Business Link Northwest's Business Performance Index: Data Driven Decision Support

Monday16th November, 2009 @ 9amNeil Geoghegan – BLNW Corporate Resources Director

Tel: 07833 726 200  E-mail: neil.geoghegan@businesslinknw.co.ukGed Mirfin – BLNW Chief Data Officer

Tel: 07876 047 165  E-mail: ged.mirfin@businesslinknw.co.uk

City Office Park, Bluebell Way,

Preston  PR2 5PZ  United Kingdom

Track S: Supporting small business development world-wide

Presentation (S1) to the 1st INTERNATIONAL ENTERPRISE PROMOTION CONVENTION

best practice and innovation in the creation and support of small businesses world-wide

15-17 November 2009 - Harrogate, North Yorkshire, UK

Agenda

• What is the BPI• Demand Pull Marketing• The Search for Context 1: Growing our way

out of Recession – the Search for High Growth Businesses

• The Search for Context 2: Delivering Support to Struggling Businesses

What is the BPI• Nationally Recognised “Business Objects” data base

covering businesses in the North West.• An “evidence based” system that draws its base

data from different sources into a “data warehouse”.• It is used to inform decision makers about planning

interventions or policies.• Is fully compliant with Data Protection legislation • Is the central repository for Business Link data and

the primary source of our Management Information• A system that can map the main business

classification systems to the language used in Local Government and Business Support

• The first B2B profile driven database in the public sector

History of the BPI

We incorporated Business Link universe and Experian’s National Business Database into the BPI

Consolidates North West Business

Universe

406k

111k

Section of database unique to Business Link – Lifestyle and

Grey economy businesses

Section of database unique to Business Link – Lifestyle and

Grey economy businesses

We incorporated Business Link universe and Experian’s National Business Database into the BPI

19k

Consolidates North West Business

Universe

406k

111k

We incorporated Business Link universe and Experian’s National Business Database into the BPI

19k

Of 150,000 Penetration Impacts Added to CRM over last 18 Months, 120,000 were part of

Experian Prospect Universe (80%)

Demand Pull Marketing: Using Data to Drive Direct Marketing

Demand-Pull Marketing – Public Sector

• Historically public sector organisations have concentrated on service delivery rather than the end user.

• DPM is ultimately about adapting to local demand

• DPM involves identifying & unlocking the latent demand for a product or service rather than the generic product push marketing message typical of many public sector organizations

Marketing Approach

• Intelligent marketing content can be tailored to suit what we know about end users

• The “Marketer’s Dream” - to be able to target segments and communicate with them on a one to one basis.

Truism:

If Segmentation and Context = Relevance

Relevance = Engagement

Why is it context important when Making Decisions?

Aim: Change from Anecdotal &

Judgmental to Evidence-basedDecision making

Experience-influenced

Evidence-based

Opinion-based

Evidence-influenced

Exp

erie

nce

Evidence / Information

The Search for Context 1: Growing our way out of Recession – the Search

for High Growth Businesses

Which Companies Will Lead Us Out Of The Recession?

• Some Economists believe that 50% of new jobs will be from less than 1% of a regions company base.

• High Growth companies (Gazelles) will increase Turnover by between 25% and 30% in the next 4 years.*

• Although Employee Growth will lag behind it is likely to be in the region of 20% per annum.*

• Can Public Sector support agencies stimulate growth and ensure that Gazelle Companies fulfil their maximum potential?

• Can Public Sector support agencies engage effectively with these companies and should we try?

• What is the potential impact? *NESTA – “Measuring Business Growth: High-Growth Firms and Their

Contribution to employment in the UK” – Oct 09

Tracking Gazelles• Route out of recession is to back gazelles

• A gazelles are defined as small, fast growing companies (in reference to the fact they can jump higher and run faster than their peers),

• Gazelles according to one accepted definition are defined as companies that have experienced at least 60% growth in employment and additionally deflated turnover (turnover adjusted for inflation) over a 3 year period.

• But…they are extremely difficult to spot

• In the current economic climate especially so….

