It’s the day after the not-for-profit North East Business & Innovation Centre in Sunderland has completed its takeover of Tedco on South Tyneside, a marriage of business support agencies. And lunching with Paul McEldon, BIC’s chief executive, we learn this is just the tip of an iceberg in growth to create more entrepreneurs in the region.
BIC’s contribution now towards driving up self-employment - about 150 self-starters a year already helped - is into spreading digital accomplishment, and into the growing colony of people running businesses from home. It’s the bellows blasting expertise also into infant businesses of graduates and undergraduates. It’s even into schools, instilling some entrepreneurial understanding.
McEldon, 12 years at the BIC’s helm, believes merging with Tedco will assist Sunderland and South Tyneside’s shared pledge to collaborate on economic growth, especially as the two councils have jointly put a City Deal bid to Government.
“With councils closer, it makes sense the enterprise agencies should be. It gives their work more synergy,” suggests McEldon, who chairs also the National Enterprise Network and has, too, recently joined the board of Sunderland College. The big bid, if successful, would bring on an advanced manufacturing centre north of Nissan’s site at Washington.
Meanwhile a BIC subsidiary set up, Tedco Business Support, has Carol White, former deputy of Tedco at the head, while Doug Scott, who led Tedco as was, winds it down now. “We already work across the region on various projects of course, mainly helping firms to establish their innovation plans,” McEldon says. “We partner a lot of organisations on this. As always, we’ll look to expand what we do as opportunity arises.”
BIC’s mission statement was changed last year to one of ‘building business success in the region’ to reflect its widening involvements. And the launch of Tedco Business Support accompanies two other spanking new projects: a joint venture with one Andy Atkins at the Centre for Digital Business in Sunderland, and an Interim Sales Service which the BIC has introduced. Here they put someone with sales savvy into a business, whether germinating or stagnating, who gets paid on results.
The digital centre is posted as the UK’s only vendor-neutral training, consulting and research business in digital being aimed at all businesses. “In the Interim Sales Service,” McEldon explains, “We’re funding an accomplished sales person to go into a business 12 to 20 days a year. We receive a percentage of increase in turnover achieved after a year.
“We take a risk asking for payment by results. But the company helped takes a risk too, though it’s less risky than if a sales manager was employed straight away at £40,000 to £50,00 a year and delivered nothing.”
A pilot runs with four companies already. Early indications? “It has gone quite well. One’s near the end of its first year and the return is good,” says McEldon, obviously satisfied by this programme co-developed with Digital City and David Anderson Associates.
BIC’s benefit to small businesses is extending fast beyond its Sunderland base, where the 93% occupancy rate of its units is a five year peak. About 130 businesses are in premises of 150sq ft to 6,000sq ft, enjoying access also to meeting rooms and bespoke laboratories. “That occupancy is at the level we want. Wholly occupied, existing businesses would be unable to expand on site.”
He reckons BIC reflects the economy generally. “We’re a microcosm,” he says. “Default rates don’t differ from before, and many exciting newish companies are giving faith that things are turning round. Our business survival rates after three years are always around 70%, much above national average.”
Why? “We try to create an environment. We’re not helping firms with their every decision. But we bring as much support from anywhere as we can, be it the Manufacturing Advisory Service, business clubs or whatever - access to contacts and ensuring firms are getting what they should. Web based things are good, but people still like talking to people and getting names of people to go and see.”
Access to cash still eludes many small businesses though, McEldon states. “But you still need a good plan. Sometimes businesses forget that. How you present yourself in any situation for money is vital.
“It’s no good just telling the bank ‘we’re going to grow’. A gap in the market remains about helping businesses to be investment ready, whether for venture capital or bank lending.”
The Government’s announcement of start-up loans for the 18 to 30s appears to have gone down well and, says McEldon: “The Government’s looking to extend that to any age. That will help start-ups. People then shouldn’t really have an excuse about funds being unavailable.”
Meanwhile the BIC’s 50 staff are helping more people to work from home, and university types applying newly acquired skills and learning to self-employment. Within six months there’ll be an on site facility for home-workers.
McEldon explains: “Besides tenants on site we help others starting up - about 150 a year, primarily in Sunderland. Of those, over half trade from home. We believe a facility for them to visit will be helpful - a business environment they can pop into, get support from, meet with similar types of organisations, and in an environment out of the house.
“Whether we can turn it into a market remains to be seen. We expect good uptake. It can be lonely running a business from home, also distracting. There’s lots to be said for an environment where people will meet and share thoughts and ideas. Some think working from home offers flexibility. ‘I’m my own boss’, they think. But often you work far longer hours. It’s a shock - the isolation too if you’ve suddenly switched from an organisation.
