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Entrepreneur Mapping


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An Award Winning Presentation delivered at the 2010 ONS Research Conference which attracted plaudits from practitioners and politicians alike

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Entrepreneur Mapping

  1. 1. Entrepreneur Mapping: Tracking Businesses along TheJourney from Pre-Start to Start-Up to High Growth RIU Conference 21st June 2010•Neil Geoghegan – Corporate Resources Director •Ged Mirfin – Chief Data Officer
  2. 2. Content• Methodology• Business Life Cycle• High Growth Businesses• Key Questions• QlikView• Start-Ups & Growth Prospects: Environmental Factors• Star Performers: Experiential Factors• The Take-Off Period – the Importance of Critical Business Events• At the end of the day its all about Confidence• Conclusions• Questions
  3. 3. Entrepreneurialism – is it really a white knuckle ride?“The life of an entrepreneur in a gazelle company is a life of almost constant fear. Everything is uncertain. What will happen next? This means that the entrepreneurs must be able to control their fear, which few can. It’s like a downhill skier before hurtling down the precipice…the fear is there but under control.The people who succeed are people who can tolerate the fear, the fear of awful events, and if you learn to tolerate the fear well, then you can do almost everything. As an entrepreneur you need to learn how to deal with fear.”David BirchOriginator of the Term “Gazelle”, March 2010
  4. 4. Methodology• Tracking Businesses from Conception to Birth to High Growth examining their shared characteristics• What differentiates the behaviour of owners of High Growth Companies who have sought Business Support?• “Business Life Cycle” Tracking Key Developmental Stages of a Business• Entrepreneur Mapping “Matching” the details of Pre-Start Enquiries (“Thinking of Starting-Up a Business”) with: a. A Business Location b. The Home Address Details of the Directors or Proprietors c. Home-Based Businesses• Enriching of Data Set with Additional Classification Systems to better understand the behaviour of Business Owners• Visualisation of the links between the Socio-Demographic Environment where Directors and Proprietors live and Business behaviour• Star Performers Survey provided further detailed behavioural insight
  5. 5. Business Life Cycle• Focus on Start-Up and Early Growth Phase• Focus on Businesses between 3 d rio and 5 years old (some “shelf Flyers f Pe companies” are included) these -Of only start up properly after e Tak being dormant for a while• We also surveyed Mature Sprinters Businesses further on in the Accelerators Business Life Cycle that have been assisted by BLNW to explore the behaviour of their owners
  6. 6. High Growth CompaniesA gazelle company is an American expression for small, fast growing companies (in reference to the fact they canjump higher and run faster than their peers), that creates many job opportunities. Fast growing firms ("gazelles") are defined as companies that have experienced at least 60% growth in employment and turnover (turnover adjusted for inflation) over a 3 year period. Accelerators: Sprinters: Flyers: Young, and usually Fast-expanding Dynamic Sprinters who turn into small, high growth SMEs often in new large rapidly enterprises industries that generate expanding job Young, start-up or spin- large amounts of creators. out firms. Turnover. Do they also Large Mature High “Adolescent” High-Tech generate large numbers Growth Companies. of jobs at the same time? Companies The subset of high- growth enterprises. which are 3 but typically 5 years or older. “Early Start-up phase: “Early Growth Phase: “Exponential Growth Up to 3 Years” 3 to 5 Years” Phase: Years and Older”
  7. 7. Key Questions – How do we spot Winners (Business Flyers)?• Can these companies help to grow our way out of recession?• How important are Start-Up Businesses to growing our way out of a recession?• How quickly can Start-Up Businesses grow?• We run the QlikView microscope over key geographies and ask “how important is place” when it comes to starting-up a business?• Is “Entrepreneurialism” a “Middle Class Phenomenon”?• How do the owners of “Flying Businesses” behave?• Are you confident to push-off on the white knuckle ride?
