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State of Small Business Britain Conference 2018


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Presentations from the Annual State of Small Business Britain Conference 2018 held at the Shard , June 21st .

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State of Small Business Britain Conference 2018

  1. 1. State of Small Business Britain Conference 2018 Productivity and Place Funded by
  2. 2. Micro-business Britain: Ambition, adoption and productivity Stephen Roper, Mark Hart, Jane Bourke and Katherine Hathaway
  3. 3. Introducing Micro-business Britain Project Aims and overview • Addresses knowledge gaps for micro-businesses around innovation, digital adoption and ambition • Aim to better understand the pathways to productivity in micro- businesses • Survey of 6,500 micro-businesses in the UK, smaller comparison samples in the US (2,000) and Ireland (1,500) Key themes • Personal and business ambition • Innovation inputs and outcomes • Digital adoption and diffusion • Resilience • Business and family • Growth and linkages In 2017 there were 1.11m micro-businesses (with 1-9 employees) in the UK, employing around 4.09m people (17.6 per cent of the workforce). This group of firms accounted for £552bn in sales, 14.7 per cent of that by all UK firms.
  4. 4. Ambition – and lack of it – among micro- businesses
  5. 5. Aiming to grow a ‘national or international business’ – by region
  6. 6. Personal ambition (% business owners)
  7. 7. Micro-business innovation (% firms)
  8. 8. Investing for innovation (% firms)
  9. 9. And collaborating for innovation (% of innovating firms)
  10. 10. Digital adoption – as of 2018 (% firms)
  11. 11. Adoption has risen sharply since 2015 (% firms)
  12. 12. Pathways to productivity • Initial modelling highlights the role of digital adoption in productivity upgrading • How does adoption in 2015 (or before) influence to sales per employee in 2018? • Key results are: – Cloud-based computing adds 13.5 % – CRM use adds 18.4 % – E-commerce adds 7.5 % – Web-based accounting software adds 11.8% – Computer aided design leads to a 7.1% increase • Provides strong support for the importance of digital diffusion and related initiatives • Being a home-based business, having a larger leadership team, being an exporter and being an organisational innovator are also positively associated with higher sales per employee
  13. 13. Rannia Leontaridi OBE BEIS
  14. 14. Dan Severn, DM Orthotics Ltd
  15. 15. Productivity and Place DM Orthotics
  16. 16. Place  Dan Severn MBA, BSc Physiotherapy  DM Orthotics are based in Cornwall  Turnover £3.2 M  UK (60%) and Export (40%).
  17. 17.  SME 53 Staff  13 off-site - Clinical, Sales and Export teams  40 on-site in Cornwall - Admin, Accounts, Manufacture, Design, Marketing.
  18. 18. Product DMO (Dynamic Movement Orthosis).
  19. 19.  Bespoke handmade orthotic devices  Custom-made and Class 1 Medical devices  Audited against ISO13485.
  20. 20. Challenges Old-fashioned manufacture process No flow through the factory Too much paper Rekeying data Struggle to log non-conformities linked to ISO Inefficient manufacture process with wasted time.
  21. 21. Process Oxford Innovation consultants specialising in production and efficiency Team engagement and involvement Complete step-by-step breakdown of manufacture process backwards from dispatch Floor plan and flow chart Highlighted value stages and non-value stages.
  22. 22. Findings Order travels 2 miles from start to finish 26 discrete documents 11 scan points per order 25 value stages (value to the customer) 82 non-value stages Identified possible “just do its” which are the simple, obvious and cost effective stages.
  23. 23. Changes Removed the individual daily capture sheets, time saved = 2 hours per month Removed the sew book (pad on table), time saved = 1 hour per month Removed the 2nd cutter inspection, time saved on average = 2 minutes per suit Over a month this is a saving of 1 working day.
  24. 24. Removed the zig-zag station Free up the Quality Assurance inspection time which takes on average 4 minutes per suit Over the month this saves 13hrs & 20seconds. The movement saved is 550mts per day, which is 11km per month on average Time saved 2hrs per month.
