit all failure of the RDAs would have been of
invaluable help. However, you reap what you sow and the scorched earth appearance of the decommissioning of
strategic data assets does not reveal public sector agencies in their best operational light. Perhaps, however, a more
measured assessment of a Government in a hurry to dismantle what it saw as examples of systematic failure rather than
a consideration of retaining the operationally more efficient bits at a sub-regional county level would have helped.
Methodology
This paper highlights in its own modest way the value that a joined-up approach based on overlaying and linking
overlapping data classification systems can highly enrich and enhance data analyses of the business economy, especially
when it comes to revealing the make-up of key industry sectors, particularly in identifying newly emergent ones like Digital
& Creative Industries and Energy and Environmental Technology Services.
An Overlapping Approach
At Business Link initially I became convinced that the panacea for finding high growth companies in Merseyside was
to utilise the business classification adopted by Experian - Commercial Mosaic6. Commercial Mosaic categorises
UK businesses into 13 groups and 50 distinct types, based on key variables that influence business behaviour. The
Commercial Mosaic segmentation system includes demographics – the age of businesses, number of employees,
turnover and critically the principals’ background. It also includes a classificatory approach grouping together businesses
with shared demographics. Finally it follows a propensity approach with the broad description of the business classification
indicating likely behaviour, for example, in its purchasing.
CHAPTER 1
9. The Family or Genus Gazelle
COMMERCIAL COMMERCIAL
FEATURES
MOSAIC GROUP MOSAIC TYPE
Directors under 30 & Well Educated
Highly productive and skilled workforce
Mature businesses -64% Employ >100
Monumental Monoliths Farsighted High Flyers Large Range Business Activities inc. Food, Manufacturing,
Textiles, Recreation, Sport, Luxury Goods- Niche Businesses
Trade Specialist Industrial Centres or Retail Parks
HIghly Specialised type engaged manufacture specialist
equipment and precision instruments esp. Telecoms & IT
Specialist Suppliers Hi Tech Highlights Medium Sized Businesses
Independent
Based Specialist Industrial & Technology Parks
Newer Independent Businesses
High Risk- 30% Chance Failure
Wide Range Activities: Specialist Wholesale & Retail, Business
Independent
Developing Dynamos Support, Services & Recreation
Entrepreneurs Small Businesses but with Very High Amounts of Turnover from
Highly Skilled & Productive Staff
Especially prevalent in North West
New Independent Businesses, One Third 2 to 3 Years Old
So New many not have SIC Codes assigned to them
High Risk- 34.6% Chance Failure
Independent Wide Range Activities: Specialist Wholesale & Retail, Business
Fledgling High Fliers Support Services & Recreation
Entrepreneurs
One Third Grow to Employ Much Larger Nos. of Employees
As Specialist Suppliers first move is generally to specialist
Industrial parks
Independent Low Risk High-Tech Businesses
Engaged Diverse Range of Activities but esp. R&D and Chemical
Energetic Enterprises Professional Professors Processing, Especially Prevalent in Northwest Trading from
Specialist Industrial & Technology Centres near Universities &
Hospitals
New “Knowledge Based” Businesses
Especially Prevalent amongst Digital & Crossover Media, Support
Energetic Enterprises Support Supremos Services to Financial Industry - High Salaries
Low Risk Businesses in Areas of High Prosperity, Serviced
Offices
Fig 3. The Family or Genus Gazelle
The approach, I reasoned, was a useful guide to identifying the typical markings of gazelle-like businesses. The admixture
of key demographic and behavioural characteristics got me to the habitat where Gazelles lived quickly. The problem was
that it was self-confirmatory. It led me to locations where I would expect to find gazelles because I was looking in places
I knew they inhabited. It didn’t lead me to places where I might not expect to find them but where they also existed in
significant numbers. The consequence was that the bulk of the population of gazelles was found to exist in the high-tech
parts of Merseyside concentrated in colonies on business parks, incubator hubs in university R & D centres, specialist
manufacturing units and industrial & scientific technology parks. Not surprisingly these were located in some of the more
affluent and prosperous parts of suburban Liverpool, St. Helens and the Wirral and less so in Halton and Knowsley. There
was in other words a concentration on high tech Businesses to the exclusion of more traditional lower-tech manufacturing
& retail businesses in less prosperous and more deprived areas of Merseyside.
FOOTNOTES & URLS
6. MIRFIN G. & LAND L. “Growing Our Way Out of Recession:
Supporting Fast Growing Companies” : Presentation to the Mersey
Partnership First User Group Meeting Thursday 12th November,
2009
slideshare.net/CllrMirfin/high-growth-merseyside
7
10. Geography
1. Very High Risk 2. High Risk 3. Average Risk 4. Low Risk 5. Suppressed
100.00 % 1
1 1 1 1
90.00 %
80.00 % 15
4
Locations / Risk
70.00 % 4
60.00 % 3 10 8
50.00 % 7
40.00 %
3 6
30.00 %
1 9 2
20.00 %
10.00 %
1 1 4
1 1 2
1 2
00.00 % 2
Halton Knowsley Liverpool Sefton St. Helens Wirral
Fig 4. The Location of High-Tech Gazelles in Merseyside by Local Authority
Recourse to a wider set of overlapping criteria was required, in order
to more accurately define the universe of high growth businesses.