• Many Gazelles caught in the cross-hairs as the economic recession continues to find its mark wounding some, badly disabling others and bringing an unfortunate minority to their knees

• 3 Years Growth is now more likely 2 Years Growth and 1 Year of Decline

• Some Gazelles are now not able to run as fast or jump as high

• Even in more favourable Economic conditions trained Business Hunters found Gazelles difficult to target:

Which business groups could be potentially high growth?

Independentbusinesses

Scientists, technologists and/or academicsNiche activities or

specialised product offerings within

older or traditional industries

High technology knowledge –based

businesses

Advanced manufacturing using precision

technology

Entrepreneurial

Based on specialist industrial parks and technology centres Newer

businesses do not have SIC

codes

•Commercial MOSAIC segmentation system includes:

•Demographics – Age of business, number of employees, turnover, principals’ background•Classification – Businesses with shared demographics are grouped together•Propensity – Broad description of the classification that indicates a business’ likely behaviour, for example, in its purchasing.

What is Commercial Mosaic?•Commercial MOSAIC is a business classification system•Categorises UK businesses into 13 groups and 50 distinct types, based on key variables that influence business behaviour•It uses a descriptive naming convention

The Family or Genus GazelleCommercial Mosaic

GroupCommercial Mosaic

TypeFeatures

Monumental Monoliths Farsighted High Flyers

Directors under 30 & Well EducatedHighly productive and skilled work forceMature businesses -64% Employ >100Large Range Business Activities inc. Food, Manufacturing, Textiles, Recreation, Sport, Luxury Goods – Niche BusinessTrade Specialist Industrial Centres or Retail Parks

Specialist Suppliers Hi Tech Highlights

Highly specialised type engaged manufacture specialist equipment and precision instruments esp. telecomms & ITMedium Sized BusinessesIndependentBased Specialist Industrial & Technology Parks

Independent Entrepreneurs Developing Dynamos

Newer Independent BusinessesHigh Risk – 30% Chance FailureWide Range Activities: Specialist Wholesale, & Retail, Business Support Services & RecreationSmall Business but with Very High Amounts of Turnover from Highly Skilled & Productive StaffEspecially Prevalent in North West

Independent EntrepreneursFledgling High Fliers

New Independent Businesses. One Third 2 to 3 Years OldSo New many not have SIC Codes assigned to themHigh Risk – 346% Chance FailureWide Range Activities: Specialist Wholesale, & Retail, Business Support Services & RecreationOne Third Grow to Employee Much Larger Nos. of EmployeesAs Specialist Suppliers first move is generally to specialist industrial parks

Energetic Enterprises Professional Professors

Independent Low Risk High-Tech BusinessesEngaged Diverse Range of Activities but esp. R&D and Chemical Processing, Especially Prevalent in Northwest Trading from Specialist Industrial & Technology Centres near Universities & Hospitals

Energetic Enterprises Support Supremos

New “Knowledge-Based” BusinessesEspecially Prevalent amongst Digital & Crossover Media, Support Services to Financial Industry – High SalariesLow Risk Businesses in Areas of High Prosperity. Serviced Offices

North West Actively Trading Business Locations (428,963)

MOSAIC Gazelles (69,297)

Age Over Three Years (18,874)

Turnover Above £400k (1,474)

Employing 10+ (445)

company that is potentially high growth?

By using a commercial classification system or…

our experience from activity on the ground?

…that is mature…

…with a reasonable turnover…

…employing 10+ people?

The Power of the BPI: Identifying Potential High Growth Companies

-Business Link has intensively assisted 10.8% of these companies

- 

What do these look like?

How do you Identify a…

Risk Profile Percentage Using Experian Commercial Risk Scores

16.14%

42.06%

31.59%

2.50%7.73%

Suppressed Low Risk Average Risk High Risk Very High Risk

The power of the BPI: are these companies healthy?

NB: The standard Very High Risk commercial profile across the North West as a whole is

20.44%

The power of the BPI: in which sector are these companies?

RES Sector Profile Percentage Using BPI

10.23%1.82%

23.18%

15.00%3.64%4.09%

42.05%

Advanced Engineering and Materials BiomedicalBusiness and Professional Services Digital and CreativeEnergy and Environmental Technology Services Food and DrinkNon RES

The power of the BPI: where are these companies?

The power of the BPI: where are these companies?

