100719132851-4e2525dd398b465e98f36b1e196d7f30.file
NWDA – High Growth Business Support – notes to PQQ Introduction - NWDA The Northwest is a £106billion economy with 6.8m people and in excess of 242,000 firms 1. The Northwest Regional Economic Strategy (the RES) sets out the vision for the region – a dynamic, sustainable, international economy, which competes on the basis of knowledge, advanced technology and an excellent quality of life for all. The key drivers are to create and maintain the conditions for sustainable growth, improve productivity and grow the market, and grow the size and capability of the workforce. The Northwest Development Agency (NWDA or ‘the Agency’) and the other English RDAs were established to increase the prosperity of the English regions. Preparation of the RES has been led by the Agency as the strategic leader of the economic development of the region. Wide consultation and a Regional Advisory Group consisting of private, public and voluntary/ community sectors assisted in the development of the RES. Over the next few years we aim to continue the transformation of the economy by building on our many assets and tackling areas of poor performance as recognised under the themes of business, skills and education, people and jobs, infrastructure and quality of life. Actions to improve the formation, survival and growth rate of businesses and to develop higher added-value activity have been identified as key.
High Growth Business Support The GVA of the Northwest has increased by £3.7bn from 2004 to 2005 (3.7%), however GVA growth has been below the England average of 3.9%. This means that the GVA gap has increased from £17.3bn to £17.8bn. (The RES identified the GVA gap as £13bn, however subsequent data revisions changed this figure)2. This £17.8bn gap is accounted for by: •
£3.5bn due to fewer people of working age and fewer people working than the England average (compared to £3bn in RES 2006)
•
£14.3bn due to lower productivity of those people in work (compared to £10bn in RES 2006).
Against a backdrop of falling job numbers from 2004 to 2005, the number of knowledge jobs in the Northwest has increased by 42,200 so that knowledge occupations now represent 38.5% of all jobs. This is an increase of 1.6% points compared to 1% in England, although this increase relative to England is not fast enough for the Northwest to meet the England average percentage by 2009. The total number of jobs is also not growing as fast as needed to achieve the target. In addition, general entrepreneurial data shows the Northwest to be performing poorly in relation to the UK average with 17% fewer start-ups per 10,000 adults and the region has 38,000 fewer businesses than the England average based on population. If this same analysis is used to take account of business size, then the Northwest has a gap of about 6,500 businesses which have grown to a turnover of greater than £500K per annum. The RES actions 3 and 4 identify requirements to improve start up rates overall and that knowledge-based businesses (including start-ups) are more innovative and internationally competitive and can exploit growth conditions. Stephen Timms, the Minister for Competiveness, recently announced that the Enterprise Directorate (the renamed Small Business Service) has a renewed focus on business growth. He detailed that he wants to see higher levels of ambition on the part of small business as there is a bigger contribution they can make to the competiveness of the UK economy. 1
2
ONS data and NOMIS ABI for 2005. NWDA, BASELINE UPDATE REPORT 2007 :Progress One Year On, June 2007
05.09.07
Page 1 of 6
100719132851-4e2525dd398b465e98f36b1e196d7f30.file
These statements, alongside the drive for business support simplification and the RES provide clear policy direction for the encouragement and support for businesses with high growth potential.
