CELEBRATING THE 2011 WALES FAST GROWTH 50

WESTERN MAIL COLUMN SEPTEMBER 24TH 2011

During a week when enterprise zones where finally announced in Wales and the Welsh Government found three more sectors to add to their list of favourite industries, the Western Mail published the annual list of the fastest growing firms in Wales.

Since the Wales Fast Growth 50 was established in 1999, 418 firms have appeared on the thirteen lists and it is estimated that all of these companies have created around 20,000 jobs and generate over £10 billion of turnover into the Welsh economy every year, much of which is spent on local goods and services.

This year’s list was unusual in that it included one of Wales’ most successful businesses, the Admiral Group PLC. That is great news for the economy i.e. that one of our largest firms can generate growth normally found in younger and smaller businesses. Of course, with a turnover of £1.6 billion in 2010 and over 3500 employees, Admiral dominates the data for the fifty firms.

Yet, even if it is excluded, the performance of the other forty nine is an incredible achievement, generating a £600 million in sales in 2010 at an average growth rate of 108% and putting an additional £314 million for the economy during the period 2008-2010 – a record for the Fast Growth 50 even without Admiral. These firms also created a thousand additional jobs for Wales at a time of uncertain economic conditions

Whilst Admiral PLC is the largest company on the list, this year seems to be one where mid-sized companies are also beginning to grow within the economy, with a further twenty one firms generating a turnover of more than £5 million in 2010. This is a substantial group of companies that could become major players within their sectors over the next few years and hopefully follow in Admiral’s footsteps. What is now critical is that support, from both the private and public sector, is focused on developing the further impact of these firms, whose challenges are very different from the majority of the business population.

The Fast Growth 50 also has a number of new businesses, featuring fourteen fast growth start-ups that are five years old or less. However, none of these are in a technology-based sector, which should worry those who advocate focusing the majority of support on backing such companies. Indeed, one of the major policy decisions of the Welsh Government has to been to focus its support on six key sectors (now extended to nine) and yet, as the last thirteen years of the Fast Growth 50 has shown, growth companies can be found in any sector. The 2011 list is no exception.

Of course, as this column has pointed out on various occasions, the results of the Fast Growth 50 should not be a shock to anyone. The real surprise will be when policymakers stop ignoring the overwhelming evidence and finally realise that by focusing on developing these companies there could be enormous rewards for the economy.

This was emphasised by yet another recent study, this time from Endeavor and the Global Entrepreneurship Monitor (GEM), which verified that the answer to job creation lies in high-impact entrepreneurship. In fact, high-growth entrepreneurs are rare yet actually employ significantly more people than low-growth entrepreneurs.

For example, their research found that whilst high-growth entrepreneurs represent only four per cent of the total number of entrepreneurs, the businesses they founded created close to 40 per cent of the total jobs. In addition, high-growth entrepreneurs are planning to add up to fifteen times more jobs than low-growth entrepreneurs over the next five years.

Finally, and most importantly, it found that once high-growth entrepreneurs become successful, they are the most likely to start funding other ventures as angel investors, thus creating a strong entrepreneurial ecosystem within their local business community.

But perhaps the main lesson for policymakers who seek to pick winning sectors comes from Afonwen Laundry, the fastest growing firm in Wales.

Initially established in 1935, it is now one of the UK’s largest privately owned laundry and linen hire companies in the UK, supplying over 40,000 hotel bedrooms throughout the UK. The company’s growth has exploded in the last couple of years and it now supplies over 1.6 million items of linen across a wide range of hotels across the country.

It opened a new business in Cardiff some three years ago and has delivered over 150 jobs in that period, growing from nothing to a £10m a year business in its initial three years. It now employs close to 400 staff across four sites in Cardiff, Leeds, London and North Wales.

