1. Rejuvenate Your Business ProjectEV The Peel Policy Forum
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Supporting High Growth
Companies: It’s A Life-Stage
Issue Not A Journey to
Shangri-La
Author: Ged Mirfin
Business Economist, Peel Policy Forum
Date: Friday 30th November, 2012
Page 1

2. 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 creates 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 Shangri-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.
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3. 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
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4. 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”. 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” 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:
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
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5. 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
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6. is scarce (read unavailable), 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.
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.
Experience-influenced Evidence-based
Experience
Aim: Change
from Anecdotal &
Judgmental to
Evidence-based
Decision making
Opinion-based Evidence-influenced
Evidence / Information
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7. 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.
Data Driven Evidence-Based: Making
an Impact
Decision Making Based on Intuition, Judgemental Opinion or
Data Driven Evidence-based Decision Making
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 historic Budget allocations to programmes based on data-
priorities informed needs
Spending allocations based on volume of voices of special Spending allocations based on market failure gaps
interests and eligibility criteria of existing regimes as indicated by the data
Detailed reporting on a range of indices to relevant
Generic reports to all stakeholders based on historic
stakeholders on a regularised basis - weekly,
aggregate data inappropriate for policymaking at a a micro-
fortnightly, monthly, quarterly, half yearly based on
economic level
agreed service level agreements
Goal setting based on accurate estimates of the
Goal-setting by board members, administrators, project financial consequences of proposed policy options
managers with special treatment given to pet projects and allowing for prioritisation thus helping to predict the
initiatives or the current fads of the day. impact of policy options to stakeholders in a
“winners and losers” format
Highly focussed report-back and monitoring forums
Death by committee: Undue focus on ensuring that money is which ensure that not only is money spent well but
spent and that it is seen to be spent also that the impact of spending can be tracked and
measured
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 Boards chose not to make the retention of Strategic Assets a priority and make
such assets available to LEPs across the UK.
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.
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8. 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 Mosaic. 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.
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 >100
Monumental 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 & 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 Support
Independent Entrepreneurs Developing Dynamos Services & 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 Failure
Independent Entrepreneurs Wide Range Activities: Specialist Wholesale, & Retail, Business Support
Fledgling High Fliers
Services & 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 to
Energetic Enterprises Support Supremos Financial Industry – High Salaries
Low Risk Businesses in Areas of High Prosperity. Serviced Offices
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
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9. 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.
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 classification systems, was employed, including:
SIC 1992, 2003 & 2007
Yell Codes
Thompson Codes
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.
Individual Yell and Thompson Codes were selected from a complete list of code sets
selected, following detailed scrutiny by NWDA and BLNW sector managers, team leaders
and Advisors.
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10. 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 operates. All industry Sectors, in
comparison, are represented extremely well in Yell and are very precisely defined.
Using Yell Data With SIC –
Other Computer Related Activities
SIC 2003
Locatio
SIC 2003 Description Locations
SIC 2003 Description Yellow Pages Classification ns
Other computer related activities 4,531
Other computer related activities Unknown 3,032
SIC computer related activities
Other 2003 to Yell Computer Services 933
Other computer related activities Internet Web Design 207
Other computer related activities Computer Training 87
Other computer related activities Internet Services 75
Other computer related activities Computer Networking & Cabling 69
Other computer related activities Computer Aided Design Services 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 Videoconferencing 4
Other computer related activities Publishers & Publications 2
Other computer related activities Information Services 1
Other computer related activities Secretarial Services 1
Sum: 4,531
An example is given below of the amount of detail that is used to define an Industrial
Sector in Yell.
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11. “Internet Web Design &
Development”
•Web hosting: If you want a website for your customers to visit, this
is a vital internet service. A good web hosting service will ensure the
pages of your web site appear quickly and reliably.
•Domain name: The part of an email address after the @ sign. Many
internet service providers enable you to buy your own domain name,
so you can have an email (and 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.
•e-commerce: Doing business on the internet. Supply
of an e-commerce enabled 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 overhaul 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.
Access to Yell and Thomson Codes has allowed us to fill the glaring gaps left by SIC Codes
in a very neat and precise way.
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.
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12. Identifying the DCI Sector Utilising
Overlapping Classifications
Flexibility
The ability to utilise
multiple business
classifications from
various sources as well
as the keyword
Yell Class Thomson descriptors provides a
breadth of analysis that
virtually eliminates
businesses for which we
Nature of have no classification
SIC 1992, 2003 data. The potential size
Business of the pot for businesses
or 2007
Keyword missed is very small.
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.
Definitional Refinement
Access to a wide variety of classification systems means that it is possible to define sectors
very precisely and to visualise gaps and overlaps between those sectors. This lessens
dependability on SIC Codes considerably improving Sector identification accuracy.
Overlaps between different classification systems dramatically increases reliability
It is to be accepted that not all Business advertise 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.
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.
Page 12