  8. 8. You’re No More than 6 Qliks Away From An Answer From QlikView to Local Regional View • QlikView Dashboard Engine is revolutionising analytics • Ability to Link Data Sources in a way simply not possible before • Allows us to focus the microscope on a list of “enterprising prospects” analysing key “attributes”, “shared characteristics” and essential “differentiators” to better understand correlations between environment, experiential behaviour and business performance • QlikView technology has effectively allowed us to break down the six degrees of separation (Sidney Milgram) between high growth businesses and their operating environment • QlikView has allowed us to produce multi-dimensional League Tables and to understand the correlations between comparative ranking positions of the businesses on them • QlikView also allows to picture the results of our analysis in a highly visual way
  9. 9. Customer Volumes
  10. 10. Attributes of Growth Prospects- Geography1. Simple split of region reveals expected volumes for Greater Manchester.2. Strong performance from Lancashire3. Cumbrian total outperforms expectations
  11. 11. Growth Prospects Attributes - RES Includes: Builders & Building Contractors 168 Interior Building Services 289 Personal Services 179 Education 103 Medical Services 94 Garages & Vehicles 451. Vast majority of “Growth Prospect” companies operate outside of RES Sectors2. Larger Service Sector companies in Business & Professional appears to be an area from which people look to set up a business.3. Very Few Advanced Engineering companies are starting and thriving.
  12. 12. Geographic League TablesTo 20 Towns / Cities for start up City / Town Survivors Initial Enqs Conversion MANCHESTER 489 4200 12% LIVERPOOL 363 3393 11% PRESTON 271 1920 14% STOCKPORT 152 934 16% WARRINGTON 134 910 15% CARLISLE 127 902 14% BOLTON 120 840 14% BLACKPOOL 108 839 13% WIGAN 94 789 12% WIRRAL 91 512 18% BLACKBURN 84 514 16% CHORLEY 81 594 14% OLDHAM 79 565 14% KENDAL 76 531 14% SOUTHPORT 69 450 15% ROCHDALE 65 461 14% CHESTER 58 526 11% NORTHWICH 54 311 17% BURY 52 451 12% ALTRINCHAM 48 260 18% ROSSENDALE 48 340 14% LANCASTER 47 457 10% MACCLESFIELD 47 223 21% ORMSKIRK 40 326 12% SALE 40 220 18%
  13. 13. League Tables Top 20 SIC CodesSIC Code Total •Most are fromUnknown 864 unknown SICF Construction 518 codesN Administrative And Support Service Activities 489M Professional, Scientific And Technical 447G Wholesale And Retail Trade; Repair Of Motor Vehicles And Motorcycles 339 •Sole traders inS Other Service Activities 326 the constructionC Manufacturing 267 sector constitute aP Education 168 large start upJ Information And Communication 167Q Human Health And Social Work Activities 155 groupR Arts, Entertainment And Recreation 113I Accommodation And Food Service Activities 100 •ComparativelyH Transportation And Storage 85 low levels ofL Real Estate Activities 81 manufacturingA Agriculture, Forestry And Fishing 31K Financial And Insurance Activities 25 companies startE Water Supply; Sewerage, Waste Management And Remediation Activities 17 upO Public Administration And Defence; Compulsory Social Security 9D Electricity, Gas, Steam And Air Conditioning Supply 2U Activities Of Extraterritorial Organisations And Bodies 1
  14. 14. Economic Contributions
  15. 15. High Growth Geography - Sales Top Twenty Local Authorities 20/39 Manchester 52 Cheshire East 39 Cheshire West and Chester 36 Liverpool 33 Sefton 33 Trafford 30 Stockport 28 Warrington 25 Blackburn with Darwen 24 Salford 23 Bury 21 Oldham 21 Wigan 20 Wirral 20 Chorley 19 South Lakeland 19 St. Helens 19 Rochdale 17 Bolton 15 Top Twenty Towns & Cities Preston 15 MANCHESTER 108 ROCHDALE 14 LIVERPOOL 63 WIRRAL 1420/97 PRESTON 33 SOUTHPORT 13 •Greater Manchester has the highest return 34% WARRINGTON 25 WIGAN 13 STOCKPORT 24 ST HELENS 12 •Manchester (City) has 16% BLACKBURN OLDHAM 21 CARLISLE 18 ROSSENDALE 11 11 •Top 5 Performing Post Codes BB2 (Blackburn 13) BB4 CHORLEY 16 BURY 10 (Rossendale 11) M19 (Manchester 11) PR7 (Chorley / BLACKPOOL 15 ALTRINCHAM 9 BOLTON 15 NORTHWICH 9 Charnock Richard 11) M28 (Worsley 10)
  16. 16. High Growth Sales – Which Areas Generate High Growth?• Deprivation Areas – 198• Non Deprivation Areas - 513 of which 168 are from “Prospering Suburbs”.• “Prospering Suburbs” account for 25% 0f all high growth start ups and 33% of high growth start ups in in Non Deprivation Areas.• Is Entrepreneurialism a middle class phenomenon?• Is this accentuated by the current recession?