  25. 25. Results Overall time saved per month per suit is 26hrs & 20 minutes Remember 1 minute per suit = 74 hours per year Estimated 50% increase in capacity on the shop floor with these changes and the implementation of a flatbed cutting table.
  26. 26. Next steps ERP system to remove paper and rekeying within the system Continued focus on capacity and productivity Drive to increase sales to fill capacity.
  27. 27. Help and assistance Working with  OXIN  SWMAS  and Superfast Business Cornwall.  Member of the CMG
  28. 28. Message from the CMG: Manufacturing is alive and well in Cornwall.
  29. 29.  Stephen Roper (ERC)  Rannia Leontaridi OBE, BEIS  Dan Severn, DM Orthotics Ltd
  30. 30. Mark Hart, ERC
  31. 31. Dashboard – Focus on the Geography of Growing Firms • Need to understand the various types of firms that are growing and where they are concentrated • Greater granularity in growth metrics better informs the development of local and regional, and indeed, national economic policy • Focus on a range of metrics across the growth pipeline – start-up, survival and growth – of whatever scale.
  32. 32. Firm Survival and Growth Start-ups achieving at least £1m T/O after 3 years Established businesses growing from £1-2m to £3m+ T/O
  33. 33. A tale of two HGF Definitions! OECD HGFs – 20% p.a threshold (Employment) OECD HGFs – 10% p.a threshold (Employment)
  34. 34. Productivity Growth (2014-17) • Our research shows that there was a very poor correlation between jobs growth, increases in revenues and productivity gains. • Only 8.4% of all firms in the UK achieved positive productivity gains (revenue per employee) while still increasing jobs over the period 2014-17. • Perhaps surprisingly, Northern Ireland had the highest proportion in the UK at 11% - a ‘catching up’ process? • Proportion in Wales and Scotland was 7.4% for both home nations which was below the average of 8.5% for England. • West of England, the North (Leeds City Region and Greater Manchester) and London having the highest proportions of firms with productivity growth
  35. 35. Discussion • Encourage the use of a range of firm growth metrics at local level to design and monitor business support policy. • Brexit implications? – metrics provide a pre-Brexit referendum baseline given the lags in the data. – some regions exhibit a weak ‘growth’ dynamics on a range of firm-level metrics. – with the predicted official impact on the regions now in the public domain there is a ‘perfect storm’ brewing for some regions given their lack of ‘dynamism’.
  36. 36. More information at Contact us about this research: Mark Hart This work reflects the joint effort by the research team of the ERC, including, Karen Bonner, Neha Prashar, Mark Hart and Michael Anyadike-Danes This work contains statistical data from ONS which is Crown Copyright. The use of these data does not imply the endorsement of the data owner or the UK Data Service at the UK Data Archive in relation to the interpretation or analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.
  37. 37. Andy Lee, NatWest Tsitsi Mudokwani, Sisters Care Services Ltd
  38. 38. A new way of doing business support at the local level Andy Lee – Strategic Lead for Diversity in Business, NatWest Business Banking Information classification: Public
  39. 39. Building an inclusive ecosystem Information classification: Public 51 Pilot project bringing together civil society, Academia, Private and Public Sector to explore a new support systemCollaboration Collaborating with the entrepreneurs to design their support programme, focused on training and leadershipTailored Support Inclusion has to be a core principle in mainstream business support provisionEmbedding Inclusion Anchor organisation supported the rebuilding of trustBuilding Trust
  40. 40. Collaboration Information classification: Public 52 Organisations with a joint mission to improve business support @CitizensUKBham @CREMEatBham @GBSLEPGrowthHub @NatWestBusiness
  41. 41. Tailored Support Co-designed with the Entrepreneurs Information classification: Public 53
  42. 42. Building Trust Relationships had broken down over many years and trust had to be earned Information classification: Public 54
  43. 43. Embedding Inclusion Information classification: Public 55 Firms engaged over 18 months Entrepreneurs signed up to business support workshops Firms had no previous experience of mainstream business support
  44. 44. How inclusive is your support system? Information classification: Public 56
  45. 45. Information classification: Public 57 Tweet your organisations commitment to inclusive business support #smallbizbritain2018 Follow our inclusive journey @CREMEatBham @CitizensUKBham @AndyJRLee
  46. 46.  Mark Hart , ERC  Irene Graham, ScaleUp Institute  Ben Still, West Yorkshire Combined Authority  Andy Lee, NatWest  Tsitsi Mudokwani, Sisters Care Services Ltd
  47. 47. Building a productivity movement in the UK
  48. 48. Who do we target?
