Saturday, September 22, 2012


The pictures of the companies, winners and guests at the 2012 Fast Growth 50 award dinner

Thursday, September 20, 2012


The Global Entrepreneurship Monitor (GEM) research consortium has been measuring entrepreneurial activity and attitudes of working age adults across a wide range of countries in a comparable way since 1998.

Undoubtedly, it has been the main source of information on entrepreneurship across the World for more than a decade and its global report, published every January, is eagerly awaited by academics and policymakers.

Individual reports from the 54 countries participating in the study are published shortly after the main report is released and last week, the the 2011 GEM report for the UK was launched.

The main headlines from the research showed that more people in the UK were thinking of setting up in business in 2011 than in the previous ten years, with a fifth of adult Britons either already running a business or expecting to run one in the next three years.

It also noted a rise in female entrepreneurs, with 49 per cent of adults in the early stages of setting up a business being female, up from 44 per cent in 2010.

But what about the situation in Wales?

Annually, the Welsh Government spends tens of thousands of pounds on supporting this research project and yet, seven months after the Global GEM report was published, there is still no detailed report on the state of entrepreneurship in Wales. This is despite the fact that a separate Scottish report was published in July by the UK GEM team.

Fortunately, there are some sections of the UK report which examine entrepreneurship in the UK nations and give some idea of how entrepreneurship has developed in Wales in 2011. So what are the main headlines for Wales?

In terms of entrepreneurial attitudes, a significantly lower proportion of Welsh adults not currently involved in any entrepreneurial activity (18 per cent) reported that there were good start-up opportunities than for England (29 per cent) and Scotland (25 per cent).

In addition, there were significantly lower numbers of Welsh respondents who answered positively to the item “I personally know someone who has started a business in the last two years”. This may reflect a lower level of new business start-up in a nation as well as a lower level of networking by individuals in a nation.

It was also noted, and this may be an important finding for the Western Mail and its sister papers, that the proportion of non-entrepreneurial individuals who agreed that they often see stories about people starting successful new businesses in the media was significantly lower in Wales (38 per cent) than in the other home nations (44 per cent). Despite these poor results, the proportion of people who expected to start a business in the next three years (intention rate) rose significantly in Wales in 2011.

For the second year running entrepreneurial activity amongst 18-24 year olds was relatively strong in Wales, rising from 3.5 per cent in 2002 to 10.2 per cent in 2011 although no explanation is offered as to why this may have happened, especially during the last two years. The report also shows that the biggest difference between youth and older (55-64 years of age) entrepreneurship is to be found in Wales, which has clear implications for the role of organisations such as Prime Cymru, although again no details are given as to the reasons for this.

Finally, whilst there were small variations in the early-stage entrepreneurial activity by women, none of these differences are statistically significant, although Wales did have the highest ratio of female to male entrepreneurial activity rate (at 60 per cent), something which Chwarae Teg may find of interest. As usual, the GEM results have provided critical information on the state of entrepreneurship in the UK.

However, it is enormously disappointing that, despite accounting for nearly 30 per cent of the sample size, and presumably a proportion of the costs of the overall UK study, there has been no separate analysis on entrepreneurial activity for Wales eight months after the Global GEM report was published. Certainly, the Scottish report presents a detailed longitudinal analysis that not only examines overall entrepreneurial activity and attitudes but also looks at specific areas such entrepreneurship and multiple deprivation, start-up challenges, and entrepreneurship policy in Scotland.

The question is why a similar report has not yet been published for Wales? Good policymaking, especially in areas such as enterprise policy, needs accurate and up to date information on which to base its conclusions.

The analysis of data related to areas such as youth, female and older entrepreneurship has clear implications for business support organisations such as the Prince's Trust, Chwarae Teg and Prime Cymru, all of which have clear responsibilities within this area and are also partly funded by the Welsh Government.