  17. 17. Business Synapses• Does living in certain places make business decisions, easier / more effective?• Is it easier for certain socio demographic groups to set up and grow a business?• Challenges in business are ubiquitous, the synaptic gap is the difference between cause and effect in the creation of a high growth company• Business Synapse Theory suggests that the greater intensity and frequency (“busy-ness”) of Business Neurons make it easier to cross the business development gap.• The speed of response increases proportionate to the level of business stimulation (support) activity.• Business Stimuli can be many and varied (public and private) but it is the quality of stimulus operating within receptive settings that is the key.
  18. 18. Where are the busy business neurons from?• The more the merrier. Neurons in biology speed up reactions the quality of the Neurones is important. Synapse gaps are bridged by Neurones and this bridging generates action (response)• The optimum result is that reaction times are shortened and levels of responsiveness improved• An absence of Neurons will cause paralysis, this is true both biologically and in business• Business Neurons are many and varied - it is quality that is the key• Business Support is a key element in the generation of business neurons.
  19. 19. High Growth In Deprived Areas - Sales Towns / Cities Sales Growth Top 15 Deprived Areas MANCHESTER 46 LIVERPOOL 34 PRESTON 12 OLDHAM 9 ROCHDALE 8 BOLTON 7 BLACKBURN 6 RUNCORN 6 ST HELENS 5 BLACKPOOL 4 NELSON 4 SOUTHPORT 4 BARROW IN FURNESS 3 •City Regions have the largest return BURY 3 Percentage of Total High Growth CHORLEY 3 •Liverpool has the most growth companies fromMANCHESTER 46 43% deprived areas 54%LIVERPOOL 34 54% •Runcorn has the highest proportion fromPRESTON 12 36% deprived areas (75%) with Rochdale and NelsonOLDHAM 9 50% joint second (57%)ROCHDALE 8 57% •Average for the region 28%BOLTON 7 47% •Most areas have very little high growth inBLACKBURN 6 29% deprived areasRUNCORN 6 75% •Cheshire & Warrington have only 4%, CumbriaST HELENS 5 42% have 11%BLACKPOOL 4 27% •Greater Manchester 34%, Merseyside 48%, LancsNELSON 4 57% 24%
  20. 20. High Growth In Prosperous Wards - Sales Output Area Classification Typical Traits 172 Prospering Suburbs 168 Countryside 92 Blue Collar Communities 32 Constrained by Circumstances 22 City Living 20 Multicultural 5 Not Known 2 •Manchester has the highest return with 62 companies Top 15 Sales Growth Non Deprivation areas as a %age of Total •Stockport, Rossendale, Northwich and Warrington produce moreMANCHESTERLIVERPOOL 62 29 57% 46% than 90% of their growth companies from prosperous areasWARRINGTON 24 96% •OA Classification “Prospering Suburbs” are primary drivers for High 22 100% Growth CompaniesSTOCKPORTPRESTON 21 64%BLACKBURN 15 71%CHORLEY 13 81%BLACKPOOL 11 73%WIGAN 11 85%WIRRAL 11 79%ROSSENDALE 10 91%CARLISLE 9 82%NORTHWICH 9 100%OLDHAM 9 50%SOUTHPORT 9 69%
  21. 21. Significant Contributions with employment growthSales of more than £400k andemploying more than 10people
  22. 22. High Growth - Sales of £400k+ and Staff 10+ Even Geographical Spread - only 42 businesses5 3 Easier to grow in Cumbria 16% of high growth companies achieve more than £400k & 10 people, only 3% achieve this 34 in Greater Manchester, 6% everywhere else Vast Majority turnover less than £1m Total Jobs in sample – approx 2500