13. Nature of Business – Other Computer Related
When Yell Fails…
Activities
Yell to Nature
of Business
SIC 2003 to Yell
SIC 2003 Description Yellow Pages Classification Locations Yellow Pages
Classification Nature of Business
Other computer related activities Unknown 3,032
Unknown 00Bespoke Application Development
Other computer related activities Computer Services 933
Unknown 3d and 2d animation for the broadcast tv industry.
Other computer related activities Internet Web Design 207
Unknown 3D Visual Design
Other computer related activities Computer Training 87
3D visualising, animation and branding for architectural and
Other computer related activities Internet Services 75 Unknown construction industries
Other computer related activities Computer Networking & Cabling 69 Unknown Accountancy and web-site design services.
Computer Aided Design Unknown Accountancy support.
Other computer related activities Services 58
Unknown Accounting, auditing, tax consult.
Other computer related activities Telecommunication Eqpt 32
Unknown Adult Education Centres
Other computer related activities Data Recovery 10
Unknown Advanced Sensor & Control Technologies
Other computer related activities Document & Data Destruction 8
Unknown Advertising.
Other computer related activities Computer Security 7
Unknown Architectural and design services
Other computer related activities Multimedia Services 5
Unknown Architectural, technical consultancy.
Other computer related activities Videoconferencing 4
Assett/Process tracking services for businesses serving
Other computer related activities Publishers & Publications 2 Unknown Pharmaceutical, logistics, aviation & Manufacturing sectors
Other computer related activities Information Services 1 Audio visual installation engineers, commenced on 1 june
Other computer related activities Secretarial Services 1 Unknown 2007.
Sum: 4,531 Unknown Audio-Visual Production & Presentation Services
Unknown Automation and control design, installation and service.
Unknown Automotive service engineers.
Combining different classification systems means that hard to find sectors and sub-sectors
can be focused on providing us with a solution that is the best of all worlds. Quite simply,
it means that we are able know something about the vast majority of businesses – there
are very few for which we don’t have access to at least one form of classification.
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.
Revealing Findings on Merseyside
Adopting such an approach starkly revealed a number of findings about the size of the
Digital & Creative Sector in Merseyside.
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14. Designers-
Sub-Region Advertising & Graphic
Internet Web Design Sum:
Cheshire &
103 160 263
Warrington
Cumbria 36 87 123
Greater
234 365 599
Manchester
Greater
105 163 268
Merseyside
Lancashire 101 212 313
Sum: 579 987 1,566
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.
Com puter Softw are
Sub-Region Developm ent
Sum:
Cheshire &
130 130
Warrington
Cumbria 29 29
Greater
191 191
Manchester
Greater
70 70
Merseyside
Lancashire 84 84
Sum: 504 504
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15. 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 should compete so badly in
relation to Cheshire & Warrington especially given the size of the financial services
industry, the insurance industry in particular.
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!
Page 15

16. 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
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”.
Annual Turnover
< £90k £90-£400k £400k - £2,5m £2.5m+
100 - 250+ 0 0 0 2
50 - 99 0 2 0 7
Headcount Band
10 - 49 11 13 29 6
0- 9 1433 626 598 43
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.
I and my co-Author, Neil Geoghegan, concluded that in terms of the chicken and egg
debate, growth in Turnover preceded growth in the number of employees. Consequently,
achieving headcount growth is dependent on achieving an increase in the level of
turnover. Growing an employee base beyond 9 therefore and achieving the status desired
Page 16

17. by policy makers as a fully fledged SME is very difficult. Longitudinal analysis of turnover
clearly demonstrated that there was a direct correlation between achieving a turnover of
more than £1.0m and employing more than 10 Staff. This was very difficult for a business
start-up to 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.
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18. 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 classroom. 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).
Page 18

19. High Growth Companies
A gazelle company is an American expression for small, fast growing companies (in reference to the fact they can
jump 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.
Sprinters: Accelerators: Flyers:
Young, and usually Fast-expanding Dynamic Sprinters who turn
small, high growth SMEs often in new into 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”
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.
Page 19