The power of the BPI: where are these companies?

The power of the BPI: identifying potential high growth companies

-This information is based on data provided by Experian. The data has been subject to further analysis by Business Link North West  

The size of the prize – economic impact

Estimate Estimate

11,125 £445m

Current Headcount Current TurnoverEstimate Estimate

120% 100%

3 Year Headcount Growth 3 Year Turnover Growth

25 £1.0m

Average Headcount Average Turnover

445

High Growth Companies

Estimate Estimate

13,350 £445m

New Jobs New Turnover

• Gazelles require much more complex kinds of support placing much higher

levels of demand on Public Sector Agencies than heretofore?

• Gazelles are “Elite Businesses”. • Supporting them is resource

intensive requiring prioritization at the expense of existing Business

Sectors! • This is by its very nature Elitist!

• Should We Be Doing This?

The difference with Gazelles is not the type of question they ask it’s the complexity of the issue they face…

Category of Assistance

R&D, Innovation and NPD

Sales & Marketing

Training & Skills

New Machinery, Process Improvement, Retooling

Capital Expenditure

Relocation & New Premises

Export

Relationship Management, Networking, Membership Cluster Organizations/Networks

Gazelle Specific Example

Collaborating with local Higher Education Institution in Grant Funded R & D Knowledge Transfer Project

Market Scoping Research Project on Need for Specialist Footwear for those who suffer general foot discomfort in order to offer products into the mainstream market

Training of Specialist Staff working in the construction, manufacture and assembly of equipment in the Nuclear Industry

Improvement Production Processes in Specialist Marine Manufacturing Company producing products for the offshore oil extraction industry

Access to Finance for Relocation Precision Manufacturing Plant

Consolidation of Manufacturing Plant on Single Site Location including relocation Welsh Manufacturing Plant to North West

JV in Eastern Europe

Obtaining Membership of and Maximising Network Opportunities through the Northwest Aerospace Alliance

The Search for Context 2: Delivering Support to

Struggling Businesses

Context: Delivering support to businesses in the current economic climate

• Problem 1: Identifying Struggling Businesses

• Problem 2: Finding them early enough. There are No Second Chances in a Recession!

• Problem 3: Economic Impact on Key Business Segments. How badly have they been and what is the likelihood of Commercial Failure? Can Business Support can make a difference?

• Problem 4: Policy Makers don’t have context to Make or Measure the Impact of Policy

• The Answer: Commercial Risk Data is available that offers up-to-the-minute, granular information on the Risk of Commercial Failure – Experian’s Commercial Risk Profiling System offers this service.

• The Outcome: The ability to Trend this Data means we can flag companies that are in decline as well as those experiencing growth. We can also highlight which of these companies have received business support and are now experiencing recovery.

Commercial Delphi Risk CategoriesRisk Category Description

Failed/serious adverse info Administrator or receiver appointed, bankrupt proprietor, dissolved business

Maximum risk High value of unsatisfied CCJs, accounts overdue, start-up business with adverse data, proprietor with adverse data or maiden accounts show loss

High risk Large company with weak balance sheet, medium sized firm with very weak balance sheet, combination of above average risk features, start-up with adverse trading

Above average Large company with very weak balance sheet, medium to small firms with (high levels of credit search, payment difficulty, weak balance sheets), start-up firm without adverse information

Below average Large business with weaker balance sheet/modest loss, SMEs with steady trading, small firms with directors with good record, no adverse data

Low risk Well established, accounts filed, mid to large firms with £1m of assets and £5m of turnover, good record, directors with strong records

Minimum risk Large well established firms, strong balance sheets, low value of public information