An approach based on the use of an overlapping set of different INDIVIDUAL YELL AND THOMPSON
classification systems, was employed, including: CODES WERE SELECTED FROM A
COMPLETE LIST OF CODE SETS
• SIC 1992, 2003 & 2007
SELECTED, FOLLOWING DETAILED
• Yell Codes
SCRUTINY BY NWDA AND BLNW
• Thompson Codes
SECTOR MANAGERS, TEAM LEADERS
• Nature of Business Descriptors
It is the approach that this Paper follows with a much greater emphasis being applied previously to Nature of Business
Descriptors: What the business actually does, the product and service it sells and generally to whom. It is by no means
a unique approach but it is one that has been much more consistently applied here than previously.
AND ADVISORS.
Yell and Thomson Codes
Use of Yell and Thomson Codes improves granularity over SIC Codes. Yell and Thomson Codes are self selected by
businesses and reflect how a business visualises itself in terms of the market sectors in which it operates and how it
positions itself in terms of advertising to its customer base. Yell and Thomson Codes are what businesses use to tell the
world what they’re actually good at!
More problematically the activity of a business changes over time as what it actually does becomes more transparent.
Often SIC Codes quickly come to bear little representation to what the company does or the sector in which it actually
operates7. All industry Sectors, in comparison, are represented extremely well in Yell and are very precisely defined.
Using Yell Data with SIC SIC 2003 DESCRIPTION
YELLOW PAGES
LOCATIONS
– Other Computer Related Activities
CLASSIFICATION
Other Computer Related Activities Unknown 3,032
Other Computer Related Activities Computer Services 933
SIC 2003: Other Computer Related Activities Internet Web Design 207
SIC 2003 DESCRIPTION LOCATIONS Other Computer Related Activities Computer Training 87
Other Computer Related Activities Internet Services 75
Other computer related activities 4,531 Other Computer Related Activities Computer Networking & Cabling 69
Other Computer Related Activities Computer Aided Design 58
Other Computer Related Activities Telecommunication Eqpt. 32
Other Computer Related Activities Data Recovery 10
Other Computer Related Activities Document & Data Destruction 8
Other Computer Related Activities Computer Security 7
Other Computer Related Activities Multimedia Services 5
Other Computer Related Activities Video Conferencing 4
Other Computer Related Activities Publishers and Publications 2
Other Computer Related Activities Information Services 1
Fig 5. Other Computer Related Activities SIC Group Other Computer Related Activities Secretarial Services 1
Translated Into Yell Codes
SUM: 4,531
CHAPTER 1
11. Internet Web Design & Development
An example is given below of the amount of detail that is used to define an Industrial Sector in Yell.
ACCESS TO YELL AND
WEB HOSTING: If you want a website for your customers to visit, this is a vital internet THOMSON CODES HAS
service. A good web hosting service will ensure the pages of your web site appear ALLOWED US TO FILL THE
quickly and reliably. GLARING GAPS LEFT BY SIC
DOMAIN NAME: The part of an email address after the @ sign. Many internet service CODES IN A VERY NEAT AND
providers enable you to buy your own domain name, so you can have an email (and PRECISE WAY.
website) address personalised with your own or your company’s name.
SOFTWARE DEVELOPMENT: This is where a computer service company writes
software for you to meet a specific requirement. Some computer service companies
will write whole programs, while others just write tools to get one program talking to, or
sharing data with, another. Fig 6. Internet Web Design & Development:
E-COMMERCE: Doing business on the internet. Supply of an e-commerce enabled As Defined by Yell
web site, which allows visitors to pay for goods and services.
A fast moving sector, meanwhile, requires a quickly adaptable classification – companies chasing market niches update
their Yell and Thomson adverts faster than their SIC codes – which they update rarely if at all creating a very misleading
picture of the industry sector mix in the UK. When the key to making a sale is either consumers or other businesses
being able to locate a product or service rapidly then precise definition is important, especially as the emphasis has
moved away from listings and adverts placed in printed directories to web adverts and listings in on-line directories.
The speed to (re)definition or definition of new business types or sectors is extremely rapid because it is driven by
commercial imperative and not hindered by lack of academic consensus. ONS would be advised to bear this point in
mind when it comes to the impetus to revise and fundamentally overhaul an outdated and outmoded way of classifying
new high-tech, high growth industries in the new economy. Indeed it might be argued that a central deficiency of policy
making relates to a lack of precision in defining industry sectors and the inability therefore to measure the impact of
policy with sufficient precision.