20. High Growth Life-Stage Businesses in
Merseyside
Total Active Trading Businesses 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)
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 that 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 interesting questions
about the trading environment and business support networks and the strength of supply
chains within Merseyside.
Page 20

21. In term 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.
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.
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.
Page 21

22. 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 100.00%
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), 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.
Page 22

23. 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 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.
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 he 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. 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.
Page 23

24. 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.
Page 24

25. 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 Companies,
Entertainment Venues and more recently Golf Clubs), Food & Drink (Restaurants and
Specialist Food Stores). This encompasses 143 or 14.05% of all the Businesses identified.
Although the Mersey Partnership, which has recently morphed into the Merseyside LEP,
recognised the importance of the Visitor Economy, for the NWDA it was a sector denied
effective support., it not being understood that Consumers are the one of the primary
drivers of economic development and urban inner city regeneration. The Consumer Retail
sector in this instance covers a very wide range of outlets indeed with Clothing Stores,
Jewellers and Watch Shops, Sporting Goods Stores, DIY Outlets and Electrical Appliance
Stores being the most frequently occurring. The Portias' Model of the family friendly
pedestrian attractive high street shows that there is still life in the City Centre as a Retail
Centre. For an Accelerator Project like EV the key will be in demonstrating the unique
possibilities that a new approach to experiential shopping can bring.
Transport & Shipping
Other sectors of note include Transport – small Road Haulage Companies, Local Bus
Companies and Large Taxi Operators another Sector virtually ignored by the NWDA
despite being a fundamental inter-connecter in the local economy moving goods, services
and people between key locations along main thoroughfares and arteries. A similar albeit
much more important and more valuable sector as far as Liverpool City Council is
concerned is Shipping. The Mersey Partnership recognised the importance of the
SuperPort some time ago. Here a small number of Companies provide highly remunerative
administration, logistics, import/export and repair functions.
Energy & Environmental Technologies Services
The final Sector I wish to draw your attention to is the Energy and Environmental
Technologies Service sector. This is a very new and growing sector. If we adopted the
NWDA definition this Sector would be half its size because of the exclusion of Recycling
businesses, a growing area of the Merseyside economy because of the ability to recycle
high quality re-usable materials particularly different forms of polymers and elastamers.
Recycling, unless it involved high grade Polymers and/or the recovery of poisonous metals
such as Nickel, Lead, Cadmium and Zinc under EU regulations was not regarded as an
activity being fore-square in the EETS sector because it was not high-tech being seen as a
low-tech manually intensive form of business reliant on a largely untrained workforce
involved in environmental recovery, clean-up and waste disposal operations.
Page 25

26. Core Activities Industries
Hydro Solar photovoltaic
Wave and Tidal Solar thermal
Renewable Energy Biomass
Wind
Geothermal
Power generation (conventional Oil, Gas, Coal) Production of Hydrogen
Nuclear Power Generation Extraction of Coal, Oil, Gas, Biomass
Nuclear Power Decommissioning Insulation & energy conservation
Energy Power generation from waste Heat Exchangers
Combined Heat Power Trade in energy resources
Fuel Cells
Air Pollution Control Land Remediation
Environmental Consultancy Waste Management
Environmental Monitoring, Instrumentation & Water Supply & Waste Water Treatment
Environmental Control Recovery & Recycling
Marine Pollution Control Energy Efficiency
Noise & Vibration Control Trade in recovered materials
Distribution & storage of energy (electricity Transformers
& hydrocarbons) Smart grids
Energy Transmission Distribution of energy Smart metering
Switchgear
DC/AC Conversion
Low Energy Lighting LEDs
Lighting Lighting design & innovation Disposal & recycling of lighting units
Alternative Fuel Vehicles Energy Efficient Building Technologies
Emerging Energy & Environmental Alternative Energy Sources.
Alternative Fuels
Sub Sectors
Current definitions used to identify EETS Businesses are too broad and insufficiently
complex and detailed in nature to identify the new specialist Environmentally Focussed
Green Technology Businesses that are emerging. Some EETS Businesses are so “New” that
they do not have SIC Codes to describe them. Interestingly, only Environmental
Consultants were distinctly recognised in SIC 2007 as Environmental Businesses.
A large and growing number of businesses that are currently classified as operating within
this sector are effectively re-inventing themselves as Environmental Businesses in order to
take advantage of niche market opportunities but also to differentiate themselves from
their competitors via a green product or service offering. This re-invention is not simply an
attempt by companies to redefine how it sees itself and is seen by others but is also
evidenced by market and product re-positioning and more significantly fundamental
changes to business and manufacturing processes.
Blocked Sectors
Another key issue relates to Blocked Sectors. A key question that I posed myself in this
piece of research was how many businesses has experienced a reversal in their fortunes
over the last three years, as the recession has begun to bight.
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
Page 26