  23. 23. High Sales Growth (£5m+) Companies Employing more than 10Even Geographical Spread of businessesVery Few Companies achieve this sizeAlthough Sales Volumes are good employment ispredominantly in the 10 – 49 bracket Employing – 445 with sales of £125m aprox
  24. 24. Business Activity Matrix - Start Up Companies and Growth Annual Turnover < £90k £90-£400k £400k - £2,5m £2.5m+ 100 - 250+ 0 0 0 2 50 - 99 0 2 0 7 B d n a 10 - 49 11 13 29 6 0- 9 1433 626 598 43 H o n u d e a c t•There are few companies that make the leap up the high growth curve!•Turnover and Number of Employees are mutually interdependent•Growing employee base beyond 9 is very difficult and requires turnover ofmore than £1.0m•From start up to high turnover and employment in a 3 year window is veryrare
  25. 25. Conclusions - Environment• Manchester good new co generation• Liverpool has the most high deprivation locations• High Class Suburbs generate most high growth companies by a factor of 3:1• Deprived locations valiant effort – heroes!• Regeneration Areas perform well for start up activity but struggle to achieve significant growth within 3 years• Job Creation in general struggles to get over 10 employees• Few achieve high turnover (£5m)• How long does it take to establish a significant business – is a 3 year window too small?
  26. 26. Star Performer Survey• Conducted a survey amongst Business Link Advisors to highlight businesses in their portfolios that they considered to be their strongest performers• Survey designed to capture behavioural characteristics of the owners of these high performing businesses• Unique insight into high performing businesses in receipt of direct business support
  27. 27. Method• On Line Questionnaire (Sharepoint) completed by qualified business advisors in the North West of England• 259 questionnaires were completed• Response rate of 40% of advisor population• Geographic spread of respondents was forced and matches the locale of the advisor• Questions required advisors to choose from a list of priority options and rank key behavioural characteristics• Response drivers focussed on intrinsic v’s extrinsic motivations of the business owners
  28. 28. Questionnaire Format
  29. 29. Word Cloud for Responses Drive Phase
  30. 30. Business Sectors•Highest number of respondents from the Digital & CreativeIndustries and the Finance and Professional Services sectors•Energy & Environment offers the largest percentage responsefrom the BLNW team•Advanced Engineering delivered a proportionately low response
  31. 31. Entrepreneurial Characteristicsa) Drive and ambition - Do the key personnel of the business have the drive and ambition to succeed?b) Control/Decisive - Are the key personnel decisive and prefer to take full control of the business (autocratic)?c) Proactive leader - Are the key personnel proactive in their approach and show strong leadership qualities?d) Risk taking - Do the key personnel take risks in venture opportunities even if they dont know what the outcome is going to be?
  32. 32. Entrepreneurial Characteristics• Drive and Ambition and Pro-activity were more important than control or the propensity to take risks• The risk = reward concept seems not to apply to our sample• View risk from the position of experience – allows a more calculated approach
  33. 33. Innovation• Do the key personnel have creative ideas /new solutions?b) Does the company culture encourage and support new ideas, creative processes and R&D?c) Do creative ideas come from anyone in the company?• Is from inspired leadership and empowered teams.