Nature of Business Descriptors
Nature of Business Descriptors, are written by the businesses themselves and detail the key activity of the business,
especially on their web portal. Textual analysis techniques were applied to the Business Descriptors creating “single” &
“paired” key words from a lexicon of commonly appearing key words and phrases.
The greater the overlap between the differing forms of classification, the greater dependability of being able to identify
what a business is really about. It was and is not simply that Business Activity Descriptors should be regarded as
tie-breakers or that any one of the overlapping classification systems should be regarded as being any more important
than the other.
Identifying the DCI Sector
Yell Class Thomson Utilising Overlapping
Classifications
Fig 7. Using Overlapping Data Classification Systems
FLEXIBILITY: THE ABILITY TO UTILISE MULTIPLE
BUSINESS CLASSIFICATIONS FROM VARIOUS SOURCES
AS WELL AS THE KEYWORD DESCRIPTORS PROVIDES
SIC 1992, Nature of A BREADTH OF ANALYSIS THAT VIRTUALLY ELIMINATES
2003, or Business BUSINESSES FOR WHICH WE HAVE NO CLASSIFICATION
2007 Keyword DATA. THE POTENTIAL SIZE OF THE POT FOR
BUSINESSES MISSED IS VERY SMALL.
FOOTNOTES & URLS
7. MIRFIN G. & LAND L. “Revealing the North West’s Creative &
Media Industries: the Hidden Sector: A Methodological Approach
revealed for the first time at “North West Creative & Media Industries
plc – the first AGM” Thursday 25th March, 2010
slideshare.net/CllrMirfin/revealing-the-north-wests-creative-amp-
media-industries-the-hi
9
12. Definitional Refinement
Access to a wide variety of classification systems
means that it is possible to define sectors very COMBINING DIFFERENT CLASSIFICATION SYSTEMS MEANS
precisely and to visualise gaps and overlaps between THAT HARD TO FIND SECTORS AND SUB-SECTORS CAN BE
those sectors. This lessens dependability on SIC FOCUSED ON PROVIDING US WITH A SOLUTION THAT IS THE
Codes considerably improving Sector identification BEST OF ALL WORLDS. QUITE SIMPLY, IT MEANS THAT WE ARE
accuracy. Overlaps between different classification
ABLE KNOW SOMETHING ABOUT THE VAST MAJORITY OF
systems dramatically increases reliability
BUSINESSES – THERE ARE VERY FEW FOR WHICH WE DON’T
It is to be accepted that not all Business advertise HAVE ACCESS TO AT LEAST ONE FORM OF CLASSIFICATION.
in Yell and Thomson. Indeed, on average, c.40% of
businesses, choose not to do so. Either they don’t
need to do so or advertising in directories is not seen
as a particularly productive form of marketing or cost
effective sales channel strategy often for businesses
which are more business to business and less
consumer facing in their approach.
Nature of Business - Other Computer Related Activities
In this instance we can rely on either SIC
2007 or Business Activity Descriptors. As
you can see from the graphic below the
latter is particularly effective in revealing the
activities of Business.
Yell to Nature
SIC 2003 to Yell of Business
YELLOW PAGES YELLOW PAGES
NATURE OF BUSINESS :
SIC 2003 DESCRIPTION LOCATIONS CLASSIFICATION
CLASSIFICATION
Other Computer Related Activities Unknown 3,032 Unknown Bespoke Application Development
Unknown 3d and 2d animation for the broadcast tv
Other Computer Related Activities Computer Services 933
Unknown 3D Visual Design
Other Computer Related Activities Internet Web Design 207
3D visualising, animation and branding for
Unknown
architectural and construction industries
Other Computer Related Activities Computer Training 87
Unknown Accountancy and web-site design services
Other Computer Related Activities Internet Services 75
Unknown Accountancy support.
Other Computer Related Activities Computer Networking & Cabling 69
Unknown Accounting, auditing, tax consult
Other Computer Related Activities Computer Aided Design Serivces 58 Unknown Adult Education Centres
Other Computer Related Activities Telecommunication Eqpt. 32 Unknown Advanced Sensor & Control Technologies
Unknown Advertising
Other Computer Related Activities Data Recovery 10
Unknown Architectural and design services
Other Computer Related Activities Document & Data Destruction 8
Unknown Architectural, technical consultancy
Other Computer Related Activities Computer Security 7
Asset/Process tracking services for businesses
Unknown serving Pharmaceutical, logistics, aviation &
Other Computer Related Activities Multimedia Services 5 Manufacturing sectors
Other Computer Related Activities Videoconferencing 4 Audio visual installation engineers, commenced
Unknown
on 1 June 2007
Other Computer Related Activities Publishers and Publications 2
Unknown Audio-Visual Production & Presentation
Other Computer Related Activities Information Services 1 Automation and control design, installation
Unknown
and service.
Other Computer Related Activities Secretarial Services 1
Unknown Automotive service engineers.