“To make it work properly, everyone must buy in to it. If it’s your partner or your kids they must realise that just because you’re at home doesn’t mean you’re not running your business, and if you don’t run your business they’ll have no tea on the table.
“If you haven’t a family this may not arise. And a family can also be very supportive, helping not necessarily with running your business, but supporting you as you do it. In most one-person operations, holidays don’t happen for the first three years. People must accept that.”
With University of Sunderland, the BIC helps the graduates and undergraduates to be creative in the varsity incubators, honing their business skills, hopefully to speed viability so they can avail of business support. “The more we can help like this, the greater our chance of keeping them and their businesses in the region,” McEldon concludes.
At an even earlier level, the BIC goes into schools to explain self-employment. “It’s an option more than ever for people coming out of education. People 16 now will hopefully come to us after a few years - our supply chain in a sense,” he laughs.
“The more through the door, the better the chance to develop viable and sensible businesses. We teach youngsters about self-employment. Many don’t recognise it. You can ask ‘how many of your parents run their own business’? No hands go up. You ask ‘what do your mam and dad do’? They’ll say ‘well, they’re a taxi driver’ or ‘a lorry driver’ perhaps, or ‘child minding’.
“You then point out there’s self-employment in the family already. If no-one’s paying them a wage they must go out and earn. Youngsters often don’t realise a business can run without even employing five people.
“A lot involves getting them to see that a personal interest can stimulate their opportunities. If someone’s going to start a business and times get tough, as they will, they’ll stand a better chance of having the drive to get out of bed and keep it going than if it’s a business they don’t have an interest in.” The BIC is also running an apprenticeship programme with 10 young people so far. They work for up to six weeks in BIC’s various departments, exposed to finance, IT, marketing, and business support. They’re also made work ready, made aware they must turn up on time, dress appropriately and accept they cannot have their phone attached to their ear all the time - “one of the big problems, unfortunately. They don’t get that - look at you as if you’re an idiot,” McEldon says.
They afterwards get placements with BIC tenants. “Of the 10 we’ve had with the tenants on 13 week programmes I think nine have been taken on full time. We believe us kicking them round a bit before that gives them advantage. We still keep an eye on them. It’s working for them, the tenants and us.” On the innovation front there’s a target of helping 40 businesses by next September, and hopefully creating 60 jobs. “We’ve signed the 25th business to the programme. We’ll deliver within those businesses at least 80 jobs so we’re on track to exceed our targets, from Teesside to Northumberland,” McEldon reports.
An ERDF programme offers up to 40% funding, and advice and guidance.
“We’ve about 70 innovation specialists who’ll help, whatever the innovation goal,” McEldon says. “There are good people out there and we match companies with specialists.
“The firms tend to be into their project already. I wish in a way they came with the mere concept. It would be nice to start with a blank sheet of paper! But they usually know what they wish to do, just lack skills to do it. It might be something simple like a software programme to be written.” (The BIC is a co-founder of Sunderland Software City).
Innovative or not, young businesses on site are promised exposure to everything in the North East potentially helpful - every connection, network and funding opportunity available. “If we find something, all companies get to hear about it.
“We host events and support organisations onsite. The Chamber, the Federation of Small Businesses, UKTI - we host as many of their events as we can. Tenants then, hopefully, get something for their business, and needn’t
“If someone says ‘can you find something out for us?’ we’ll do that, or point the way. We’ve always said success of the businesses is our success. If the businesses aren’t succeeding, the BIC isn’t succeeding. All our PR’s about success of our businesses, not necessarily that of the BIC.”
What’s McEldon’s work wish? “Probably something more to provide skills and enterprise awareness in schools. Then pupils could look to set up a business, or use those skills to join an enterprising business. With enterprising skills they’d be invaluable to employers.
“If you know the principles of making money, and sales and marketing - business skills generally - you can’t fail to be more employable. Academic stuff’s great. But most employers look for a spark of entrepreneurial spirit among young people, which isn’t always taught or valued in education.
“Competent literacy and numeracy always help. But when we’re sent less academic kids and we ask them how to make money they know how to make money. They’ll always have money in their pockets.
“It’s probably the academic ones who won’t know. They’ve probably had money from a different route. So entrepreneurial skills aren’t necessarily academic skills.
“However, there’s no point in having all that if you can’t add up properly and read a document.”
The BIC surely won’t relax until it has won over all the young people, streetwise or not.