  34. 34. Marketa) Right place/right time - Has an element of luck influenced the success of this business?b) Is it a growing market and is it favourable for the type of product/service the business is offering?c) Does the product/service have a USP/competitive edge compared to the current marketplace?d) Access to market - Does the business haveeasy access to its marketplace?e) Import/Export - Is the business an importeror exporter and is this a key to their success?
  35. 35. Market• The right place right time question has a very normal distribution, “luck” is not a factor• Growing Markets and Niche products are important• 79% of the respondents offer a unique selling point• 79% of respondents did not consider Import Export activities to be important• 54% believed this strongly• Access to Market is vital
  36. 36. Unique Selling PointOnly 5% of the responses said that price was their USP48% believed it was quality47% believed it was market positioning
  37. 37. Finance• Are the key personnel financially committed to the venture?b) Has the business secured investment/asset backing?•91% of the respondents had a significant personalfinancial investment in their businesses•Third party finance was not a major driver
  38. 38. Skills• Are the key personnel classically trained or self taught? Do/does the owner/director/s have the necessary business management skills to facilitate innovation/process development? i.e. accounting, marketing and strategic planning.b) Have the key personnel an established track record for success contributed to the performance of the business?c) Do the key personnel of the business have expert market knowledge/experience with the ability to create "niche", "me too" and "new" products?d) Does the business have a clear/streamlined structure of skilled staff that work well together and how much has this contributed to
  39. 39. Skills• Skills are critical to performance• Track record and “expert” market knowledge are as important as formal skill set• Skill and Confidence are very closely linked• Organisational skill and empowerment complement core subject specific skills
  40. 40. Business Support Themes for the “Star Performer” group
  41. 41. Business Support Themes - Notes• Most action plans were “strategic” rather than “tactical”.• Huge focus on skills & training• Emphasis on new premises• Marketing was a very common feature• Business Development focused on developing opportunities, R&D and intellectual property• Most of the interventions were directed at “high end” business processes
  42. 42. Different Age Profile for the respondents•Much broader spread of age – Minority being less than three years•Only 34 (12%) were in the 3 year “start up” phase•Vast Majority older than 7 years.•Most companies from affluent areas, proportion (66%)much less than startup statistics (73%)
  43. 43. Sales Banding of Respondents•Even distribution of turnover bands•More established companies have higher turnover•Maturity equals volume
  44. 44. Headcount Banding of Respondents•Still an emphasis on companies employing less than 10 people•Largest band employ between 10 - 49•Much greater company count for larger companies•Maturity equals size
  45. 45. High Growth Companies – “The Critical Event”
  46. 46. Critical Events• This is where opportunity meets hard work• Events can be planned, they can be accidental but they are not always recognised!• Even when recognised they are not always developed• Few fledgling entrepreneurs derive maximum benefit form the opportunities• Many step away from the inherent risk
  47. 47. Critical Event – EssentialCharacteristics for Success
  48. 48. Snapshot of a High Growth Company• Twice as likely to emerge from a Prosperous area• Will register tangible growth in its first three years• Will seek (strategic) business support• Is likely to emerge from new technology / markets• Will be a round for a while• Will be “educated or experienced” and focus on skill• Drive, Ambition and Commitment will be evident• Will make the most of critical business developments• Will have enough confidence to take measured risks• Flyers will look before they leap, but they WILL leap.
  49. 49. Conclusion• We Need to prepare for the “Event” spike on the growth curve• We need to provide the “Nurture” aspects of a high growth company (Finance & Robust Business Process)• We need to understand how Entrepreneurial Confidence can be bolstered, prepare them for the leap• Pro-actively encourage partnerships and other personal business relationships• Create critical business neurons• Questions?