Business Support Simplification Process (BSSP) and Business Link The Agency is committed to the business support simplification process and the rationale for this is to raise the efficiency and quality of support whilst reducing client confusion. To this end, the Agency wants to provide a cohesive, innovative and customer-led solution for high growth support activities; specifically targeted as identified in this paper. The implications for this project are detailed below. The intensive support provided to the start-up and to the established business clients falls within the BSSP ‘Business Creation’ and ‘Business Expertise’ products. These identify the need to provide businesses with expert knowledge, coaching and skills development as support in their objectives of improving performance and growth. The target market is clearly identified as firms who are experiencing rapid growth or who have high growth potential. High growth is a criterion in several BSSP products (business creation, growing internationally and business expertise) and the growth requirements of the client may cover several of these products. This project seeks to encourage providers to work together across the region to deliver the support services detailed here. The high growth service will be marketed under the Business Link Northwest (BLNW) brand and clients will access this service through that route. This will be in the same way as the existing ‘business start-up and survival project’ which is targeted at the other sectors under RES action 3 women, BME communities, disabled entrepreneurs, social enterprise and the hard to reach communities in Barrow, Blackpool, Knowsley, St. Helens and Wirral. Using this approach in the Northwest will bring the core Business Link service and intensified business start up support together for the first time under one umbrella; which will not only reinforce the role and brand of Business Link thus aiding a reduction in customer confusion, but also help to drive efficiency through shared functions like central marketing and a single CRM. BLNW will promote its core universal and targeted services, conduct the IDB process, and refer potential customers to the high growth service provider as appropriate. BLNW will also ensure client continuity by providing access to the CRM knowledge platform for the high growth service provider. This project will be registered on the BLNW product list and the BLNW service will signpost clients meeting the potential growth criteria to this service along with other support options available. The service provider in this project will represent an additional delivery programme to provide detailed high growth support to the target groups. Appendix 1 illustrates the positioning of the anticipated support in the context of the mainstream Business Link service offering.
Contract Requirements In this context, the Agency is seeking to procure a 3 year contract (2008 to 2011) to provide a dedicated programme for the delivery of High Growth Support focused on RES Action 3 and 4 priorities. This should be a dedicated growth programme targeting support at companies where potential high growth has been identified and covering a broad range of SIC sectors from manufacturing to services. The number of ‘knowledge occupations’ represents nearly 40% of all jobs in the region hence, it is quite possible that a substantial amount of the businesses that would benefit from this programme will be knowledge based. This contract will be targeted towards high growth businesses which the Agency defines as (a) are pre-start or start-up firms which have the potential to reach a turnover of >£500k or to employ >5 people or (b) for established businesses over 2 years old which have the potential to increase turnover or employment by >20% per annum within the first three years of joining the programme. The emphasis is on the value these businesses can add and it is expected that the assisted
05.09.07
Page 2 of 6
100719132851-4e2525dd398b465e98f36b1e196d7f30.file
businesses will achieve Gross Value Added (GVA) well in excess of the regional average (£33,786 per employee in 2004). This contract does not wish to replicate nor provide additional investment where there is already existing start up and survival support. It should be noted that this contract will not provide support in the areas covered by the recently contracted ‘Business Start-up and Survival’ project. Specifically, • Spatial content identified as: • Barrow, Blackpool, Knowlsey, St Helens and Wirral • Urban Regeneration Company (URC) areas and • Housing Market Renewal (HMR) areas • BME, Women, Disabled and Social Enterprises – targeting hard to reach client groups within the community, from across the entire North West. This does not preclude businesses (or pre-start businesses) from these groups being identified as potential high growth by the Business Link IDB process and thereby becoming a client of this programme. We would want bidders to take account of start up and survival provision across the region and the Agency expects that the successful bidder will align their service provision within the totality of the support services market place. This contract will deliver services across three main work streams: • Pre-Start training/ support; • Business coaching/ intensive directed support; and • Provision of Non Executive Directors. Through procuring a contract that provides a cohesive business support package high growth activities, the Agency wishes the bidder to be capable of providing support to all three of these work stream areas in order to fulfil the business support requirements of the project. Objectives This project is aligned to the goals of the RES, and will aim to contribute towards the following key RES targets that have been set for 2006-2009: •
GVA Growth – achieve GVA growth above the England average. The long term aim is for the Northwest to close the GVA/head gap with the England average.
•
Firm foundation – measured by VAT registrations, the region aims to raise the firm foundation rate to 21,000 per annum. The long term aim is for the Northwest to have the same firm foundation rate as the England average.
•
Knowledge job creation - Create 80,000 net new jobs in ‘knowledge’ occupations.
