Anniversaries are times for taking stock and for celebration, but also for looking to the future.
Paul McEldon who heads up North East BIC, the 14-acre business support centre on the north bank of the Wear, which provides incubator space to businesses and also support to businesses on and off site, hardly has time for celebration or reflection.
The BIC, which is home to more than 130 businesses, is busy with various initiatives and programmes to support enterprise in the North East. It provides a portfolio of services including innovation support, marketing and ICT expertise.
It recently announced a merger with the South Shields based business support organisation Tedco which delivers business support contracts throughout the North East via outreach facilities. In aggregate the two agencies helped to create more than 2,000 businesses last year. Eight staff have transferred to the BIC and will operate out of it.
McEldon explains: “We have two big organisations merging together to deliver across a wider geographical area. Sunderland and South Tyneside councils are co-operating more closely together politically and this reflects that.’’
For the first time in its history the BIC has also extended its physical presence beyond Sunderland. It will operate Darlington’s new Business Growth Hub on the town’s Central Park Enterprise Zone near the railway station. The Hub, which will open next year, will house up to 64 businesses.
“We have worked very closely with the council on the design,’’ says McEldon. “It’s a big thing for us to move out of just delivering in Sunderland. We’ll need new staff, we’ll need to expand.’’
If Darlington is a success, is it something the BIC would like to repeat?
McEldon doesn’t hesitate. “We definitely would, it’s what we feel comfortable doing.’’
The BIC was set up in 1994. It followed a business trip by Jules Preston, then chief executive of Sunderland Tec to Barcelona where he was shown a business incubator site.
“The shipyards had just shut in Sunderland, Tyne and Wear Development Corporation were reclaiming the land down here and the environment for business start-up or small business was challenging to say the least,’’ says McEldon. “The Tec board decided that we needed to try to do something to support the entrepreneurial culture.’’
The BIC was set up as a Tec not-for-profit spin-out company. It also received some initial investment from Nissan and Northern Electric and some ERDF funding.
So, work started on the first phase and now, 20 years later, eight phases have been completed and all the land is occupied.
Over that time there have clearly been many changes.
About 60% of the people the BIC helps to set up in business are unemployed, which McEldon doubts has changed much over the period. However, there has been a significant shift in the gender of those starting out.
“When we started helping businesses 20 years ago, the number of female start-ups was about 26%, it’s now 44%,’’ he says. “The rise of female entrepreneurship has been definitely one of the trends over the last 20 years.’’
Unsurprisingly, there are now far more digital and IT businesses.
“When we set off 20 years ago, if the heating went off it created chaos, now, if we turned the heating off, nobody would notice, as long as the internet was still going. It’s different priorities for business and things have changed dramatically. The internet is massive now, both for the types of business that are coming on site and for the reliability of IT.
“We have got the new software centre, which was the second development of the Sunderland Software City and we have eight companies in there now.’’
By the end of August the BIC Cloud should also be up and running.
“We know what small businesses go through,’’ says McEldon. “Having to buy a server and not to be able to do back-ups and have mobility is a big thing. We have decided to invest in a BIC cloud, so that any business on site can buy into the cloud at a competitive price.
Rather than buy their own servers, we are going to have a batch of servers and we’ll have a bespoke pic’n’mix menu of software they can buy as they use it - software as a service.’’
Microsoft and various other software products will sit on the BIC server and any business can pay for them per user without needing licences.
“Businesses don’t have to buy licences and servers and have a big capital input up front where they still don’t have back-ups and mobility,’’ he says. “We are investing about £75,000 in a cloud which will allow them to buy into that and pay as they use it. If you’ve got 10 staff all needing Microsoft Excel, if somebody’s off for three weeks sick, you only pay for nine for that month or if you shut down over Christmas, you only pay for what you use.’’
The BIC has also set up the Centre for Digital Business to get non digital businesses to understand the benefits of the digital world and it is talking to various local authorities and enterprise agencies about getting SMEs to use the digital world to enhance their business.
The growth of IT has also meant an expansion in the numbers of people able to run businesses from their own homes and this has prompted another BIC initiative.
“We are setting up something called BIC Open Space, which is a co-working/ homeworking/ space,’’ he says. “We help a lot of people set up in business off-site. We help about 150 or so people per annum set up in business, who are not based here. A lot of them work from home, a lot of them don’t have any interaction with other businesses and a lot of them don’t have any access to business support. Daft things happen like the computer going wrong and suddenly the business is up the Swanee because they have to take it to PC World.
