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Iep Conference Final Version2

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A Presentation delivered at the International Enterprise Promotion Conference outlining how the Business Performance Index was built and how to target and deliver support to struggling and high growth businesses

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Iep Conference Final Version2

  1. 1. Business Link NorthwestsBusiness Performance Index:Data Driven Decision Support Monday16th November, 2009 @ 9am Neil Geoghegan – BLNW Corporate Resources DirectorTel: 07833 726 200 E-mail: neil.geoghegan@businesslinknw.co.uk Ged Mirfin – BLNW Chief Data Officer Tel: 07876 047 165 E-mail: ged.mirfin@businesslinknw.co.uk City Office Park, Bluebell Way, Preston PR2 5PZ United Kingdom Track S: Supporting small business development world-wide Presentation (S1) to the 1 INTERNATIONAL ENTERPRISE PROMOTION CONVENTION st best practice and innovation in the creation and support of small businesses world-wide 15-17 November 2009 - Harrogate, North Yorkshire, UK
  2. 2. Agenda• What is the BPI• Demand Pull Marketing• The Search for Context 1: Growing our way out of Recession – the Search for High Growth Businesses• The Search for Context 2: Delivering Support to Struggling Businesses
  3. 3. What is the BPI• Nationally Recognised “Business Objects” data base covering businesses in the North West.• An “evidence based” system that draws its base data from different sources into a “data warehouse”.• It is used to inform decision makers about planning interventions or policies.• Is fully compliant with Data Protection legislation• Is the central repository for Business Link data and the primary source of our Management Information• A system that can map the main business classification systems to the language used in Local Government and Business Support• The first B2B profile driven database in the public sector
  4. 4. History of the BPI
  5. 5. We incorporated Business Link universe andExperian’s National Business Database into the BPI
  6. 6. We incorporated Business Link universe and Experian’s National Business Database into the BPISection of databaseunique to BusinessLink – Lifestyle and Grey economy Consolidates North businesses West Business 19k 111k Universe 406k
  7. 7. We incorporated Business Link universe and Experian’s National Business Database into the BPI Consolidates North West Business 19k 111k Universe 406kOf 150,000 Penetration Impacts Added to CRM over last 18 Months, 120,000 were part of Experian Prospect Universe (80%)
  8. 8. Demand Pull Marketing: Using Data to Drive Direct Marketing
  9. 9. Demand-Pull Marketing – Public Sector• Historically public sector organisations have concentrated on service delivery rather than the end user.• DPM is ultimately about adapting to local demand• DPM involves identifying & unlocking the latent demand for a product or service rather than the generic product push marketing message typical of many public sector organizations
  10. 10. Marketing Approach• Intelligent marketing content can be tailored to suit what we know about end users• The “Marketer’s Dream” - to be able to target segments and communicate with them on a one to one basis.
  11. 11. Truism:If Segmentation and Context = Relevance Relevance = Engagement
  12. 12. Why is it context important when Making Decisions? Experience- Evidence- influenced based Aim: ChangeExperience from Anecdotal & Judgmental to Evidence-based Decision making Opinion- Evidence- based influenced Evidence / Information
  13. 13. The Search for Context 1: Growing our way out of Recession – the Search for High Growth Businesses
  14. 14. Which Companies Will Lead Us Out Of The Recession?• Some Economists believe that 50% of new jobs will be from less than 1% of a regions company base.• High Growth companies (Gazelles) will increase Turnover by between 25% and 30% in the next 4 years.*• Although Employee Growth will lag behind it is likely to be in the region of 20% per annum.*• Can Public Sector support agencies stimulate growth and ensure that Gazelle Companies fulfil their maximum potential?• Can Public Sector support agencies engage effectively with these companies and should we try?• What is the potential impact? *NESTA – “Measuring Business Growth: High-Growth Firms and Their Contribution to employment in the UK” – Oct 09