SUM: 4,531 Fig 8. Other Computer Related Activities SIC Group Translated
Using Nature of Business Descriptors
Data Validation
Sector Definition is the key to accessing meaningful data. Definition however needs to be intuitive. This is particularly
the case when you are confronted by businesses that “just don’t fit” and it requires a judgement call to decide whether
that business is “in sector” or “out of sector”? High level validation of data achieved through granular interrogation of
data contributes to a much more rational and less forced way of building a sector definition.
CHAPTER 1
13. CHAPTER 2
Revealing Findings on Merseyside
ADOPTING SUCH AN APPROACH STARKLY REVEALED
A NUMBER OF FINDINGS ABOUT THE SIZE OF THE
DIGITAL & CREATIVE SECTOR IN MERSEYSIDE.
DESIGNERS-
SUB REGION INTERNET WEB DESIGN SUM:
ADVERTISING & GRAPHIC
Cheshire & Warrington 103 160 263
Cumbria 36 87 123
Greater Manchester 234 365 599
Greater Merseyside 105 163 268
Lancashire 101 212 313
SUM: 579 987 1,566
Fig 9. Designers: Advertising & Graphic and Internet Web
Design by Sub Region
The first was the worryingly small size of the Graphic and Internet Web Design Community in Merseyside in comparison
to other Sub-Regions of the North West, which placed it behind Lancashire and only just ahead of Cheshire and
Warrington. At the time this raised a number of interesting questions for the Digital & Creative sector team at Business Link
North West, not least: given the size of the central business district in Liverpool – the lack of connectivity between Digital
Marketing Agencies and the wider Business Community; the small number of technically proficient brand marketers
despite the presence of three major universities in the city and two of the largest colleges of higher education in the
U.K. (Liverpool & St. Helens) and most critically, the failure of retention of a highly educated student population in one
of the most culturally vibrant cities in the U.K. These are major questions which are particularly pertinent and relevant
to the Enterprise Village Project. It is a fundamental question as to why the Digital & Creative Sector is twice the size in
Manchester than it is in Merseyside. Clearly the presence of national radio and TV stations in Manchester has a lot to
answer for in terms of a catalytic effect.
SUB REGION COMPUTER SOFTWARE DEVELOPMENT SUM:
Cheshire & Warrington 130 130
Cumbria 29 29
Greater Manchester 191 191
Greater Merseyside 70 70
Lancashire 84 84
SUM: 504 504
Fig 10 Computer Software Development by Sub Region
IT IS NOT AN ISOLATED FACTOR ANOTHER SUB-SECTOR THAT WE
LOOKED AT IN DETAIL AT BUSINESS LINK NORTH WEST IN OCTOBER
2010 WAS THE COMPUTER SOFTWARE DEVELOPMENT SECTOR.
Again Merseyside does particularly badly in comparison to Cheshire & Warrington and once again Lancashire. The
concentration of industrial defence primes in Lancashire may be one explanation for this. There is no reason why the
Merseyside economy should compete so badly in relation to Cheshire & Warrington especially given the size of the
financial services industry, the insurance industry in particular.
11
14. Real World: Identifying the Gaming Sector
Gaming Industry Profile: Lancashire
Potential Gaming Companies - North West Summary of Turnover and Employment by Sub Region
Count of Actively Trading Locations by Turnover and Sub-Region:
CHESHIRE & GREATER GREATRER
CUMBRIA LANCASHIRE SUM:
WARINGTON MANCHESTER MERSEYSIDE
1: Unclassified 1 1
2: 1 to <50k 57 14 81 36 49 237
3: 50k to <400k 22 8 36 11 12 89
4: 400k to <1m 12 1 10 2 2 27
5: 1m to <2.5m 4 8 6 2 20
6: 2.5m to <5m 2 7 2 6 17
7: 5m to <10m 5 9 1 3 18
8: 10m to <40m 5 6 3 1 15
9: 40m + 7 2 21 4 7 41
Unknown 7 6 11 10 13 47
SUM: 512
200
Turnover Band
1: Unclassified
160
2: 1 to <50k
3: 50k to <400k
Count of Locations
4: 400k to <1m
120 5: 1m to <2.5m
6: 2.5m to <5m
7: 5m to <10m
80 8: 10m to
9: 40m +
Unknown
40
0
Cheshire & Cumbria Greater Greater Lancashire
Warrington Manchester Merseyside
Sub-Region Name
Fig 11a. Chart showing turnover in the
North West’s gaming Industry
AS THE ABOVE SLIDE ON THE COMPUTER GAMES INDUSTRY CLEARLY SHOWS MERSEYSIDE IS AGAIN FAILING TO MATCH
ITS WEIGHT IN A HIGH PROFILE AND HIGHLY REMUNERATIVE SECTOR OF THE ECONOMY. TWO PROBLEMS APPEAR
TO BE IN PLAY: GETTING A BUSINESS ESTABLISHED IN THE FIRST INSTANCE AND THEN GROWING IT BEYOND FOUR
EMPLOYEES. AGAIN THESE ARE ISSUES THAT ENTERPRISE VILLAGE WILL SEEK TO ADDRESS. ONE FACT IS PARTICULARLY
STARK IN RELATION TO THE GAMES INDUSTRY. WHEREAS 68.59% IN CHESHIRE & WARRINGTON OF COMPUTER GAMES
COMPANIES HAVE GROWN BEYOND FOUR EMPLOYEES; 61.29% IN CUMBRIA; 68.25% IN GREATER MANCHESTER AND
59.38% IN LANCASHIRE THIS FIGURE IS ONLY 56% IN MERSEYSIDE. IT IS A TELLING FIGURE!