Therefore, one can only hope that the 2011 GEM report for Wales will be published imminently and will be comparable in detail to both the UK and Scottish reports. With entrepreneurship becoming more critical to the revival of the Welsh economy, I fully expect that its conclusions and analysis will be shared widely amongst politicians, policymakers and those organisations on the ground who are trying to develop a more entrepreneurial business community which is so vital to the future prosperity of Wales.

Wednesday, September 19, 2012


Today, the 14th annual list of the fastest growing firms in Wales is launched.

At a time when the Welsh economy badly needs a boost, the firms featured in this year’s Fast Growth 50 supplement demonstrate, yet again, the entrepreneurial and innovative potential that exists within our business community.

And despite trading within an economy that has been struggling to grow since the recession, this year’s list shows a record increase in turnover, demonstrating that even within difficult economic times, Welsh business can be competitive in an increasingly turbulent global environment.

Thanks to their wealth and employment creating potential, such high impact firms are now becoming the focus of policymakers around the World. And whilst entrepreneurship remains a key goal for developing local economies, there is an appreciation that as many firms will never grow beyond providing a local service and therefore there needs to be an increasing focus on those businesses that have the potential to grow further and create jobs.

National and regional governments around the World are now realising that focusing on high growth businesses, or so-called ‘gazelles’, can give them more “bang for their bucks” in ensuring that public sector business support is targeted towards those that can create jobs in the economy.

In fact, we can see that the impact of a small group of high growth firms can be tremendous within a small economy such as Wales. Since 1999, 440 firms have appeared on the fourteen lists published in the Western Mail. These have created over 22,000 jobs and generate over £12 billion of additional turnover annually into the Welsh economy, much of which is spent on local goods and services.

The 2012 Fast Growth 50 list is the most successful to date, generating a turnover of over £3billion and creating over 3000 jobs.

This is, in part, due to one of Wales’ most successful businesses, Admiral Group PLC, which appears on the list for the second year in succession, doubling its turnover between 2009 and 2011. In fact, larger firms with a turnover of greater than £20 million make up 20 per cent of this year’s list, demonstrating that growth is not only limited to smaller businesses.

Yet, even if Admiral is excluded, the performance of the other forty-nine is an incredible achievement, generating over £815 million in sales in 2011 at an average growth rate of 86%, and generating an additional £377 million for the economy during the period 2009-2011. These firms also created approximately 2000 jobs,  far higher than the number generated by inward investment into Wales during the same period

In terms of location, Cardiff remains the main centre for fast growth firms, with thirteen businesses being based in the capital city, the same as 2011. Other urban centres are also magnets for growing firms including Bridgend (six firms), Swansea (five firms), Newport (four firms) and Wrexham (three firms). The other stand-out town in Wales is the area around Welshpool in Powys, which has three significant manufacturing firms that are showing considerable growth.

This year, North Wales has only six companies, although their collective growth is considerably higher than the Welsh average. Two  counties - Anglesey, Conwy - have no fast growth businesses within their boundaries for the fourth year in a row. They are joined as Fast Growth 50 free zones in 2012 by Blaenau Gwent, Carmarthenshire, Ceredigion, Denbighshire, and Merthyr Tydfil.

As in 2011, the average age of the growth company in Wales is twelve years old, suggesting yet again that it takes time for such businesses to establish themselves in their marketplaces. The oldest business this year is Wynnstay PLC, which was established in 1918, whilst there are thirteen fast growth start-ups (five years old or less).

There are twenty seven businesses that appear for the first time on the Fast Growth 50 list whilst four companies – Kids@Play, Professional Driver Services, Smart Solutions and Trojan Electronics - return for a third time in succession. In fact, this is the second time that Trojan has made it a “hat trick”, having appeared ion the fast growth 50 lists in 2005, 2006 and 2007.

Two businesses have demonstrated four years of continuous growth, both of which made their debuts on the list in 2009. Machynlleth based Dulas had a turnover of £21.5 million in 2011, whilst Biotec Services International has grown to sales of £9.2 million over the same period.

Finally, congratulations to Glyndwr Innovations for becoming the fastest growing firm in wales in 2012.

