erc business demography theme presentation. july 8th 2015
TRANSCRIPT
ERC Business Demography Research Theme
Reference Group Presentation 8th July 2015
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
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.
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.
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
MILLENNIAL 2000 – ‘M2000’
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
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
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
Adding Jobs for 16 years
Generating Revenues for 16 Years
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
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
Period of Most Substantial Growth
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
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
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
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
FIRM AND JOB DYNAMICS & THE GREAT RECESSION
DECOMPOSING UK AGGREGATE LABOUR PRODUCTIVITY
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
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
[email protected] or Michael Anyadike-Danes at [email protected] or
Jun Du at [email protected] or Karen Bonner at [email protected]
More details about the activities of the ERC and our latest events can be found at:
www.enterpriseresearch.ac.uk