27. two years growth and one year of decline. Some gazelles are now not able to run as fast
or jump as high.
Sector Count
Charitable 34
Visitor Economy 13
Construction 10
Property 6
Public Sector Funded 4
Consumer Retail 3
Care 3
Shipping 2
Digital 2
Wholesalers, Merchants, Stockists & Suppliers 2
Professional Services 2
Education & Vocational Training 2
Health & NHS 2
Transport 1
Energy & Environmental Technology Services 1
Advanced Manufacturing 1
Bio-Medical 1
Other Miscellaneous 1
Other Manufacturing 1
Total 91
A survey of the turnover figures (both Actual and Derived) from the Trading, Profit and
Loss Accounts of the 1,017 high growth life stage businesses reveals that 91 experienced a
reversal of 20% or more over a two year period, severely affecting their Profit Margin.
20% was selected as a benchmark figure because it represents a dip in turnover beyond
simple business profitability consolidation. This represents 8.95% of the total stock of
business in this key growth phase of their Life-Stage.
The sectors are starkly revealing. It should come as no surprise that the Charity Sector is
under pressure. The fact that half of Charities have seen a severe reversal in their turnover
will come as somewhat of a shock as both consumers, businesses and public sector bodies
have reduced their contribution to charitable institutions. Nor should it be a surprise that
the Visitor Economy is under pressure as a direct consequence of shrinking disposable
income. Boutique Hotels, Expensive Restaurants, Pubs, Entertainment Venues and Events
Management Companies have all suffered.
That Construction and Property Companies were the first to suffer from the effects of the
recession, in particular businesses specialising in corporate property and the building of
commercial units, is confirmation of the effect of the economic downturn on this sector.
Page 27

28. The fact that this is impact 1 in 10 Care Home providers should however be cause for
anxious thought. As is the fact that 1 in 20 high growth life stage Consumer Retail
businesses are experiencing severe reverses is bad news for the high street in Merseyside
Sector % of Sector Under Pressure
Charitable 54.84%
Visitor Economy 23.14%
Construction 13.99%
Property 5.26%
Public Sector Funded 7.14%
Consumer Retail 4.76%
Care 10.00%
Shipping 9.09%
Digital 14.29%
Wholesalers, Merchants, Stockists & Suppliers 7.41%
Professional Services 2.56%
Education & Vocational Training 6.45%
Health & NHS 3.10%
Transport 2.22%
Energy & Environmental Technology Services 3.23%
Advanced Manufacturing 1.09%
Bio-Medical 20.00%
Other Miscellaneous 1.92%
Other Manufacturing 2.56%
Total Average: 10.16%
and, of course further bad news for the corporate property industry with the threat of
further reductions in occupancy on secondary and tertiary high streets.
The ultimate purpose of this paper 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) – those that I have dubbed Enterprise Village Ready.
Enterprise Village Ready Businesses
The aim of the Growth Accelerator Programme is designed to increase the number of
small businesses that achieve rapid growth. It will help small businesses with potential
and overcome barriers to growth. The Growth Accelerator Programme provides high
growth potential small businesses with the know-how and ability to achieve sustainable
growth. Proven business experts work with business leaders to tackle issues such as:
Developing and delivering a tailored growth strategy
Becoming investment ready and securing finance
Page 28