When I was younger, the blue vans with white lettering were a regular feature on the roads of North Wales and I never thought that they would one day feature in a list of the fastest growing firms in Wales. Indeed, to have a family business in a traditional industry from a small market town on the Llyn Peninsula is an incredible achievement, especially as it looks set to become the largest player in its sector across the UK.  They are worthy winners of this year’s list and demonstrate, like the rest of the Fast Growth 50 firms, that success is not limited to certain types of businesses based in a few key sectors.

IS THE DELAY ON ENTERPRISE ZONES GOING TO BE COSTLY FOR THE WELSH ECONOMY?

WESTERN MAIL ARTICLE SEPTEMBER 17TH 2011

As we enter the middle of September, it would seem that Wales is still waiting for a decision on whether it will create enterprise zones, which have been developed to boost prosperity through cheaper business rates, access to capital, superfast broadband and lower levels of planning control.

This is six months after the Chancellor formally announced the creation of such zones, although the new UK Coalition Government had already discussed their development in previous policy announcements.

Whilst there is prevarication in Cardiff Bay over their policy on this matter, our competitors across the border are already developing their plans to attract and develop new business, with twenty-one new enterprise zones already created across England. These include a number of areas on the border with Wales, including Hereford, Bristol and Merseyside.

And whilst critics could have argued that this is an England-only policy that has no relevance to devolved nations, this premise was blown out the water by the Scottish Government announcement, earlier this week, that it would be creating four new enterprise zones with a focus on low carbon manufacturing.

Should Wales be worried by such developments?

Let’s take the case of Scotland first.

The SNP has indicated that a focus on green technology will be at the heart of its economic strategy. The fact that it may use enterprise zones as a way of attracting focused inward investment in this sector should be of concern to other regions, especially those such as Wales which have also targeted low carbon technology as one of the key sectors it wishes to develop.

In England, there are even more worrying developments.

When Jaguar Land Rover announced that it would be considering a major multi-million pound investment in a new engine plant, it was hoped that Wales would be one of the sites to be considered with the West Midlands as the only other serious alternative.

Yet, there are rumours in the car industry that a site called i54, near Wolverhampton, is expected to win the race. Is it a coincidence that the same site was recently selected as one of the UK’s first enterprise zones?

Whilst Cardiff Airport struggles to develop its impact on the region and the so-called aerospace park next to it has achieved little since its inception, the new enterprise zone near Manchester Airport is set to attract more than 350 new businesses and create 21,000 jobs. In Cornwall, the Newquay enterprise zone will be targeting companies from abroad to build a centre of excellence of aerospace companies.

I could go on and mention the high technology enterprise zone at Daresbury Science Park, the renewable energy super cluster in Humberside and the Science Vale in Oxfordshire, which will focus on high performance engineering, biotechnology and medical instruments, but I think you get the picture.

The real question, though, is why Wales is taking its time to enter a race that has seen other competitor regions well ahead of us.

You won’t be surprised that it seems that bureaucracy is the main issue, with civil servants in Wales allegedly refusing to do anything because they need further clarity on issues such as capital allowances.

Considering that capital allowances are not even devolved, why should this be an issue? It clearly wasn’t important to the 21 enterprise zones in England that have already been awarded enterprise zone status.

Back in June, this column suggested that the Welsh Government could consider six enterprise and innovation zones for Wales based on the six sectors favoured by the Welsh Government. For example, Swansea could be made the life sciences enterprise zone for Wales whilst Cardiff could lay claim to either the creative industries or financial services.

In the North, Flintshire or Wrexham would both have a strong case for the advanced manufacturing and materials enterprise zone whilst the whole island of Anglesey, the poorest county in the whole of the UK, could become the energy enterprise zone for Wales. Over time, other enterprise zones could be added to these six areas that focus on developing the potential of this vital industry.

Yet nothing has happened in the intervening period, seemingly because of innate policy snobbery within the Welsh Government Business Department that, despite all evidence to the contrary, is more interested in finding reasons why it shouldn’t do something positive with the opportunities presented by enterprise zones.