As a result of these project aims, the overall project objective is to have an impact in the following areas: • • • • • • • •
An increase in the number of high growth knowledge based start ups in the region An increase in the number of high GVA jobs in the region. An increase in Entrepreneurship capacity in the region. Development of entrepreneurial skills - creating a legacy for the region and serial entrepreneurs that will go on to create more than one business. Increased turnover, profit and/or employment rates of businesses assisted through the service. Businesses better prepared and enabled for survival and success Improving the NW share of high performing businesses On overall increase of the GVA contribution for companies participating in the programme.
During the course of this process, the Agency will want to interpret these objectives into output targets, which will be monitored throughout the term of the contract – part of which could be subject to performance related payments.
05.09.07
Page 3 of 6
100719132851-4e2525dd398b465e98f36b1e196d7f30.file
Detailed Workstream Information Further information regarding the anticipated workstreams for high growth business support is set out below. Component 1: Pre-start Support Programme Develop support programme. Recruit suitable pre-start candidates (see eligibility criteria). Establish suitable timetables to engage candidates. Establish suitable regional delivery centres. Deliver support programme. Ensure business start-up. Support candidate/ business to start-up. Component 2: 1:1 Consultancy (start-up) Receipt of clients onto programme from: (a) Component 1 (pre-start). (b) Business Link IDB process. Establish the detailed requirements to deliver the growth. Deliver required targeted support: (a) Intellectual Property/ Legal. (b) Organisational/ HR. (c) Access to Finance. (d) Marketing/sales. (e) Technical/ product/ design etc. (f) Other (activities defined by the IDB process). Manage the clients to deliver the growth objectives.
.
Component 3: 1:1 Consultancy (Established Business) Receipt of clients onto programme from Business Link IDB process. Establish the detailed requirements to deliver the growth. Deliver required targeted support: (a) Intellectual Property/ Legal (b) Organisational/ HR (c) Access to Finance (d) Marketing/sales. (e) Technical/ product/ design etc. (f) Other (activities defined by the IDB process). Work with the business to deliver the growth objectives.
.
Note:-
05.09.07
Page 4 of 6
100719132851-4e2525dd398b465e98f36b1e196d7f30.file
The essential difference between component 2 & component 3 is the client needs. The start-up requirements and method of intervention may be wide-ranging, whereas the established nature of the existing business needs a different approach. The issues faced by start-ups (although specific around their 'concept') can be quite broad whereas those for the established firms may be much more focused on a specific issue which is inhibiting their growth ambitions. Component 4: Non Executive Director 'matching' service Establish a suitable 'bank' of Non Executive Directors. (a) A variety of sectors/ specialists eg. Nuclear/ chemicals; marketing/finance etc. (b) Able to operate regionally. (c) High quality matched to start-ups/ established business clients. Put into place a flexible insurance policy for the NEDs matched to the potential client base. Establish the need/ suitability of the client for a NED. Match the client with several 'candidates' from the NED 'bank'. Allow the client to select the NED. Monitor/ follow up on relationship to ensure delivering the objectives.
Budget / Scope The Agency has outlined a commitment to invest in the area of high growth business support services through its Strategic Investment Framework. The anticipated level of funding to be allocated to this activity by the Agency is significant. In 2006, the Agency committed approximately £200K to a one year pilot programme for support to potential high growth businesses throughout the region. The initial findings and experiences from this pilot have been used to guide the development of this project and any final conclusions will be used in the final delivery. This contract is in separate from but will need to recognise the activities contracted by the Agency under ‘Business Start-up and Survival’ Bidders should note that alongside the Business Link service provision, this will be the Agency’s principal contribution to high growth support activity during this period in the North West.
05.09.07
Page 5 of 6
100719132851-4e2525dd398b465e98f36b1e196d7f30.file
APPENDIX 1 High Growth support in the context of the mainstream Business Link service
Targeted or Universal Service
Business Link IDB Process
High Growth Potential?
HIGH GROWTH Programme Specialist delivery
Other BL Support Services
High Growth Potential?
Legal Services Support :JIT Start-Up training Mentoring NED Links
Ongoing BL Support
05.09.07
IP Support Access to Finance
Completion of HG programme
Page 6 of 6