29. Commercialising innovation effectively
Developing leadership and management capability
The Growth Accelerator Programme also connects clients with trusted sources of business
advice locally. For example, UK Trade & Investment, business incubators and specialist
professional services firms, as well as investor and business networks.
Typically a Growth Accelerator or Growth Hub as physical space or location will offer a
comprehensive programme designed to provide Business professionals at all levels the
tools, theory, and proven best practices to take their business forward. The centre piece
of a Growth Accelerator Programme is a growth plan, which begins with a comprehensive
diagnostic review based on information about a business and goals. The analysis takes
into account factors, including your current business model, marketing programs, key
market segments, service delivery model, investment planning, product mix, and use of
available technology.
For that reason we are not necessarily looking at businesses that have already entered
into the “Take-Off” Phase of their business life-stage and are already some way down the
track. Instead we are looking at those that have left the blocks, have pushed on past the
first 10 metres of track and are just about to hit their stride. I believe that the Sprinting
Metaphor is an instructive one, not least because it guides us towards looking for
businesses where their business model is not as set and the Growth Acceleration advice
will better shove and shape them in the right direction.
High Growth Early Life-Stage Businesses
in Merseyside
Total Active Trading Businesses in Merseyside (40,476)
Turnover between £250K and £500K
& At Least 3 Years A/Cs (4,678)
At Least 3 FTEs (1,622)
Primary Trading Location in Merseyside(1,177)
What we discover is that the volumes are higher but not that much higher than in our
Accelerator sample. Clearly the gap that separates the one or two man consultancy or
small trading establishment or manufacturing unit is marked. The added financial value
Page 29

30. derived from a small business from the previous take-home pay of Directors can be very
small. Total additionality in terms of turnover after wages have been deducted may be no
more than £100,000. A large part of this will be eaten up in overheads and other business
development costs. This is the reason why an Accelerator Programme can have a major
impact on business performance but at the same time it is why an Accelerator Programme
requires proof of performance or business concept.
For that reason a turnover figure of a minimum of £250K demonstrating both the intent
and capability of the business owners was selected. It was also felt necessary to work with
a maximum turnover figure 25% above the minimum set in the analysis for the
Accelerator businesses segment. As we can see from the Table below the period between
£350K and £400K is critical in the life-stage of a business. It demonstrates that once a
Business has reached a turnover level of £400K they enter a new phase of in the life-stage
of the business generating the necessary cash to recruit new staff and acquire new
technology to improve the speed and volume of business performance.
Turnover
Band %
£250 to 300K 30.53%
£300 to 350K 29.47%
£350 to 400K 10.53%
£400 to 450K 14.21%
£450 to 500K 15.26%
Sprinters
As we can see from the Table below the Table below what I have dubbed Sprinters have a
very different look and feel from the Accelerators I identified earlier in this paper. Small
Construction and Consumer Retail businesses occur in twice the proportion and are four
times more common than when we were looking at bigger Accelerator businesses. What
this tells us is that the Merseyside Economy is built to a very large degree on Construction
and Retail. We can, at least, take confidence that Merseyside is still very much a Region of
Builders and Shop Keepers. The question is: how does an Accelerator Programme help a
Construction and Retail business grow? The problem for me is an extremely pertinent one.
The bulk of Business Mentors and Advisors come from the Professional Services
Community. Shaking hands with people who get their hands dirty all day or charm
customers to part with hard earned disposable income they can’t really afford to spend is
very different from introducing technically skilled knowledge workers into networks of
digital economy businesses requiring highly specialised services.
The Glass Ceiling Effect
What is also clear is that the trends that were prominent for Businesses at the
Acceleration stage are much more highly visible in the Sprinting stage. The “glass” ceilings
Page 30