  15. 15. Tracking Gazelles• Route out of recession is to back gazelles• A gazelles are defined as small, fast growing companies (in reference to the fact they can jump higher and run faster than their peers),• Gazelles according to one accepted definition are defined as companies that have experienced at least 60% growth in employment and additionally deflated turnover (turnover adjusted for inflation) over a 3 year period.• But…they are extremely difficult to spot• In the current economic climate especially so….• Many Gazelles 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• 3 Years Growth is now more likely 2 Years Growth and 1 Year of Decline• Some Gazelles are now not able to run as fast or jump as high• Even in more favourable Economic conditions trained Business Hunters found Gazelles difficult to target:
  16. 16. Which business groups could be potentially high growth? High technology knowledge –based Independent businesses businesses Scientists, technologists Niche activities or and/or academics specialised product offerings within older or traditional industries Advanced manufacturing using precision technology Based on specialist industrial parks and technology centres Newer businesses do not have SIC codes Entrepreneurial
  17. 17. What is Commercial Mosaic?•Commercial MOSAIC is a business classification system•Categorises UK businesses into 13 groups and 50 distinct types,based on key variables that influence business behaviour•It uses a descriptive naming convention•Commercial MOSAIC segmentation systemincludes: •Demographics – Age of business, number of employees, turnover, principals’ background •Classification – Businesses with shared demographics are grouped together •Propensity – Broad description of the classification that indicates a business’ likely behaviour, for example, in its purchasing.
  18. 18. The Family or Genus Gazelle Commercial Mosaic Commercial Mosaic Features Group Type Directors under 30 & Well Educated Highly productive and skilled work force Mature businesses -64% Employ >100Monumental Monoliths Farsighted High Flyers Large Range Business Activities inc. Food, Manufacturing, Textiles, Recreation, Sport, Luxury Goods – Niche Business Trade Specialist Industrial Centres or Retail Parks Highly specialised type engaged manufacture specialist equipment and precision instruments esp. telecomms & ITSpecialist 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 Support ServicesIndependent Entrepreneurs Developing Dynamos & Recreation Small Business 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 – 346% Chance FailureIndependent Entrepreneurs Wide Range Activities: Specialist Wholesale, & Retail, Business Support Services Fledgling High Fliers & Recreation One Third Grow to Employee 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 Processing,Energetic Enterprises Professional Professors Especially Prevalent in Northwest Trading from Specialist Industrial & Technology Centres near Universities & Hospitals New “Knowledge-Based” Businesses Especially Prevalent amongst Digital & Crossover Media, Support Services toEnergetic Enterprises Support Supremos Financial Industry – High Salaries Low Risk Businesses in Areas of High Prosperity. Serviced Offices
  19. 19. The Power of the BPI: Identifying Potential High Growth Companies How do you Identify a… North West Actively Trading  company that is potentially Business Locations (428,963) high growth?  By using a commercial classification system or… MOSAIC Gazelles (69,297)  our experience from activity on the ground?  …that is mature… Age Over Three Years (18,874)  …with a reasonable turnover… Turnover  …employing 10+ people? Above £400k (1,474) Employing 10+ (445) What do these look like? -Business Link has intensively assisted 10.8% of these companies
  20. 20. The power of the BPI: are these companies healthy? Risk Profile Percentage Using Experian Commercial Risk Scores 7.73% 16.14% 2.50% 31.59% 42.06% Suppressed Low Risk Average Risk High Risk Very High Risk NB: The standard Very High Risk commercial profile across the North West as a whole is 20.44%
  21. 21. The power of the BPI: in which sector are these companies? RES Sector Profile Percentage Using BPI 10.23% 1.82% 42.05% 23.18% 4.09% 15.00% 3.64% Advanced Engineering and Materials Biomedical Business and Professional Services Digital and Creative Energy and Environmental Technology Services Food and Drink Non RES
  22. 22. The power of the BPI: where are these companies?
  23. 23. The power of the BPI: where are these companies?
  24. 24. The power of the BPI: where are these companies?