Yes, enterprise zones are not the be-all and end-all for government policy but that argument misses the bigger picture, namely that they are about more than the funding being made available.

They are a means and a symbol by which local areas are getting together to develop a public-private sector partnership and a coherent plan for the creation of employment and prosperity.

And at a time when we have a Welsh Government seemingly with no economic strategy and little idea on how to take the economy forward, having any sort of plan would be a good place to start from.

GROWTH FIRMS SUPPORTED IN SCOTLAND BUT NOT WALES?

Western Mail Column 
10th September 2011

Next Friday, the annual awards dinner for the Wales Fast Growth 50 will take place in Cardiff.

I am proud to say that the event has been sold out for weeks and promises to be another night that celebrates the best of Welsh entrepreneurship.

The dinner will be followed, on September 21st, by the publication of the thirteenth Fast Growth 50 supplement in the Western Mail.

Having spent every spare hour during the last four weeks putting this together, I am proud to say that the profiles of every business featured this year is a testament to the variety of successful ventures of all sizes that flourish in all parts of Wales.

Yet, it would seem that those in charge of economic development in Wales remain reluctant to engage with these high potential companies.

Even when the Welsh Government, six years ago, acknowledged that it should give extra support to a smaller group of firms through the knowledge bank for business (KB4B), there were very few Fast Growth 50 firms invited to join. Instead, the vast majority of participants on this programme were mainly the so-called anchor companies so beloved of the CBI and the current government.

Given the fact that every year, the fast growth 50 firms make a disproportionate contribution to the Welsh economy and have the potential to grow further with the right support, one has to wonder why they continued to be ignored by  policymakers in Cardiff Bay?

Interestingly, the same issue has recently been raised in Scotland, following a study of high growth firms by Professor Colin Mason of the Hunter Centre for Entrepreneurship at the University of Strathclyde.

According to Professor Mason, there are 825 high growth firms identified that make up only 4 per cent of the Scottish business population. However, they employ almost half a million people and account for 50 per cent of all new jobs in the economy.

Following the publication of this study, more enlightened policymakers in Scottish Enterprise (the main economic development body North of the Border) have come forward to propose that increasing the number of fast growing firms could have a transformational impact on the Scottish economy.  They estimate that increasing the number of high growth firms by 25 per cent over the next decade could create over 100,000 jobs.

It is also worth noting that, as with every Fast Growth 50 list for the last thirteen years, those firms growing quickly in Scotland were to be found across a wide range of industries, with very few operating in high technology sectors.

Indeed, Colin Mason was at pains to emphasise that policymakers should not prejudge the sources of high growth firms and the eligibility criteria for business support should be as open as possible.

Contrast that with the current logic of the Welsh civil service, which led to the last Minister responsible for economic development to focus only on six key sectors, with financial support only available to those businesses within a narrow range of industries.

Perhaps the key finding from the Mason report, replicated in other studies, is that you do not need to be based in a technology sector such as biosciences or ICT to engage in innovation and grow.

On the contrary, the Scottish research found that most growth firms, regardless of industry, were highly innovative, customer focused and internationally orientated.

As a result of this work from Strathclyde, it would seem that Scottish Enterprise has appreciated, unlike the Welsh Government, the scale of the opportunity and the importance of nurturing those companies that can develop into the big players of the future.

We will have to wait and see whether the Scots now focus their policy efforts on those companies that have the ability and appetite to grow but certainly, there is finally an appreciation in one devolved administration that it can, even without fiscal powers, help develop the indigenous business base and perhaps create some of the real supergrowth companies of the future.

One can only hope that politics and policymakers in Wales have a similar revelation soon.

MAKING THE MOST OF SOCIAL MEDIA - PIER 64 SHOWS THE WAY FOR WELSH BUSINESS

WESTERN MAIL ARTICLE SEPTEMBER 3RD 2011

Earlier this week, I had the pleasure of reading a new report, entitled "the Leisure Wallet”, which examines the state of the leisure industry in the UK during 2010-11 including how and why people frequent pubs, bars and restaurants.