31. that they naturally seem to encounter: outgrowing premises, cash-flow issues, lack of
adequate capitalization, production and work volume capacity result in them reaching a
ceiling in turnover which they are unable to break through without a commitment to
growing the business backed by hard cash.
Sector Count %
Construction 233 13.11%
Consumer Retail 231 13.00%
Other Miscellaneous 188 10.58%
Visitor Economy 158 8.89%
Professional Services 154 8.67%
Digital 121 6.81%
Property 112 6.30%
Wholesalers, Merchants, Stockists & Suppliers 112 6.30%
Advanced Manufacturing 95 5.35%
Automotive 80 4.50%
Other Manufacturing 79 4.45%
Health & NHS 65 3.66%
Transport 50 2.81%
Education & Vocational Training 23 1.29%
Agriculture, Horticulture & Animal Rearing 22 1.24%
Food & Drink 20 1.13%
Energy & Environmental Technology Services 17 0.96%
Shipping 10 0.56%
Care 3 0.17%
Distributors & Added Value Re-Sellers 3 0.17%
Bio Medical 1 0.06%
Charitable 0 0.00%
Public Sector Funded 0 0.00%
Total 1777 100.00%
The trend is familiar across a number of Sectors. I focussed previously on Digital
businesses within the marketing and design space. The Table below is highly instructive.
Turnover Count %
Unclassified 122 5.31%
£1 to <90k 1497 65.20%
£90k to <400k 530 23.08%
£400k to <1m 108 4.70%
£1m to <2.5m 27 1.18%
£2.5m to <5m 8 0.35%
£5m to <10m 1 0.04%
£10m to <40m 2 0.09%
£40m+ 1 0.04%
Total 2296 100.00%
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32. Digital Sprinters
What it shows is that Digital businesses at this stage of development are still very much of
a life-style choice. Only 6.40% of Digital Marketing and On-line businesses in Merseyside
generate a turnover in excess of £400K p.a. The conclusion that one must draw from this is
that the Digital Marketing will generate a large number of jobs but they will be dispersed
across a very large number of companies the majority of which employ only a very small
number of people but which provide good lifestyles for the well paid individuals that work
in this highly skilled industry. The barriers to entry are low but as a consequence of the
attractive nature of the industry it is very competitive. More importantly, it is very
difficult to achieve significant traction designing policies to encourage the Growth of
Digital Creative Industries because of the dispersed nature of employment in the industry.
I cheekily suggested in a presentation to the North West Creative & Media Industries
AGM, entitled, “Revealing the North West’s Creative & Media Industries – the hidden
sector: A Methodological Approach”, that Creative & Media industries were the North
West’s hidden sector. The web might be becoming all pervasive through the impact of on-
line retail and e-commerce but no-one knows how many people are really employed in
working within the Digital space. There are hundreds of Job Titles which contain the term
Digital but the phrase covers a multitude of sins.
I have taken as an example the role of Digital Strategist. A lot of people call themselves a
Digital Strategist, but what is a Digital Strategist? And what do they do in their day to day
role?
Using LinkedIn’s Advance People Search Function I took a sample of 50 individuals who
self-describe themselves or their Marketing Role as that of a Digital Strategist. The
following is a breakdown of their Job Titles:
Digital Strategist: 11 + Senior Digital Strategist: 1 + Digital Strategy Director: 1 +
Social & Digital Strategist: 1
Digital Marketing: 3
Digital Consultant: 2
Digital Marketing Consultant: 2
ERecruitment: 2
Media Planner: 2 + Media Planner/Digital Strategist: 1
Brand/Digital Strategist: 1
Client Services Director: 1
Creative & Digital Strategist: 1
Page 32

33. Digital Account Director: 1
Digital Account Manager: 1
Digital Director: 1
Digital Marketing Manager: 1
Digital Marketing Strategist: 1
Digital Process Analyst: 1
Digital Social Media Expert: 1
Digital Leader: 1
E-Commerce: 1
Global Head of On-line: 1
Innovation Director: 1
Interactive Advertising: 1
Interactive Communications Manager: 1
Lead Creative Strategist: 1
Mobile Marketing: 1
On-line Editor/Digital Manager: 1
On-line Marketing Strategist: 1
Search Consultant: 1
Social Media Analyst: 1
Social Media Consultant: 1
Social Media Strategist: 1
According to Wikipedia, “digital strategy is the process of specifying an organization's
vision, goals, opportunities and initiatives in order to maximize the business benefits of
digital initiatives to the organization. These can range from an enterprise focus, which
considers the broader opportunities and risks that digital potentially creates (e.g., changes
in the publishing industry) and often includes customer intelligence, collaboration, new
product/market exploration, sales and service optimization, enterprise technology
Page 33