CHAPTER 2
15. Count of Actively Trading Locations by Employment Band and Sub-Region:
CHESHIRE & GREATER GREATRER
CUMBRIA LANCASHIRE SUM:
WARINGTON MANCHESTER MERSEYSIDE
1: 0 - 4 38 12 60 33 39 182
2: 5 - 9 35 11 35 16 31 128
3: 10 - 49 39 6 68 21 16 150
4: 50 - 99 2 11 4 17
5: 100 - 249 2 5 2 1 10
6: 250+ 1 1 2
Unknown 4 2 9 3 5 23
SUM: 121 31 189 75 96 512
200
160 Employees
Count of Locations
1: 0 - 4
120 2: 5 - 9
3: 10 - 49
4: 50 - 99
80 5: 100 - 249
6: 250+
Unknown
40
0
Cheshire & Cumbria Greater Greater Lancashire
Warrington Manchester Merseyside
Sub-Region Name
Fig 11b. Chart showing employment
in the North West’s gaming Industry
IT IS ALSO A SHAME THAT THIS RESEARCH WAS NOT TAKEN FURTHER. THE OUTPUTS FORMED PART OF A RESEARCH
PROJECT FUNDED BY THE NWDA ON REDEFINING THE DIGITAL & CREATIVE SECTOR IN THE NORTH WEST, LARGELY IN AN
ATTEMPT TO JUSTIFY THE RELOCATION OF THE BBC TO SALFORD QUAYS IN MANCHESTER. IN THAT SENSE IT PROVED
A POINT WHICH WAS THAT THE HUB OF THE NORTH WEST’S DIGITAL & CREATIVE INDUSTRIES ARE CLEARLY LOCATED
WITHIN GREATER MANCHESTER AT THE EXPENSE OF OTHER NORTH WEST SUB REGIONS. THAT HUB, HOWEVER,
WAS NOT AS LARGE AS IT IS IN THE SOUTH WEST AND BRISTOL IN PARTICULAR WHICH HAS THE SECOND LARGEST
COLLECTION OF DIGITAL & CREATIVE FIRMS OUTSIDE OF LONDON. UNFORTUNATELY, BUSINESS LINK NORTH WEST AND
ITS REVOLUTIONARY BUSINESS PERFORMANCE INDEX BUSINESS INTELLIGENCE SYSTEM WAS DISMANTLED PRIOR TO
THE WINDING-UP OF THE NDPB – AN ACT THIS AUTHOR STILL REGARDS AS ONE OF INTELLECTUAL VANDALISM.
Figs. 11a & b; Identifying the Computer Gaming Sector
13
16. It’s a Life-Stage Problem
The role that more precise definition based on access to greatly enhanced and enriched data sets can bring to
understanding high growth sectors, of course forms only part of the issue. Another critical element involves understanding
precisely when high growth occurs.
The following graphic is taken from a Presentation which was delivered to the ONS Regional Research Conference on the
21st of June 2010 entitled, “Entrepreneur Mapping”:Tracking Businesses along The Journey from Pre-Start to Start-Up
to “High Growth”8, 9.
Annual Turnover
< £90k £90 - £400k £400k - £2.5m £2.5m +
100 - 250+ 0 0 0 2
Headcount Band
50- 99 0 2 0 7
10 - 49 11 13 29 6
0-9 1433 626 598 43
Fig 12. Annual Turnover & Head Count of New
Start Businesses 3 Years Old or Less
What it clearly demonstrates is that only 23.74% of Start-Up Businesses that are 3 years old or less with less than 10
Employees generate a turnover of greater than £400K. Only 1.59%, generate a turnover in excess of £2.5M.
Tracking I and my co-Author, Neil Geoghegan, concluded that in terms
;
of the chicken and egg debate, growth in Turnover preceded
Businesses along growth in the number of employees. Consequently, achieving
headcount growth is dependent on achieving an increase in the
The Journey level of turnover. Growing an employee base beyond 9 therefore
and achieving the status desired by policy makers as a fully
from Pre-Start to fledged SME is very difficult. Longitudinal analysis of turnover
clearly demonstrated that there was a direct correlation between
Start-Up to “High achieving a turnover of more than £1.0m and employing more
than 10 Staff. This was very difficult for a business start-up to
Growth”. achieve in 3 to 5 Years. Only 47 out of 2770 Start-Up Businesses
we analysed (or 1.7%) actually achieved this.