Universities are often criticised for not engaging properly with business so the success of this university company from Wrexham is great news for the Welsh economy.

One can only hope that their success will spur on other higher education institutions to follow in their footsteps over the next few years.

Tuesday, September 18, 2012


On Wednesday, the Wales Fast Growth 50 initiative, which was started fourteen years ago to recognise the best of Welsh indigenous business, will again showcase companies that are making a real difference within their sectors and, more importantly at this time of economic difficulties, are creating jobs within their local communities.

In fact, the fifty Welsh firms featuring on this year’s list, despite being only an average of twelve years old, will have collectively created nearly 10,000 jobs since they were started, which is an incredible achievement.

When the Fast Growth 50 project was launched back in 1999, its inspiration was a similar, but far larger, initiative since 1982 run by Inc magazine.

Indeed, the Inc 500, which identifies the 500 fastest growing firms in America, is a truly inspirational list that not only demonstrates incredible entrepreneurial feats within the World’s largest economy, but also gives clear pointers as to how future business practice is developing in key sectors.

The 2012 Inc 500 list was released earlier this month and the data for the companies featured is fascinating for those of us studying the characteristics of fast growing firms.

Whilst, the overall turnover of all Inc 500 firms in 2011 was $15.8 billion and they employed a total of 46,609 people, the median annual revenue of $8.9 million is relatively modest, as is the median employment of 36 employees (which is similar for this year’s Wales fast growth 50 firms).

More relevant is information on how the companies have achieved fast growth, especially in terms of accessing funding that, at least in the UK, is of major concern to many small businesses.

The surprising finding from Inc is that external funding is not as important to growth as expected - 77 per cent of the founders of the five hundred fastest growing businesses in the USA set up using only their own personal savings, with two thirds needing less than $100,000 to get started.

And whilst 34 per cent stated that access to external capital has been essential for growth, 42 per cent have not utilised external funding in developing their business. In fact, three quarters of companies have financed their growth over the past three years largely through cash flow from operations.

This seems to fly in the face of the popular belief that successful companies require external capital to fuel their growth. This is an important lesson for many entrepreneurs in that, contrary to popular belief, self-funding does not equal slower growth.

Whilst external capital does play a part in a number of growing firms, it can also have its problems such as ownership dilution, loss of control, and management team distraction. In fact, the entrepreneurs questioned for Inc magazine consider the biggest obstacle to growth is not finding money but actually finding good people to help the business grow, which is a vital lesson for governments in supporting businesses to expand.

Whilst entrepreneurship is increasingly seen as a young person’s game, those businesses in the USA that achieve substantial growth are managed by entrepreneurs who are overwhelmingly middle-aged white males, although they had, on average, started their first business at the age of 27.

But despite the fact that the majority of these founders are above the age of 45, they saw themselves as innovators who love launching companies and developing products. Also, unlike many entrepreneurs in the UK, they are very hands on with social media with a third directly involved in writing their companies’ tweets and Facebook updates.

The sectoral make up of the fastest growing firms in the USA also has important lessons for governments that are still tending to follow a “picking winners” policy. Rather than the high technology sectors beloved of policymakers, the fifty fastest growing firms in the USA are overwhelmingly located in traditional sectors such as advertising and marketing, consumer products and services, government services and financial services.

As various research studies continue to show that a small number of businesses create a disproportionate percentage of jobs in the economy, there are lessons to be learnt from such firms.

Given this, I urge anyone with a real passion for entrepreneurship and growth to read the stories behind such performances, regardless of whether the companies are found in the Inc500 or the Wales Fast Growth 50.

Monday, September 17, 2012


Every second Wednesday of every month, the Office for National Statistics releases the official employment and unemployment data for Wales.

And every second Wednesday of every month, the usual group of economists and business groups come out with the general consensus that jobs are not being created within the economy thanks to the UK Government’s austerity measures.

But if anyone bothered to look carefully at the detailed job statistics, then they actually paint a very different picture. Take employment, for example. One would think from all the doom and gloom that seems to pervade our media that no jobs were being created.

