This document summarizes the activities and upcoming work of the ERC Business Demography research theme. It discusses an update on projects since the last meeting in December, including a survey of firms from 2000 and analysis of firm and job dynamics before, during, and after the Great Recession. It also outlines decomposition of UK labor productivity and growth from 1998-2013. The theme lead provides an overview of engagements with external organizations and priorities for projects through January 2016, including further analysis of productivity and reporting results from the survey of millennium firms.

1. ERC Business Demography
Research Theme
Reference Group Presentation
8th July 2015

2. Agenda
• Update on activity since December meeting
• Millennial 2000 – BIS sponsored survey – update - MH
• “Getting in under the hood: firm and job dynamics in the UK
before, during, and after the Great Recession” – MAD & MH
• “Decomposing UK Aggregate Labour Productivity and Growth
1998-‐2013” – JD & KB
• AOB

3. Activity since December
• ERC Publications:
– “Contribution to Job Creation by High Growth SMEs” – Anyadike-
Danes and Hart (July 2015)
• Presentations:
– Anyadike-Danes, M; Bonner, K and Hart, M (2015) “Micro-enterprises
and their contribution to job growth”, paper presented to the ERC-
CDFA conference on micro-enterprises on 1st June 2015.
– Anyadike-Danes, M and Hart, M (2015) “Fecundity, survival and
growth: high growth firms in the UK and their contribution to job
creation, a demographic perspective”, paper presented at a workshop
on “A Long-Run Approach to Entrepreneurship. The Demography of
Firms and Industries in Europe: Past, Present and Future Perspectives”
at Södertörn University, Stockholm, Sweden, May 28-29, 2015.

4. Activity (contd.)
• Academic Papers:
– Anyadike-Danes, M; M Hart and J Du. 2015. "Firm Dynamics and Job
Creation in the UK: 1998-2013" International Small Business Journal,
Vol. 33 (1) 12-27.
– Anyadike-Danes, M et al (2015) “An international cohort comparison
of size effects on job growth”, Small Business Economics , forthcoming
• Workshops:
– Business Population and Demographic Statistics User Group, BIS
London, “UK Business Demography” (June 2015)
• Growth Dashboard – 2015 – with Business Growth Service
– Follow-on work with various LEPs – notably for the 3 West Midlands
LEPs in the new Combined Authority and SEMLEP.

5. Engagement
• The Scale-up Institute – Sherry Coutu (Launch June 2015) -
formally involved in monitoring the evidence base
• OECD project on ‘dynamics of employment’ – UK component
• Invest NI – HGFs and Firm growth for the new sub-regional
framework
• BBB – evaluation of EFG
• UKCES – HR practices and strategies and SME growth
• BIS/HMT – input into pre-budget discussions related to
productivity – leading to ERC Insight Paper

6. MILLENNIAL 2000 – ‘M2000’

7. Context
• In 1998, 240,000 firms were born – most
employed fewer than 5 people
• In 2014 - ~26,000 of these firms still in
business (11%)
• 67% haven’t grown at all

8. Who are the Millennial 2000?
– 1,230 firms had 1-4 employees in 1998
But created 40x number of jobs they had in year one
– 1,131 firms had <£100k sales in 1998
But generated 80x amount of first year sales
– 412 firms in both categories
Created 77x number of jobs they started with
AND generated 137x amount of first year sales

9. M2000 Contribution to the
UK Economy in 2014
• Employ c.110,000 people and generate
around £16bn sales
• On average each M2000 firm now employs
~55 people and generates sales of ~£8.5m

10. Adding Jobs for 16 years

11. Generating Revenues for 16 Years

12. The M2000 Survey
• How they grew 1998-2014
• Was it a story of ‘luck’ or………………?
• Strategic behaviour
– business model development; markets; innovation;
knowledge sourcing;
• Funding – bank, equity, alternative finance
• External advice – private and public
• Leadership, Management, Skills
– evolution of the ownership/management team

13. What are the M2000 telling us?
[Emerging Findings - 219 firms – final achieved sample
of 362 firms - analysis starts 13th July]
So far –
• They are in ALL sectors of the economy and in all
parts of the UK
• Over half are family businesses – and many of the
Founders still actively involved in the business
• Predominantly independent businesses and most are
B2B
• 1 in 3 have a formal Board of Directors

14. Period of Most Substantial Growth

15. A story of Exporting and/or
Innovation?
• In 2015 – ~half sell internationally - and those that
are have been exporting for more than 10 years
• … a higher proportion than in the wider economy
(20%)
• 2 out of 3 had innovated but not in the last 3 years

16. Finance
• A third had initial capital of <£10k – almost no PE or
VC involvement
• 1 in 4 actively searching for external finance since
2012 – primarily bank finance (average sought -
£700k)
• Only 1 in 10, of those seeking finance, did not obtain
the finance they were seeking

17. Impact of the Great Recession
• Recession adversely affected about a third
• Many grew substantially during the Great Recession
– how?
– All about UK markets – much less internationally
– Less about innovation
– Not about M&A!
– Most ran down reserves or managed costs

18. External Advice
• Legal advisors, accountants and bank managers
• Around 1 in 3 have made use of government
business support – most of these still doing so
• Thirst for knowledge:
– Technology; professional information; intelligence about
market competitors; skills

19. FIRM AND JOB DYNAMICS & THE
GREAT RECESSION

20. DECOMPOSING UK AGGREGATE
LABOUR PRODUCTIVITY

21. Discussion
• Priorities to January 2016 - wrapping up our 3-year
work package
• Of note:
– Productivity work – dissemination and further
analysis – particularly on the regional dimension
– Millennial 2000 – reporting in September 2015
– Business support analysis – linked BSD/CRM data
– Evaluation of EFG for BBB
– Firm Growth and Skills – UKCES project
– Growth, Diversity and LEPs – Themes 3 & 6

22. Contact us:
If you would like any more information about the Business Demography
theme and any of its activities please contact the Theme Lead, Mark Hart at
mark.hart@aston.ac.uk or
Michael Anyadike-Danes at m.anyadike-danes@ston.ac.uk or
Jun Du at j.du@aston.ac.uk or Karen Bonner at k.bonner1@aston.ac.uk
More details about the activities of the ERC and our latest events can be
found at:
www.enterpriseresearch.ac.uk