  49. 49. Our mission Be the Business is the movement to drive up UKproductivity through inspiring and helping everyfirmin the country to improve their own performance, and the performance of those they workwith.
  50. 50. Be the Business was founded on two fundamental insights about productivity 65 Distribution of businesses relative to the expected productivity for a firm of their size in their sub-sector Link between management practices and productivity Median productivity in each group of firms Good management practices are one of the biggest drivers of productivity The gap between ‘the best’ firms in the UK and ‘the rest’ is significant
  51. 51. We start with a focus on the hump of underperformingfirms Distribution of businesses relative to the expected productivity for a firmof their size in their sub-sector “This empirical evidence suggests a long tail of countries and companies with low,slowproductivitygrowth. These productivity laggards have been unable to keep-up,much less catch-up, with frontier countries and companies. Bank Chief Economist, Andy Haldane, March 2017 “We will launch a Call for Evidence to understand how bestwe can help the UK’s least productive businesses to learn from,and catch-up with,the most productive.” Chancellor Phillip Hammond, 13 March 2018, Spring Statement
  52. 52. Atailored offer forSMEs Propagated and multiplied by larger firms We’re focusing on the 240,000 SMEs with between 10 –249 employees,where we know improvements to management practices can have significant bite. (There are 7,000 businesses in the UK with more than 250 employees). Examples
  53. 53. Developing national awareness of our movement
  54. 54. Reaching our target audience with focused regional and sector press
  55. 55. How do we meet this audience need?
  56. 56. The Be the Business offer For those just engaging Our digital platform
  57. 57. Online advice and benchmarking - Improvement advice in accessible language - Dashboard of business practices In-person communities -Cornwall -North West -Supply chain Management and Leadership -Lancaster -Bath -Glasgow Mentoring -Birmingham -Manchester We’re developing four core areas of focus, applied in regions across the country, to iterate what we’re doing and learn quickly
  58. 58. Hospitality firms in Cornwall - Met with key business leaders and identified partners - We have engaged and inspired business leaders - Almost 100 businesses registered their interest in the pilot - We’ve held our first workshops in person and launched our online community We are building communities to develop practices that can scale Family businesses in the North West Graham Ramsbottom Grosvenor/Wheatsheaf group Martin Rayner Lakeland Robert Hough Peel Gill Hall Butler’s Cheeses Jacqueline Jackson Thomas Jardine Richard Topliss RBS
  59. 59. Productivity through people - Lancaster: 3 cohorts - Bath: 2 cohorts - Strathclyde: 1 cohort High quality adult learning with high impact results
  60. 60. Chris Waterfield Mentor: Arunima Dhar Organisation: Waterfield Bakery Sector: Mfg food Area of improvement: Build credibility as a leader to take over the business from his father, adopt lean techniques in the plant and guide the company during times of financial challenge. Liz Smith Mentor: David Low Organisation: LG Davis Sector: Mfg Area of improvement: Step above the day to day firefighting mode and focus on the futureof the organization that is owned by her uncle. Liz wants to understand business processes like risk management, performance management etc from David who has worked in GSK all his life. Pilots underway in Greater Manchester and Midlands A mentoring pilot that is ready to scale up
  61. 61. How do we use a ’movement' to scale?