34. architectures and processes, innovation and governance; to more marketing and
customer-focused efforts such as web sites, mobile, eCommerce, social, site and search
engine optimization, and advertising.”
Digital media consists of things like digital text, digital images, digital audio, digital video
and other digital content that can be created, referred to and distributed using computers
and over the internet. A strategist is a person who is skilled in designing and planning the
necessary actions to achieve a major or overall aim. So, a digital media strategist is
someone who is skilled in designing and planning the necessary actions to create, refer to
and distribute digital content over the internet.
This position is based on a unique set of technological knowledge. A digital strategy
manager collaborates with all marketing, business development, and organizational
management teams.
This position focuses specifically on a business’s digital brand by leading, building and
maintaining their presence in the digital world. They are accountable for driving the
prioritization of the technology infrastructure for digital advertising continuity across all
multi-media platforms. They manage all related IT departments and functions as a conduit
between digital presence and all advertising and/or marketing activities, strategizing their
specific marketing needs incorporating the digital technology structure.
But what do they actually do? A detailed analysis of the skill-sets of self-defined Digital
Strategists reveals a far more complex picture. Digital Strategy is a spectrum of activity
which brings into play the full range of digital assets and communications tools of a
business, not all of which will be web-based, from web site building and maintenance via
PPC/SEO and Google Analytics at one extreme to more sophisticated forms of Social
Media Interaction, Online Communities and Viral Communication at the other.
The results are particularly revealing in terms of the top skills frequencies of Digital
Strategists. When placed in aggregated categories it is possible to ascertain the emerging
shape of the Digital Strategy Arena:
Social Media
Social Media/Facebook/Social Media Optimization: 24
Social Media Marketing: 12
Buzz Monitoring/Social Media Tracking/Reporting/Social Media Audit/Social
Trending: 7
On line Community/Social Network/Social Media Network Management/Social
Networks: 6
Blogging/Word Press: 6
Affiliate Marketing: 3
Loyalty Marketing: 1
Total: 59
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35. Traditional Web Marketing
SEO: 10
On-line Advertising: 9
PPC: 9
Web Analytics/Web Tracking: 9
Email Marketing: 7
Graphic Design: 4
Web Copy: 4
Online Media Planning: 2
Web Marketing: 1
Total: 55
Web 2.0 Optimized Web Marketing
Content/Content Management/CMS: 15
On-line P.R/Reputation Management.: 12
SEM (Search Engine
Monetization)/Micropayments/mCommerce/mPayments/mobile payments: 10
Web Design: 8
User Experience/Web Usability: 7
Web-Site Build/On-line Management/HTML Error Checking: 7
Viral Video/Video: 7
Information Architecture/Design/Web Platform: 6
Interactivity/Interactive On-line Games: 4
Brand Activation: 2
Web-Site Management: 2
Web 2.0: 2
Extranets: 1
Interactive TV: 1
Intranets: 1
Micro-Sites: 1
On-line Publishing: 1
Photography/Images for Web: 1
Web-Link Building: 1
Total: 89
Digital Technologies
Mobile Marketing: 11
eCommerce: 8
eCRM/Web Lead Capture: 7
CRM/Database Management: 4
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36. Emerging Technologies Application/Innovation: 2
Digital Marketing Research: 1
Total: 33
Clearly, what stands out from this is that Digital Strategy is based on the evolution out of
established forms of web-site and web marketing. The main areas for development are
the exploitable possibilities of Web 2.0 and optimized Web Marketing and Cross-Over
Media. There are also a whole series of Digital Technologists who have established second
and alternative career paths in digital marketing. These are important individuals who can
bring valuable technical know-how to businesses who wish to exploit the potentiality of
cross-over media digital platforms.
The most current area and the space which everyone seems to be ploughing effort into at
a rate of knots is Social Media.
The Key Question that this poses is: Is there a misnomer and a misunderstanding about
what a Digital Strategist actually is?
The digression is an extremely circuitous one but what it starkly reveals is that the number
of Digital Strategists able to offer the range of services necessary to deliver optimized
Web Marketing to big multinationals and PLCs is extremely small indeed. These
individuals reside in big well known Marketing Agencies who have huge resources at their
disposal. These people seek roles in big agencies because who they are and their
employment history in working with and for big business. In the Digital Marketing space
you do not get the opportunity to work with big companies unless you have worked with
big companies and that only tends to happen if you work for a big agency. Digital
Technicians meanwhile are finding well paid sinecures in the same Agencies because of
the highly technical skill sets: why would they want to set up by themselves unless they
had an extremely niche offering, which generally only happens if they have had the
opportunity to work for a big agency previously.
The same turnover ceiling effect visible in the Digital Marketing Agency space can also be
seen amongst small firms of Undertakers and Funeral Directors. This may seem a highly
unusual thing to say, however on deeper consideration it made perfect sense. The
Turnover Ceiling of such firms appears to be c.£500
Removal Firms
It is also true of Removal Firms. A small Removal Firm with 2 Removal Vans, a Couple of
Drivers and Removal Staff will be limited physically, both in logistical terms and physically
by the number of removals it can carry out during any one week. That does not include
the costs of running a Road Haulage business including escalating fuel costs and
maintaining high levels of insurance cover for both vehicles and personal effects. That
level of turnover ceiling is close to £500K. The benefits of volume pricing to meet key
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