The Critical Business Event
We further concluded that in the business history of high growth companies it was a “Critical Business Event” which
preceded an increase in turnover beyond £400K allowing the business to recruit a critical echelon of new employees that
drives the Business forward to achieve the levels of growth required to achieve even higher levels of turnover still. Deeply
imbued with the literature on entrepreneurial behaviour at the time we argued that this is the point where opportunity
meets hard work. Furthermore such events are not always recognised - they can be planned but more often not they
are accidental – the concatenation of a series of fortunate events: what we dubbed, in jest, the Lemony Snicket Moment!
The problem is that even when recognised they are not always developed. Few fledgling entrepreneurs derive maximum
benefit form the opportunities. Many indeed step away from the inherent risk. This is because in order to take advantage
of critical events a Business is required to take a risk in terms of funding expansion. This requires the sourcing of capital
funding in order to break through the glass ceiling and reach the next plateau in the life stage of business development.
This is why growth hubs which focus purely on the mechanics of actually doing business: legal advice, tax, Vat,
accounting, sales & marketing, training & skills, export without a focus on capital expenditure to fund next stage growth
omits the key driver of business acceleration. This is why sourcing, applying for and securing funding will be core business
competencies and a key service offering of Project EV.
CHAPTER 2
17. Business Life Cycle
Time
GAZELLES: A GAZELLE COMPANY
IS AN AMERICAN EXPRESSION
FOR SMALL, FAST GROWING
d
COMPANIES IN REFERENCE TO
io
r
Pe
Flyers THE FACT THAT THEY CAN JUMP
Off
➟
Size
Ta
e-
k
Sprinters
Accelerators
HIGHER AND RUN FASTER THAN
THEIR PEERS),
FIRMS
THAT
MANY JOB OPPORTUNITIES. FAST
GROWING
ARE DEFINED AS COMPANIES THAT
HAVE EXPERIENCED ART LEAST 60%
GROWTH IN EMPLOYMENT AND
TURNOVER (TURNOVER ADJUSTED
FOR INFLATION) OVER A 3 YEAR
PERIOD.
CREATES
(“GAZELLES”)
Fig 13. The Business Life Cycle: Chasing
Down Business Accelerators
Start- up Growth Maturity Decline
Business Accelerators
Calling businesses operating in this phase of development Accelerators was deliberate. I owe the term to Maureen
Haldane at Manchester Metroplitan University who first deployed the term in relation to achieving different levels of
proficiency in the use of educational technology in the classroom10. I took this concept to show businesses quickly
accelerate beyond the foundational development stage adding additional functionality with greater frequency and facility to
the pointy where they begin to grow faster developing in a more cohesive fashion. The ultimate epitomy of this metaphor
we coined the Usain Bolt Moment with businesses developing a fluency of performance with Body (Sales & Marketing &
Operations) moving in attuned fashion with Mind (Business Intelligence & Accounting Systems).
High Growth Companies
Sprinters: Accelerators: Flyers:
Young, and usually Fast- expanding Sprinters who turn
small, high growth Dynamic SMEs often into large rapidly
enterprises.. in new industries expanding job
that generate large creators.
Young, start- up or amounts of Turnover.
spin-out firms.. Do they also generate Large Mature high
large numbers of jobs growth companies.
“Adolescent” High at the same time?
Tech Companies.
The subset of high
growth enterprises
which are about 5
years or older.
“Early Start-up phase: “Early Growth phase: “Exponential Growth phase:
Up to 3 Years” 3 to 5 Years” 5 Years and Older”
Fig 14. High Growth Companies
FOOTNOTES & URLS
8. MIRFIN G. & GEOGHEGAN N. “Entrepreneur Mapping: Tracking 10. ioe.mmu.ac.uk/staff/ioe-profile.php?surname=Haldane
Businesses along The Journey from Pre-Start to Start-Up to High &name=Maureen
Growth” : RIU Conference 21stJune 2010 ONS Regional Research
Conference, O2 Conference Centre, Liverpool
slideshare.net/CllrMirfin/entrepreneur-mapping
docstoc.com/docs/84348272/Pre-Start-Up-Business---PowerPoint
9. Attendent Commentary can be found at : docstoc.com/
docs/84348272/Pre-Start-Up-Business---PowerPoint
15
18. The position of businesses on the growth curve in the phase between start-up and attaining levels of “high” growth, we
argued, is a function of the Life–Stage (not chronological age) of a business in this phase of development, as it reaches
a particular level of turnover and number of full time employees.
At the time the evidence, based on a focus on high-tech businesses, appeared to demonstrate that businesses in this
acceleration phase of growth were achieving a turnover level of between £400K and £2.5M. Subsequent research and
feedback has revealed that such an approach ignores a number of young heavy industrial manufacturing businesses
which can reach much higher levels of turnover because of either the base cost of the commodities they manufacture –
typically metals or glass or the size of their production runs – typically plastics or chemicals – is very large.
