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Introduction

The new government clearly states that reducing the budget deficit is the most urgent issue facing Britain. Last year, the latest Public Sector Net Borrowing forecast was the largest in Britain's peacetime history.  The recently published Spending Review Framework released by HM treasury in June 2010 focuses on reducing Britain’s record deficit and restoring sound public finances and outlines the need to provide a platform to consider new and radical approaches to public service provision. 

This paper makes the case for an area of Government spending in business support that has successfully delivered results across the North West of England and could do so for the rest of the country, with the opportunity for significant impacts on job creation and on productivity across the regions.

“The debate about industrial policy always raises the spectre of ‘picking winners’. But in a globalised economy its time to move this debate on a bit – be clear about what this means. Because in some ways we have to be picking winners. We have to make some strategic choices. We can’t avoid that. The ‘winners’ in this sense are the skills we judge we will need for the future, and the sectors they support.” (Vince Cable, Business Secretary, June 2010)

“Whenever feasible, government funded business support should be targeted at businesses that have the potential to grow. And policymakers should continue to develop policies that facilitate the emergence of high-growth firms”  (NESTA, 2009)

Background

In 2008 the North West Regional Development Agency commissioned the High Growth Programme targeted at 1800 of the regions aspiring high growth businesses. One of the largest programmes of its kind to date, it targets three groups of businesses/entrepreneurs:

• • Pre starts that have the potential to generate revenue of £500K within three years
• • Early stage companies (less than 12 months old) with the potential to grow to £500K in three years
• • Existing SME’s over 12 months old, with a minimum of £500K revenue and a maximum of £10 million revenue but have the scope to grow at 20% year on year for three years

Almost two years in, the programme, delivered by Winning Pitch plc in Manchester, has made an incredibly positive impact and is creating the conditions vital to supporting entrepreneurs achieving high growth. Participating businesses receive high quality coaching and mentoring from experienced coaches – with assistance in developing a vision, strategy and implementation plan. Specialist advice is also provided in areas such as finance, marketing, sales and leadership. The programme drives action and is extremely practical.

High Growth  = High Job Creation

The programme is exceeding its targets with over 1000 new jobs created to date. This impact on job creation supports the wider research that suggests that while high growth businesses represent just 5% or 6% of a regions small business stock, they create up 60-70% of new jobs each year.

Clearly, if the North West and other regions were able to increase their high growth business stock, this would have a significant impact on the nations economy.  

The High Growth Research Programme 

The High Growth Observatory runs alongside the NWDA High Growth Programme acting as a “live feed”, tapping into the rich sources of information available from the participating businesses to understand more about who they are, what impact they are having, and critically, how the region can stimulate more of them to re-ignite its economic recovery. 

A range of research projects were carried out by Winning Pitch over the duration of the programme, gathering insights from participating entrepreneurs about their backgrounds, their leadership skills and their mindset, and insights from the participating businesses around their strategic goals and key barriers to growth. This information was then used to identify best practices for high growth interventions and sustainable models to deliver them. 

Among the projects carried out was a benchmarking study of over 40 of Europe’s key high growth support programmes, a collaboration with the Kauffman Foundation looking at the anatomy of growth entrepreneurs, a focus group with 25 of the regions top growth coaches.

The key findings from the research show us not only that Coaching for Growth is delivering, but also which aspects of the programme have worked best, where future focus should be, and how to build on the infrastructure that has been developed for the future. 

Key Findings

1. Coaching for Growth Works

Over 1000 new jobs have already created as a direct impact of the programme and 40% of the businesses surveyed grew 20% in turnover in the 12 months since they enrolled, despite the sharp downturn in economic activity in 2009.

2. The Best Return on Investment: Existing Businesses

Businesses already turning over £500k have delivered more than 75% of outputs and, usually with over 10 employees, have the basic business foundations already in place i.e. infrastructure, knowledge and skills to support sustained high growth. Of 200 new jobs created in May 2010 alone, 170 came from larger companies.

3. Start-Ups Require a Different Model

This coaching has been somewhat slower to achieve tangible impacts with start-ups – they are not always ready for it and in some cases require a level of education in basic business skills (especially market research and finance) prior to engagement with a growth coach.

4. Overcome Specific Growth Barriers

The key barriers existing businesses face are overwhelmingly marketing/sales planning and implementation, financial management and managing organisational change. While internationalising has not been a priority of many of the companies on the programme some the most successful participants have done this – it needs to be a future priority.

5. Target the Right Businesses 

Using data systems and processes intelligently we can start to target future businesses for validation of their growth or potential growth credentials. However, data on its own cannot identify these companies. A mix of sophisticated data mining and one to one validation of a company’s growth ambition from experienced coaches, is essential to find the right companies who will deliver high growth.

6. Target the Right People – Mindset & Ability

The importance of mindset and mental attitude (determination, motivation, personal drive) is a critical success factor for entrepreneurs on the programme. This was supported by their teams who see their leaders as passionate visionaries - they have set their minds on a growth mission and their staff believe they will achieve it. 

7. Keep A Local focus

Local and sub regional economic differences are important – some regions have had higher growth demand and some have performed better than others. Cities and urban areas are vital targets.

8. Ensure Sustainability by building on the Existing Infrastructure 

The infrastructure, processes & systems associated with the existing High Growth programme is delivering results. As the programme enters its final year, ongoing research has identified that businesses, coaches and key business support providers all advocate the creation of a “High Growth Leadership Foundation” that builds on the programme successes to date. It will act as a centre of excellence and provide “on demand” support to members at critical times on their growth path and act as a sustainable model to support the regions Fast Growth Businesses. Preliminary discussions are now taking place for Foundations in both Lancashire and the North West as a whole, with strong interest from private sector sponsors.

Conclusions

These findings come at a critical time in Government decision-making.  Clearly the activity of coaching for growth is delivering results – often where other support projects have not. The nature of these results in the North West suggests that this activity is essential to meet Government priorities. Government funding to reduce the barriers faced by businesses to achieve high growth does have a significant return on investment. Targeting this activity at specific groups of businesses is now more achievable than ever before based upon the research activity now taking place into this area. This programme of research, carried out directly with businesses, with growth coaches and with key public sector stakeholders has identified how the offering can be provided more effectively and also at a lower cost through a mix of public private partnerships.

About Winning Pitch plc

Winning Pitch support individuals and companies to achieve profitable breakthroughs in revenue performance.  

We are a research led company that has identified the core ingredients of business and personal success – this knowledge has allowed us to deliver breakthrough solutions to entrepreneurs and individuals who desire more. We are grounded in providing practical hands on coaching advice to produce sustainable growth.   

Our core services comprise business growth consultancy, entrepreneurship, personal development, sales coaching and strategy, innovation support and international development. We are passionate about making a difference this is why we have an ongoing commitment to creating solutions for success.

Winning Pitch specialises in designing, delivering and managing complex large-scale public sector funded programmes targeting SME development and the skills agenda. We deliver one of Europe’s largest programmes aimed at high growth businesses.

To find out more about the coaching programme, the research carried out to date and how Winning Pitch can help you understand more about this elusive group of businesses, contact David Thomas, Director, Winning Pitch Observatory, d.thomas@winning-pitch.co.uk, 0161 918 6785.