  62. 62. Scaling interventions that work Visit Cornwall + Visit England PtP scale-up (672) Family run- business networks Mentoring scale-up: 1274 firms Digital platform at scale
  63. 63. Professionalfirms Propagating , adapting and pioneering Business bodies Banks Productivitypioneers
  64. 64. We will be the enemy of complacency, unmoved by the latest quarterly statistics
  65. 65. After a decade of flatlining productivity performance, we believe the UK now needs a decade of productivity outperformance to be competitive in a post-Brexit world.
  66. 66. Panel discussion: SMEs, productivity and Brexit – challenges and opportunities  Adam Marshall, British Chambers of Commerce  Sonali Parekh, Federation of Small Business  Matthew Fell, Confederation of British Industry  Phillip McCann, University of Sheffield
  67. 67. Stephen Roper, ERC Maria Wishart, ERC
  68. 68. ’Core’ projects to end 2018 • Investing for the future? Investigating the determinants and barriers of investment in smaller firms • Leadership and management practices and the take-up of innovation - How do boundary spanning practices and work organisation influence adoption? • Innovation and productivity in SMEs – which types of innovation and which combinations of publicly/privately funded innovation drive SME productivity? IP issues come in here. • Understanding local productivity disparities – What explains productivity distributions between local areas? • Best practice/digital adoption across supply chains – to what extent are supply chains spreading best management practice or digital adoption to smaller suppliers?
  69. 69. SOTA Reviews Curating the evidence base Pre-publication • How can we attract and retain more internationally-mobile R&D? Nigel Driffield • Discouraged Borrowers: Measurement, Determinants and Impact, Ross Brown • Regional Differences Accessing Finance in UK SMEs: Do They Exist and Do They Matter? Ross Brown • Identifying ways to tackle barriers faced by women-led firms in accessing Venture Capital through new behavioural research Aloña Martiarena • Innovation and Quality Management – What are the links? Stephen Roper • How can we improve R&D collaboration across the supply chain? Andrew Thomas • What supports the adoption of innovations within established (non-frontier) firms? Rosa Caiazza In preparation • Formal IP protection and innovation. What is the evidence? Suma Athrye • What is the relationship between innovation support and productivity.? What works? Abdullah Gok • Diversity and R&D team performance Marian Garcia • How can clusters be initiated, supported and sustained Chris Van Egeret
  70. 70. ‘Commissioned’ projects (selected) • Micro-business Britain – analysis and benchmarking using the US and Irish data • Productivity in metal forming and foundries – IS funded fellowship project working closely with two industry associations • Assessing the impact of Creative Industries – Coventry will be City of Culture in 2021. How will this impact local economic and health outcomes? • Supporting growth and productivity in Northern Ireland – series of projects for Dept for Economy, NI • Building better business resilience – helping develop stronger business resilience among disadvantaged communities
  71. 71. Building better business resilience • Funded by the JP Morgan Foundation this two-year project asks: How can we help new firms develop resilient strategies, thereby promoting survival and growth? • Focussing on entrepreneurs from disadvantaged backgrounds this is a five-country study lead by ERC with Spain, Italy, France and Germany. • The literature review phase is now completed. Survey work and related case studies and focus groups will take place in the UK this autumn and in our partner countries in early 2019. • The outputs from the project will include practical policy guidance as well as toolkits for SMEs and business support practitioners
  72. 72. Engagement, influence, impact • We continue to maintain high levels of ‘soft engagement’ – providing advice and input to Funders and non-Funders including LEPs, FSB, and HMRC • One element of this has been ‘Teach-ins’ with BEIS, FSB and IPO (coming up) on the latest thinking on SMEs and innovation • We have also convened/planned workshops and events with BEIS (on the 2.4% R&D target), IPO on innovation and IP (forthcoming) etc. • Always happy to talk and see how we can help you …
  73. 73. Thank you