It is sensible to widen the criteria for high growth businesses in the accelerated phase of development to those businesses
achieving a turnover Level of between £400K and £4M. This seemed to make sense in terms of multiples of turnover
with £4M representing x10 the Value of £400K. It also made sense to take a more intuitive approach with regard to
the number of FTEs (Full Time Employees) in order to gain a better appreciation of the Contribution Per Employee to the
Business. For that reason a Minimum Number of 4 FTEs has been selected.
Total Active Trading
Business in Merseyside
(40,476)
Turnover between
£400k and £4m & at
least 3 years A/Cs
(4,043)
At least 4 FTEs
(1,402)
Primary Trading
Location in Merseyside
(1,017)
Fig 15. Location of Accelerating Businesses
in Merseyside by Local Authority
(Volumes)
THE STOCK OF HIGH GROWTH LIFE STAGE BUSINESSES IS ACTUALLY QUITE SMALL IN TERMS OF THE OVERALL STOCK
OF BUSINESSES IN MERSEYSIDE, REPRESENTING ONLY 2.51% OF THE TOTAL STOCK OF ACTIVE BUSINESSES IN
MERSEYSIDE. THIS IS A FAR LOWER STOCK OF POTENTIAL GAZELLES THAN LEADING SURVEYS WOULD HAVE US EXPECT.
It is to be noted that 385 of the Businesses have
Primary Trading Locations outside of Merseyside
although the business is owned and managed
from within the Merseyside region. This raises
some interesting issues about Merseyside
business owners deciding to locate their business
outside of Merseyside, which in turn begs some
; High Growth Life-
Stage Businesses
in Merseyside
interesting questions about the trading environment
and business support networks and the strength
of supply chains within Merseyside.
CHAPTER 2
19. 515
203
182
131
86
Fig 16. Location of Accelerating Businesses in Merseyside by Local Authority
(Volumes)
In terms of Location by Local Authority the findings were also very surprising. The fact that the bulk of high growth life stage
businesses were concentrated in Liverpool is perhaps unsurprising. The fact that such a large number were located in the
older industrialised parts of Sefton and some of the more deprived parts of the Wirral was. This is a very different picture
from the high-tech slanted analysis that was conducted at Business Link North West, dominated by high-tech Locations
in Liverpool, St. Helens and the West Wirral.
Fig 18. Location of Accelerating Businesses
in Merseyside by Local Authority
(Percentage)
The reason for this is self evident. Especially, if we look at the sector groupings which constitute the make-up of the high
growth life stage businesses. What I found was incredibly revealing. It should not have been. But it was. It was because
it revealed a more complete picture of high growth Merseyside than the NWDA was attempting to present, I suspect
because the picture it represented was one very different from that of the high-tech vision it was trying to sell to foreign
direct investors.
17
20. CHAPTER 3
Property & Construction – The Lynch Pin of the Economy
The reality of Merseyside’s high growth life stage businesses is that they are dominated by the Property and Construction
Sector. 221 or 22% of Businesses are involved in either the Property Sector or Construction. Construction for Merseyside
more than most regions is a function of public sector led regeneration. If we further accept that the Professional Services
sector which includes Accountants & Solicitors (who make up 22 or 26.51% of this Sector) are dependent for a sizeable
percentage of their business on property transactions then this puts the scale of this particular sector into further context.
Next in terms of importance come what I would call the Public Sector Economy in Merseyside. With one of the highest
numbers and overall percentage of Public Sector employed workers in the UK this should not perhaps be surprising. The
number of high growth life stage businesses in this cohort however is.
SECTOR COUNT %
Property 114 11.21
Advanced Manufacturing 92 9.04
Professional Services 78 7.67
Construction 73 7.18
Health & NHS 65 6.39
Consumer Retail 63 6.19
Charitable 62 6.09
Public Sector Funded 56 5.50
Visitor Economy 56 5.50
Other Miscellaneous 52 5.11
Transport 45 4.42
Other Manufacturing 39 3.83
Education & Vocational Training 31 3.05
Energy & Environmental Technology Services 31 3.05
Care 30 2.95
Wholesalers, Merchants, Stockists & Suppliers 27 2.65
Food & Drink 24 2.36
Shipping 22 2.16
Agriculture, Horticulture & Animal Rearing 16 1.57
Digital 14 1.38
Distributors & Added Value Re-Sellers 12 1.18
Automotive 10 0.98
Bio Medical 5 0.52
TOTAL: 1017
Fig 19. Accelerating Businesses in
Merseyside by Sector
(Volumes)
Public Sector Funded Business
244 Businesses or circa One in Four (23.98%) of Merseyside’s high growth life stage businesses form part of the
dense network of directly and indirectly funded Public Sector support related activities. These include: Health and the
NHS (including G.P. Practices, Pharmacies, Dentists, Miscellaneous Healthcare Practitioners and Hospices), and Care
(including Nursing Homes, Care Agencies and Nurseries). Safe to say that Health and Social Care are big business in
Liverpool as befits a de-industrialising region beset by the legacy of chronic healthcare problems of a former industrialised
workforce and the long-term unemployed. A whole high growth Industry has grown up to service the needs of this
community, which, with a gradually ageing population, is hardly likely to get any smaller.