Yet, the data clearly show that, since the current UK Government took power back in May 2010, employment in Wales has actually increased by over 35,000, compensating for the fall of 27,000 in those employed during the previous two years. In fact, 68.6 per cent of all working age adults are now in employment in Wales, which is the same proportion as when the UK economy first went into recession back in the third quarter of 2008.

And whilst the latest data suggests that unemployment remains stubbornly stuck at around 9 per cent of working age adults, most of this increase actually took place between 2008 and 2010, when an additional 28,000 individuals became unemployed in Wales. In contrast, unemployment in Wales has risen at a far slower rate since the UK Coalition Government came to power.

One of the major drags on the Welsh economy during the last two decades has been the high number of those who are economically inactive. These are the group of individuals who are not in work, but who do not satisfy all the criteria for unemployment (wanting a job, seeking in the last four weeks and available to start in the next two).

Yet Wales now has the lowest level of economic inactivity since records began in 1992, a fact which seems to have been missed completely by both politicians and the press. Another claim that some commentators continue to make every month when the jobs figures are released is that there has been a major shift from full-time to part-time work.

Whilst the data indicates that the number of part-timers gone up since May 2010, the increase is about 1 per cent. Similarly, there have been claims that people are moving from employment to self-employment but again, the data doesn’t seem to bear this out for Wales, with only 4,000 more people working for themselves in the period 2008-2012.

Another major issue for those commentating on the economy has been the over-reliance on services, especially banking and finance, at the expense of manufacturing, with some politicians calling for a shift in the structure of industry in the UK.

In that respect, there is some good news, with an additional 15,000 manufacturing jobs have been created in Wales since June 2010, which equates to two thirds of all net new jobs created during this period. Given the lack of consumer confidence, it is not surprising that the largest decrease in the number of jobs has been in the retail trade, with 15,000 jobs gone in the last two years.

Perhaps the biggest surprise, given the picture painted of the effect of public sector cuts, is that there has been an increase of 17,000 new jobs in those sectors associated with the public sector such as health, education and public administration. Despite these better set of statistics, there remains a major concern in that the employment situation of young people in the economy is worsening. Indeed, the numbers of those employed in Wales and aged between 16 and 24 has fallen by 43,000 during the period 2008-2012.

Whilst the majority of this decrease was during the 2008-2010 period, the fact that the number of young people in employment has continued to go down by 21,000 in the last two years should be a major concern to government. It is worth noting that the official unemployment data shows that there are 51,000 young people in Wales who are classed as unemployed, which is approximately the same number as when the current UK government took office two years ago.

One potential explanation for this is that rather than staying unemployed here, a significant number of young people are leaving Wales to look for opportunities elsewhere. But for some of those remaining, the situation seems to be worsening, as the latest claimant count for those aged between 18-24 years of age shows.

In the last eight months, the number of long-term claimant benefits has gone up from 2,700 in January 2012 to 4,500 in August, an increase of nearly 70 per cent. The political debate, of course, is how this number can be reduced, and quickly. Whilst it was inevitable that some did try and point the finger at Westminster last week, the fact remains that much employment and training support is actually in the hands of the Welsh Government.

Given this, surely it would be better to focus on how to get these individuals, who can be directly identified from the claimant register, onto the various programmes currently being supported by tens of millions of pounds of European and Welsh Government funding. In fact, there is one specific amount of European money that has been allocated £104m to directly supply young people with the skills needed for learning and future employment.

Yet only a third of this funding has been paid out to date when we have a youth employment crisis on our hands and, more worryingly, it is well behind its own targets.

For example, 3,000 fewer individuals had gained qualifications by May 2012 and 8,000 fewer young people had gained other positive outcomes.

More worryingly, given concerns about a lost generation, only five per cent of participants on the various projects being funded are to be found in the hard to reach NEET (not in employment, education or training) group, against an overall target of twenty five per cent.