  25. 25. The power of the BPI: identifying potential high growth companies -This information is based on data provided by Experian. The data has been subject to further analysis by Business Link North West
  26. 26. The size of the prize – economic impact High Growth Companies 445 Average Headcount Current Headcount 3 Year Headcount Growth New Jobs Average Turnover Current Turnover 3 Year Turnover Growth New Turnover Estimate Estimate 120% 25 11,125 13,350 £1.0m 100% £445m £445m
  27. 27. • Gazelles require much more complex kinds of support placing much higher levels of demand on Public Sector Agencies than heretofore? • Gazelles are “Elite Businesses”. • Supporting them is resource intensive requiring prioritization at the expense of existing Business Sectors! • This is by its very nature Elitist! • Should We Be Doing This?
  28. 28. The difference with Gazelles is not the type of question they ask it’s the complexity of the issue they face…Category of Assistance Gazelle Specific ExampleR&D, Innovation and NPD Collaborating with local Higher Education Institution in Grant Funded R & D Knowledge Transfer ProjectSales & Marketing Market Scoping Research Project on Need for Specialist Footwear for those who suffer general foot discomfort in order to offer products into the mainstream marketTraining & Skills Training of Specialist Staff working in the construction, manufacture and assembly of equipment in the Nuclear IndustryNew Machinery, Process Improvement, Retooling Improvement Production Processes in Specialist Marine Manufacturing Company producing products for the offshore oil extraction industryCapital Expenditure Access to Finance for Relocation Precision Manufacturing PlantRelocation & New Premises Consolidation of Manufacturing Plant on Single Site Location including relocation Welsh Manufacturing Plant to North WestExport JV in Eastern EuropeRelationship Management, Networking, Membership Obtaining Membership of and Maximising NetworkCluster Organizations/Networks Opportunities through the Northwest Aerospace Alliance
  29. 29. The Search for Context 2: Delivering Support to Struggling Businesses
  30. 30. Context: Delivering support to businesses in the current economic climate• Problem 1: Identifying Struggling Businesses• Problem 2: Finding them early enough. There are No Second Chances in a Recession!• Problem 3: Economic Impact on Key Business Segments. How badly have they been and what is the likelihood of Commercial Failure? Can Business Support can make a difference?• Problem 4: Policy Makers don’t have context to Make or Measure the Impact of Policy• The Answer: Commercial Risk Data is available that offers up-to-the- minute, granular information on the Risk of Commercial Failure – Experian’s Commercial Risk Profiling System offers this service.• The Outcome: The ability to Trend this Data means we can flag companies that are in decline as well as those experiencing growth. We can also highlight which of these companies have received business support and are now experiencing recovery.
  31. 31. Commercial Delphi Risk Categories Risk Category Description Failed/serious Administrator or receiver appointed, bankrupt proprietor, dissolved business adverse info High value of unsatisfied CCJs, accounts overdue, start-up business with adverse data, Maximum risk proprietor with adverse data or maiden accounts show loss Large company with weak balance sheet, medium sized firm with very weak balance sheet, High risk combination of above average risk features, start-up with adverse trading Large company with very weak balance sheet, medium to small firms with (high levels of credit Above average search, payment difficulty, weak balance sheets), start-up firm without adverse information Large business with weaker balance sheet/modest loss, SMEs with steady trading, small firms Below average with directors with good record, no adverse data Well established, accounts filed, mid to large firms with £1m of assets and £5m of turnover, Low risk good record, directors with strong records Minimum risk Large well established firms, strong balance sheets, low value of public information