Given the current economic climate, it made for fascinating reading, For example, whilst there is a general acceptance that consumer spending will be lower, there remains, not surprisingly, resilience amongst 18-24 year olds who see going out as a critical part of their lives.

The over 55s are also continuing to eat and drink out of the home regularly and are committing higher levels of their leisure spend to UK and overseas holidays and leisure breaks.

In terms of sectors, the study shows that eating out at a restaurant remains the most popular leisure activity in the UK and, despite gloomy news on the economic front, the proportion of the population eating out in the past six months has risen from 65% to 67%.

More relevantly, the report showed that the fast growing world of the social media is changing the patters of behaviour for many consumers.

For example, a third of us will consider a review of the restaurant on the internet as being important in choosing where we go and eat. Whilst it is mainly younger consumers who are driving this trend, it is expected that older professional workers will quickly catch up in using websites such as TripAdvisor.com, Yelp.com or the fast expanding Urbanspoon.com.

Given this, I was fascinated to have the opportunity to meet the owners of a new restaurant in Cardiff Bay that is not only setting the pace in terms of its location and quality of food, but has been pioneering in its approach to marketing the business through various social media.

Pier 64, based in Penarth Marina, is a joint collaboration between Francis Dupuy of Le Gallois fame, local developer Paul Smith, and Joanne Nuwar. Marketing itself as a good quality restaurant in a fabulous location, it has become the place to go out in within the immediate environs of the capital city.

A great deal of its success is of course due to Francis’s reputation in the restaurant trade and his skill at blending the best of French cooking with Welsh hospitality. The location overlooking Penarth Marina is also hard to beat. However, it has also taken full advantage, from day one, of the opportunities for the latest trends in social marketing for the restaurant industry.

In fact, unlike most restaurants in Wales, Pier64 is taking a completely new and creative approach to promoting itself that is paying dividends in a crowded marketplace.

Twitter, the social networking and microblogging service, has been critical in creating a buzz for the new restaurant, gathering nearly 500 followers in its first two weeks. Pier64 also monitors social media for people talking in advance about coming in for a special occasion such as a birthday or anniversary and then arranging for a free glass of bubbly on arrival. This approach all adds up to a great customer experience that can make the difference between people telling their friends and becoming a repeat customer.

A lot of direct customer interaction, including news and developments, will also be done via their new blog, although the use of such technology in the leisure sector is still considered unusual in the UK. In contrast, restaurants in the USA regularly uses the blogosphere, and the industry has a standard and accepted approach to social media that is proactive and valued by customers.

Of course, social networking is not without its dangers and opening up the whole area of social networking can be a risky business for a restaurant, especially one that is newly opened.

All of a sudden, rather than waiting for one food critic to visit the restaurant every six months, every customer with a mobile phone is potentially a reviewer sitting in the bar or the eating area and who can share it with tens of thousands in their own personal networks. Whilst worrying for some establishments, this approach can only help to raise the bar in terms of standards, thus benefiting the better restaurants which provide quality food and service at all times.

Another development that has benefited Pier 64 is the explosion in the applications (or apps) market. For example, it is one of only three Cardiff restaurants to feature in Jamie Oliver’s new “Foodie Guide to the UK”, a new iPhone app that is due out soon. This will enable the business to take full advantage of the growing army of smartphone users who access information on where to eat through their devices. Indeed, given that Jamie Oliver's last app became highest grossing paid for app on iTunes, its importance cannot be underestimated.

The opening a new restaurant like Pier 64 with excellent food in a great location is to be welcomed. However, the real winner here will be the rest of the industry in Wales which can learn vital lessons from this business, and others, on how social media benefit their sector in the long run.

Certainly, after a slow start, it is vital that Welsh businesses, in whatever industry they operate, to make the most of the opportunities presented by new technologies that are transforming the consumer experience for the better.