Whilst Welsh politicians may well be able to do little to influence macroeconomic forces around the World, they can, nevertheless, use the levers at their disposal to ensure that we maximise the job and training opportunities for our young people. Rather than listening to those trying to blame this on others, one would hope that they would instead take positive steps to ensure that this underspent pot of money is quickly allocated to dealing immediately with the issues facing a those young people in Wales today who remain at risk of becoming the ‘lost generation’.

Friday, September 14, 2012


Last month saw the announcement of a new £425 million agreement between the Welsh Government and BT to deliver next generation broadband to 96 per cent of Welsh homes and businesses by 2015.

This will result in 1.3 million Welsh premises gaining access to broadband speeds that are fifteen times faster than those available in Wales today.

 It is a major investment from the public purse, with the Welsh and UK Government contributing around £120m with £90m being allocated from European funding coffers. The aim, if the project is given the green light by the European Commission, is to make Wales a global leader in fibre broadband and create around 2,500 jobs within the Welsh economy.

Given that business organisations such as the CBI have been crying out for investment in infrastructure to help the Welsh economy, this state-of-the art investment certainly has enormous potential to make a real difference in attracting high value added businesses to Wales. It also has the potential to transform the trading fortunes of indigenous businesses although this will only happen if there is additional support to help Welsh firms make the most of the opportunities being created in today’s connected world.

At least by working in partnership with BT, there is the potential to learn from the Superfast Cornwall project the company has been successfully operating in the South West of England and where 15 per cent of the county’s European Regional Development Fund (ERDF) Convergence programme has been invested in broadband infrastructure.

The real value-added from their approach is that as well as providing high speed broadband, the Cornish project is also looking to support the local business community to engage with the new opportunities from a more connected world. For example, a new Superfast Cornwall Fund has been established to assist companies through grants of £1,000 to £50,000.

Activities to be supported can include developing new applications or web content; introducing cloud computing, video-conferencing and Voice Over Internet Telephone (VoIP) systems; developing a new approach to internet marketing and operations to enter new export markets; enabling a new business model which is driven by superfast broadband; and developing business collaboration and 'virtual teams'.

Certainly, the Welsh Government needs to make sure that a similar fund is established within Wales so that our businesses can develop the capability and capacity to take full advantage of this massive investment in broadband.

Equally important is the development of relevant skills and a recent University of Exeter report has already examined the skills needed by businesses to make the most of new superfast broadband, focusing on the South West of England. In particular, it asked how business can make the most of the so-called “digital natives”, namely those young people who live locally and are already sophisticated users of information technology?

 Recommendations for how to take this forward included the development a graduate internship programme focused on broadband and information technology, where young people could be placed in businesses to help them make the most of superfast broadband. There also needs to be continued engagement with some of the other big players in the information technology arena.

 Whilst the recent work with Google to improve the capability of Welsh firms to access the internet to improve their competitiveness was welcomed, there also needs to be stronger relationships with other key players such as Microsoft and Facebook so that the latest technologies, software and techniques are brought to Wales.

Higher education also needs to play its role, but in a far more constructive and coherent manner than has happened previously with the Institute of Advanced Telecommunications at Swansea University and the Centre for Advanced Software Technology at Bangor. In fact, what is needed is one Welsh Institute for Computing that brings together the best academics from all of our higher education institutions in this area and builds strong links with other world class computing institutes in institutions such as Stanford and MIT.

Finally, we need to get our young people to engage far more with computing than they currently do, despite their constant access to smartphones, playstations and social media. Recently, Google’s chairman Eric Schmidt noted that computing represented less than half of one per cent of A-Levels taken in the UK, which equates to just over 4,000 students a year.

Again, Wales could encourage greater numbers to develop formal skills in this discipline which could, over time, enable them to potentially become the next generation of internet business founders.

Therefore, whilst everyone would welcome the investment by the Welsh Government and BT into superfast broadband, it cannot be just about providing the best technology. We also need investment in training, research and developing our young people to make the most of this opportunity. Certainly, we must ensure that we do not end up having the equivalent of having three Ferraris in the garage, but no driving licence to take them out on the road.