  32. 32. The Commercial Delphi risk profile of the North West Below Average Above Average Dissolved/Seri Very Low Risk Low Risk High Risk Maximum Risk Risk Risk ous Adverse InfoNorth West 5.40% 10.77% 22.88% 21.12% 8.71% 15.74% 1.12%Merseyside 4.86% 8.88% 19.83% 22.34% 9.52% 18.48% 1.15%Warrington & Cheshire 4.98% 9.72% 25.36% 20.99% 9.50% 12.73% 0.85% Cumbria 7.88% 14.20% 25.00% 19.52% 5.40% 8.41% 0.45%Lancashire 5.94% 12.80% 25.62% 21.74% 6.68% 12.19% 0.85%Manchester 5.04% 10.25% 21.27% 20.38% 9.75% 19.27% 1.52% One Size DOES NOT fit all
  33. 33. Further segmentation increases relevanceNorth West Dissolved / Serious Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum Risk Adverse Information 5.40% 10.77% 22.88% 21.12% 8.71% 15.74% 1.12%Greater Manchester Dissolved / Serious Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum Risk Adverse Information 5.04% 10.25% 21.27% 20.38% 9.75% 19.27% 1.52%Manchester Dissolved / Serious Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum Risk Adverse Information 5.43% 7.50% 17.46% 18.13% 10.96% 25.43% 1.94%
  34. 34. Analysis of the Manchester segment increasesrelevance furtherManchester Dissolved / Serious Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum Risk Adverse Information 5.43% 7.50% 17.46% 18.13% 10.96% 25.43% 1.94%
  35. 35. Analysis of the Manchester segmentation increasesrelevance furtherManchester Dissolved / Serious Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum Risk Adverse Information 5.43% 7.50% 17.46% 18.13% 10.96% 25.43% 1.94% Manchester – Maximum Risk Businesses Number of Risk Micro Band Percentage Companies 1 2,235 29.47% 2 644 8.49% 3 1,203 15.86% 4 2,201 29.03% 5 1,300 17.14%
  36. 36. Analysis of the Manchester segment increasesrelevance furtherManchester Dissolved / Serious Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum Risk Adverse Information 5.43% 7.50% 17.46% 18.13% 10.96% 25.43% 1.94% Manchester – Maximum Risk Businesses Number of Risk Micro Band Percentage Companies 1 2,235 29.47% 2 644 8.49% Drill into the highest of the high risk 3 1,203 15.86% Businesses in Manchester 4 2,201 29.03% 5 1,300 17.14% 1,270 Businesses & 6,002 Employees in Non RES Sector in Micro Band 1
  37. 37. So What Did We Do Next? We Contacted all the Business and Professional Services Companies affected Highlighted the 3 Current Issues in the Financial Markets that are causing concern:  Liquidity  Trade Credit Insurance  Payment Terms from Primes Offer: Specific Advice, Access to Finance, Cash Flow Management, Business Performance Benchmarking, Loan Guarantee Scheme Key Point: These Products already existed. The Delivery of the Message and its contextual relevance unlocked latent demand
  38. 38. Specific Example of an Intervention• Anne Example Ltd - Poultry Farmers• Problem: Erratic Payment Patterns from Primary Customer• Symptoms: Fluctuating Overdraft Levels – Breach of banking Covenant• How Do We Reach This Customer? – Generic Thematic Marketing from a Brand that is Poorly Understood? – Or, Specific DPM Activity highlighting Root Causes and Commonality!• Marketing Content: Sector-Wide Issues with Payment Problems. Best Practice Solutions within Industry Sector. Specific Solutions available from BLNW to Help Solve Problem.• Outcome: Proprietor Entered into Contract Negotiations with Buyer included Strengthened Contract Clauses re: Payment Terms. Joined Pressure Group to Ensure Business Segment Voices Heard.• Result: Improved Cash-Flow.
  39. 39. Measuring Impact Over Time Sample of 5 companies Commercial Delphi risk score over last 6 months120 Commercial Delphi100 Score Trends 80 Britplas Ltd (Int Assisted) 60 Stanley Securities CCTV Ltd (Int Assisted) 40 Arena Plastics Limited 20 Distant Horizons UK Ltd 0 ServiceAir UK 15/03/09 29/03/09 26/04/09 05/07/09 16/08/09 01/03/09 12/04/09 10/05/09 24/05/09 07/06/09 21/06/09 19/07/09 02/08/09-20 Date
  40. 40. Benchmarking Against Sector PerformanceCommercial Delphi Risk – Sample of Companies Intensively Assisted Compared to the Merseyside and Greater Manchester Average (Last 12 Calendar Months)
  41. 41. The Challenge…How can we work together to ensure that we combine intelligence with the experience we have in a particular region?

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