Very Low Risk Low Risk Below Average Risk

Above Average Risk High Risk Maximum

RiskDissolved/

Serious Adverse Info

North West 5.40% 10.77% 22.88% 21.12% 8.71% 15.74% 1.12%

Merseyside4.86% 8.88% 19.83% 22.34% 9.52% 18.48% 1.15%

Warrington & Cheshire 4.98% 9.72% 25.36% 20.99% 9.50% 12.73% 0.85%

Cumbria 7.88% 14.20% 25.00% 19.52% 5.40% 8.41% 0.45%

Lancashire 5.94% 12.80% 25.62% 21.74% 6.68% 12.19% 0.85%

Manchester 5.04% 10.25% 21.27% 20.38% 9.75% 19.27% 1.52%

The Commercial Delphi risk profile of the North West

One Size DOES NOT fit all

Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum Risk

Dissolved / Serious Adverse

Information

5.40% 10.77% 22.88% 21.12% 8.71% 15.74% 1.12%

Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum RiskDissolved / Serious

Adverse Information

5.04% 10.25% 21.27% 20.38% 9.75% 19.27% 1.52%

North West

Greater Manchester

Manchester

Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum RiskDissolved / Serious

Adverse Information

5.43% 7.50% 17.46% 18.13% 10.96% 25.43% 1.94%

Further segmentation increases relevance

Manchester

Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum RiskDissolved / Serious

Adverse Information

5.43% 7.50% 17.46% 18.13% 10.96% 25.43% 1.94%

Analysis of the Manchester segment increases relevance further

Manchester

Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum Risk Dissolved / Serious Adverse Information

5.43% 7.50% 17.46% 18.13% 10.96% 25.43% 1.94%

Analysis of the Manchester segmentation increases relevance further

Risk Micro Band Number of Companies Percentage

1 2,235 29.47%

2 644 8.49%

3 1,203 15.86%

4 2,201 29.03%

5 1,300 17.14%

Manchester – Maximum Risk Businesses

Manchester

Very Low Risk Low Risk Below Average Risk Above Average Risk High Risk Maximum Risk Dissolved / Serious Adverse Information

5.43% 7.50% 17.46% 18.13% 10.96% 25.43% 1.94%

Risk Micro Band Number of Companies Percentage

1 2,235 29.47%

2 644 8.49%

3 1,203 15.86%

4 2,201 29.03%

5 1,300 17.14%

Manchester – Maximum Risk Businesses

Drill into the highest of the high risk

Businesses in Manchester

Analysis of the Manchester segment increases relevance further

1,270 Businesses & 6,002Employees in Non RES Sector in Micro Band 1

So What Did We Do Next?

We Contacted all the Business and Professional Services Companies affected

Highlighted the 3 Current Issues in the Financial Markets that are causing concern: Liquidity Trade Credit Insurance Payment Terms from Primes

Offer: Specific Advice, Access to Finance, Cash Flow Management, Business Performance Benchmarking, Loan Guarantee Scheme

Key Point: These Products already existed. The Delivery of the Message and its contextual relevance unlocked latent demand

Specific Example of an Intervention

• Anne Example Ltd - Poultry Farmers• Problem: Erratic Payment Patterns from Primary Customer• Symptoms: Fluctuating Overdraft Levels – Breach of banking

Covenant• How Do We Reach This Customer?

– Generic Thematic Marketing from a Brand that is Poorly Understood?

– Or, Specific DPM Activity highlighting Root Causes and Commonality!

• Marketing Content: Sector-Wide Issues with Payment Problems. Best Practice Solutions within Industry Sector. Specific Solutions available from BLNW to Help Solve Problem.

• Outcome: Proprietor Entered into Contract Negotiations with Buyer included Strengthened Contract Clauses re: Payment Terms. Joined Pressure Group to Ensure Business Segment Voices Heard.

• Result: Improved Cash-Flow.

Measuring Impact Over Time

-20

0

20

40

60

80

100

120

01/0

3/09

15/0

3/09

29/0

3/09

12/0

4/09

26/0

4/09

10/0

5/09

24/0

5/09

07/0

6/09

21/0

6/09

05/0

7/09

19/0

7/09

02/0

8/09

16/0

8/09

Date

Commercial Delphi Score Trends

Britplas Ltd (IntAssisted)

Stanley Securities CCTV Ltd (IntAssisted)

Arena PlasticsLimited

Distant Horizons UKLtd

ServiceAir UK

Sample of 5 companies Commercial Delphi risk score over last 6 months

Benchmarking Against Sector Performance

Commercial Delphi Risk – Sample of Companies Intensively Assisted Compared to the Merseyside and Greater Manchester Average (Last 12 Calendar Months)

The Challenge…

How can we work together to ensure that we

combine intelligence with the experience we

have in a particular region?