Honey Pots & Hives: Maximising the potential of rural enterprise hubs

Dr Paul CowieRural Enterprise Support Workshop

Enterprise Research Centre27th February 2014

The CRE/RGN partnershipOne of five UK Government pilot programs funded from 2012 -2015 to pilot new ways to overcome barriers to economic growth in rural areasNE RGN theme was ‘rural enterprise hubs’Part of the CRE research project was to establish what a rural enterprise hub was and what it should do.

• Building on the rural economy knowledge base already out there:– Dominated by atomised microbusinesses – Significantly higher levels of home-based businesses– Difficulty in gaining access to extra-local markets and

networks– Overcoming dominant preconceptions of rural

businesses: lifestyle businesses, low-tech and no-growth.

• How do rural enterprise hubs fit into this picture?

• Overview of hubs– There is a mix ownership: 50% private (most large estates); 33% not-

for-profit; 17% local authority – Smallest hub (Amble 4ways) 7 units– Largest (Berwick Incubator) 35 units– Range of units from 9m2 to 473m2

– Not as much physical flexibility as expected – only 2 were able to adjust the size of units and mainly by letting two adjacent units

– Not much flexibility in relation to tenure. Only 1 allowed subletting/sharing and 2 worked on ‘easy in, easy out terms’

– Fear of unknown and lack of legal capacity to accommodate flexible arrangements

– They are under financial pressure: higher overheads, more empty units and longer re-let times.

– Significant amounts of cross-subsidy within property portfolios

• Hubs are spread thinly across the region

• Most are focused on accessible rural locations

• However this is not a complete picture

• Building a typology:• Two dimensions to

differentiate hubs:– X–axis relates to the

provision of services and support – traditional incubator differentiation

– Y-axis relates to nature of hub: honeypot or hive – the rural dimension.

• Gives 4 broad typologies of hubs

A destination hub which is only lightly managed

A destination hub which

wide ranging / intensive support’

A hub with mainly B2B occupiers

which is only lightly

managed

A hub with mainly B2B

occupiers with wide ranging /

intensive support’

• The stakeholder engagement with hub owners/managers revealed a number of issues:– Hubs are businesses in their own right.– They feel as isolated and disconnected as the businesses the

host.– Most have little or no experience of managing this type of

premises.– They needed to be networked as much as the businesses within

them.

• The NE Hub network has now been founded. – Links rural and urban hubs in the NE– Shares best practice– Helps business move to grow-on space. – Still finding its feet and developing

• Hub Occupiers• General statistics

– Younger businesses in hubs than general pop.

– Average FT employees = 4.9 (4.5 in RBS)

– Average PT employees =1 (2 in RBS)

 Rural Business

Survey (2009)  Hub Occupier Survey (2013)

0 - 2 years 8%   41%

Over 2 - 5 years 16%   6%

Over 5 - 10 years 20%   29%

Over 10 - 20 years 20%   12%

Over 20 - 50 years 25%   12%

Over 50 years 11%   0%

• Customers– More likely to be B2B

than B2C– More likely to serve a

market which is regional or national than general rural business pop.

Rent

Flexib

ility

Communal sp

ace

Share

d promotional

materia

l

Networki

ng

Business

Support

0%

20%

40%

60%

80%

100%

120%

Factors influencing move to hub

Of no re-levence

Not relevant

No opinion

Relevent

Very rel-evant

Better

IT

Collaborati

on

Buss Dev

Prog

Priavte

Capita

l

Skills

Train

ing

Bussiness

Support

Agency

0%

20%

40%

60%

80%

100%

120%

Barriers to growth - Hub Oc-cupier Survey

Strongly disagree

Disagree

Neither agree nor disagree

Agree

Strongly Agree

• This seems to suggest a two stage process. Possibly a transition.

• 58% of businesses in hubs had moved there from home.

• This suggested rent and flexible letting terms can be used to help ease the transition to a more commercial business outlook.

• Later support can be included to foster collaboration once they are settled in the hub.

• The final chart shows the networking activity currently taking place in the hubs.

• Again in contrast to expressed wishes very little collaboration taking place.

• Lots of informal networking but not clear what added value this brings

Info

rmal

Form

al

Traini

ng

Collab

orat

e New

Bus

Collab

orat

e Pro

mo

0%

20%

40%

60%

80%

100%

120%

Networking Activity within hubs

Daily

Weekly

Monthly

Less than Once a month

Never

• RGN has supported the development or improvement of 5 hubs in the first round and [ ] in the second round

• Strong demand for space in the new hubs, a number were filled by word of mouth.

• In one case the return of a home-based business started locally now international

• Still much to do in terms of networks and support

• Conclusion• Need to take into account the differences between hubs i.e. the Hub

Typology and the nature of the hub occupiers. • Hubs seem to offer an affective bridge between early stage/home based

businesses and a more commercial mature enterprise:– This offers opportunities for the hub to create a wider network of home-based

businesses as a pool of potential occupiers– Offers opportunities to deliver targeted businesses support to these businesses.

This could be both hard (business skills) and soft (mentoring)– A two stage approach may be needed. Concentrate on the bottom line issues,

rent and tenure, and later develop the other elements, networking and collaboration

• Hubs are businesses themselves, they need to network and collaborate just as much as the businesses they support.

• Thank you

• The full report can be found at:

http://www.ncl.ac.uk/cre/publish/researchreports/Honey%20Pots%20and%20HivesFINAL.pdf