Other Public Sector dominated support businesses which are worthy of note are the Charitable Sector which is the
beneficiary of large, albeit shrinking, amounts of public sector funding in Merseyside with a huge number of Charities
CHAPTER 3
21. and Charitable Trusts being located in the Sub-Region. This may be the consequence of the location of specialist legal
and financial services which supports this sector. Equally it is clear that religious and civic trusts which used to play an
important role in the life of Liverpool and surrounding towns still have a powerful legacy. It is to be applauded also that
all three major football clubs across the City of Liverpool promote Football in the Community Programmes which are all
growing in terms of attracting financial support and direct employees beyond the coterie of publicity hungry players.
Second, Direct Public Sector funded businesses (wholly owned subsidiaries or Public Private Partnerships - Companies
Limited by Guarantee). These include Community and Regeneration Investment Vehicles, Social Enterprises and
Community Interest Companies and what I have dubbed Big Society Businesses – Public Sector Funded Charities
which are filling social services provision vacated by the public sector, local government in particular. One may also wish to
include the raft of indirectly funded business support consultancies which are best located within the Professional Services
grouping. I found 13 such businesses – primarily former-Public Sector employees who have set up as consultants in the
same space they used to occupy as direct public sector funded business support agencies.
Education and Training and in particular businesses offering Specialist Vocational (NVQ) Training to up-skill the working
population also occur in high volumes, especially the Wirral. Training is a major growth industry. It seems somewhat
ironic to report this but I have seen examples in the Hotel and Hospitality Industry where it is possible to establish a direct
correlation between the level of NVQ Qualifications of staff and an increase in the level of turnover of a business and its
performance in terms of increased levels of customer satisfaction. The free school movement and the vibrancy of the
independent school sector against a backdrop of underperformance and negative public perception in more affluent
areas of Merseyside, especially he Wirral has increased the performance of some small private schools.
What this indicates is that the private sector segment of Merseyside’s high growth life stage businesses outside of the
Property and Construction Sectors is nor only much smaller than one might expect (586 Companies) but the balance
between the remaining identified sectors represents a very clear demarcation between a low-tech manufacturing base, a
high-tech brave new dawn which includes Digital Businesses and Advanced Manufacturing companies utilising high-tech
and precision manufacturing processes as well as of course a Consumer Retail and Visitor Economy. The point to note
is the silo nature of the Merseyside economy and the limited interconnections between key sectors.
How Do We Help Advanced manufacturing in an Accelerator Project?
Within the high-tech silo the largest segment of businesses is the group which is constituted of Advanced Manufacturers
and Digital Businesses. Advanced Manufacturing businesses form by far and away the largest segment accounting for
almost 1 in 10 of Merseyside’s high growth life stage businesses. It is safe to say that this is a sector which received an
awful lot of support from the NWDA. Made up principally (c. 70%) of Manufacturers of Metal Products, Machine Tools and
Precision Manufactured Metal Parts (Widgits) as well as Manufacturers of Precision Technology and Scientific Devices and
Instruments it is a Sector which is incredibly difficult to help in terms of an industrial intervention strategy not least because
a large part of its market is export driven.
Accompanying the Manufacturing Sector is an extended supply chain of distributors & added value re-Sellers. There
is room in an Accelerator Project to assist businesses in this sector with developing an industrial Sales & Marketing
and Business Development Strategy with one eye clearly on overseas marketplaces but with an appreciation that the
manufacturing plant for such businesses will have to be located elsewhere/offsite.
The Digital Economy
The amount of Digital businesses at the high growth stage of development is by comparison disappointingly small. This
is a function of three mutually exclusive factors. The first is that Digital Businesses are still lifestyle Businesses. Knowledge
Workers often choose to work in digital industries because of it is a lifestyle choice. By this I mean that the culture and
working environment are very different from more regimented office environments. The second is that there is a natural
turnover ceiling for Digital and Creative Industries businesses. Quite simply there are very few very large Digital Marketing
Agencies in Merseyside in particular and the marketplace in general. They are the exception rather than the rule. Digital
or Online businesses tend to be agile and very fleet of foot working out of serviced office locations utilising cloud based
hosted server technologies. The third is that they tend not to employ large amounts of people. A typical Digital business
will employ no more than 5 to 6 people at the most. Salaries will be large because of the specialist nature of the work
involved, so large in some cases that a good Digital Consultancy can be extremely choosy about who it works with –
working with a small niche client list working on highly remunerated projects often for only part of the year.
The City Centre Economy
Another important area of high growth life stage businesses in Merseyside is the City Attraction Economy encompassing
Consumer Retail (retail outlets with shop frontage), the Visitor Economy (encompassing Boutique Hotels, Pubs & Pub
19
