Fulfilling the North East’s strategic economic aim of creating 100,000 ‘more and better jobs’ is reliant on increasing the density of scaleup businesses within the North East economy. To achieve this we need to do three things:
- Support existing scaleups to continue scaling
- Help existing businesses with the potential to scale to do so
- Increase the rate of scaling start-ups.
The North East has a low business birth rate compared to other regions and we also have a lower than average rate of scaling startups (companies achieving a turnover of over £1million by their third year of trading).
Taking both things into account means that to be ‘average’ (btw, our aspiration is to blow average out the water) we need to double our rate of scaling startups from approximately 120 every year to 240 – no mean feat!
This is a challenge that we must step up to - but how exactly?
We pulled together a group of the finest minds from across the region to consider how we can motivate more people with an entrepreneurial itch, a good idea and the capability to start and grow a business take the leap to start their own business.
To inform the development of potential solutions we carried out some research into people who have the desire to start their own business and those who have founded a scaling startup.
This found that:
- Many people who have scalable business ideas and the capability to exploit the idea are in jobs that they are relatively happy in. This therefore suppresses their motivation to step over the line and to start a business.
- For those who have actually gone on to form a scaling start up (achieving a turnover of at least £1million in three years) there are several common characteristics:
- Each business was self-financed at the point of formation but many secured investment to fund growth in later stages.
- Each business started with at least one cofounder who brought a complementary skill to the table.
- Founders were confident that demand existed for their idea before deciding to start their business.
In light of this, we’ve been developing ideas on how we can connect with thosewith the capability, aspiration and concept for a high growth potential business so they finally take the plunge. . We believe this can be achieved in two ways:
#1: Entrepreneurial Leave, changing the system to enable more people to explore their entrepreneurial potential. Entrepreneurial Leave builds on and idea by the steering grou of encouraging spinouts from established businesses. Entrepreneurial Leave will encourage organisations large and small, public and private to offer their employees entrepreneurial leave, which could involve employers offering their employees up to one day per week to work on developing their business idea. This will not only motivate and incentivise those with high potential capability and ideas to take steps towards starting their own business, but will also benefit participating businesses through:
- Increasing staff engagement and motivation,
- Attracting talent due to progressive/innovative culture,
- Stimulating higher levels of intrepreneurship and innovation,
- Presenting investment opportunities.
- Providing opportunities to viably outsource non-core activities.
#2: We need to collectively create a bandwagon that people feel compelled to join: A movement catalysed through telling success stories and connecting more people with those entrepreneurs who have built a scaling start up. We need to stimulate behavioural and cultural change through the amplification of existing initiatives that have already begun to establish a start-up movement across the North East, such as Start-Up Week, If We can You Can and the National Enterprise Week.
Spreading the entrepreneurial bug will spread far beyond Startups and in addition infect existing businesses with creativity and the new ideas that will lead to the generation of new growth curves.
The application of this approach in the North East is new and different, however the concept of Entrepreneurial Leave has been tested in Sweden. The World Economic Forum attributes the statutory right to take six months off to start a business as one of the reasons Stockholm has become Europe’s Start-up Capital.
To keep track of how this story unfolds and to access information on the support and finance available to make your dreams a reality then please visit northeastgrowthhub.co.uk and signup to our newsletter here.