“We are conscious that we have helped a lot of businesses set up and we’ve obviously got physical space for the bigger companies but we know there are a whole load of businesses out there that can feel quite lonely and exposed. We are trying to create a space where they can come in and use it, it’s hot-desking plus business support. If they want, they can use it as a virtual address and they can use it as a facility to either meet people, customers or just other businesses. We are just trying to create that environment where they can come back and hopefully create a better environment for them to survive and grow.’’
The BIC has also launched the Innovation Programme, an ERDF funded programme by which the BIC works with SMEs in the North East which have an innovation - a product or a process - teaming them up with innovation specialists to help them project manage the integration of that innovation into their business or to commercialise it. It can also provide 40% of any externally bought in support that the company needs to bring that innovation to fruition.
“We have gathered together a batch of innovation providers and innovation specialists in the North East and we are matching them up with innovative companies to help them bring that innovation to the marketplace,’’ says McEldon. “It has been going for nearly two years.
We have 40 businesses that have either been there and done it or are in the process of going through it. They will create or have created more than 100 jobs - well above the targets we were set by government.’’
Under another programme, the BIC is working with a local training provider.
“When they are trying to get 16 to 17 year olds out into businesses for apprenticeships and jobs, it’s quite hard, even if they are relatively cheap,’’ he explains.
Most businesses would rather take an 18 to 19-year-old.
“We came to a deal whereby we would take a batch of 16 to 17 year-olds on and employ them in the BIC for eight weeks and give them proper work experience. They went round with our IT department, our marketing department, one at a time.
“We made sure they came in on time, made sure they dressed correctly and made sure they put their mobile phones away. One 16-year old lad did a test answering the phone and was really good and then said, `You know what, that’s only the second time I’ve picked up a phone in my life. We’ve got a phone in the house but it hardly every goes off and if it does my mum and dad answer it.’ You just assume kids learn things at home that they bring to work but they don’t always.
“Once they have gone through the eight weeks, we put them out into tenants if tenants want them for a period of time. Of the 10 or 12 that we have put into tenants, eight of them have got permanent jobs. We have taken on one of the apprentices ourselves because she was so good.’’
A key issue for all businesses is sales and it is one which the BIC has moved to address with its interim sales director programme.
Done in collaboration with a consultant, David Anderson, the scheme provides a sales specialist to a business which could not afford a full time sales director. The business only pays on results and the BIC is paid a percentage of any increase in turnover after the first year.
“If we don’t have an effect, we don’t get paid, which is quite risky for us,’’ says McEldon.“ We know what small businesses are like. They just can’t afford the cost without knowing there are going to be some benefits to them. When you look at the different stages of businesses growing - and they do grow in a quite defined way - the vast majority of businesses grow in stages. Once they set off with their business, they usually then get admin in some shape or form to answer the phone while they are out doing whatever they are doing, then they usually try to get a sales person in.
“Everybody wants more sales and if you are not that way inclined and have set your business up because you are interested in the product, getting some good sales advice is vital but generally quite risky and generally quite expensive. It’s an interim way of trying
to prove the benefit of sales input.’’
After 20 years the BIC is attracting interest from the rest of the UK and around the world.
“We’ve had visitors from Iraq, Lebanon and all over the UK. We are part of the European BIC network. We have been out to help people set up incubators in Turkey and the Ukraine.’’
It is hardly surprising – the BIC has a good story to tell.
Since 1994, the complex has accommodated more than 500 businesses and has helped to create 7,000 jobs. The complex now includes executive offices and incubator units, as well as bio-science labs and large industrial facilities. The BIC has helped more than 2,500 businesses to start up in the Tyne and Wear area and has achieved a survival rate which outstrips the national average, with more than 75% of businesses continuing to trade into their third year. In the years the BIC has been operating tenant companies have generated
a turnover of £400m.
Many of the businesses nurtured by the BIC are life-style businesses – those which provide a living for the owner but with no great growth ambitions and little prospect of taking on staff. But this does not worry McEldon.
He says: “They are usually the businesses that give a lot of satisfaction because it’s usually somebody doing something they really want to do. Most lifestyle businesses are people doing stuff they are really skilled in or that they are really enthusiastic about and they make a lifestyle choice about moving into that particular sector. And they tend to be happier – when it works. I think it’s a really good thing and shouldn’t be underestimated.’’
At the other end of the scale, the BIC has been – and still is – home to big businesses which have become important players in the regional economy, such as Leighton and Onyx Scientific.
Many more of the BIC’s businesses are making an impression, not just beyond the region,
but outside the UK.
McEldon says: “A high percentage of our tenants have exported. That doesn’t mean
that all of their stuff is exports but more than 50% of our tenants have exported. You suddenly realise how many times DHL or FedEx are coming onto the site and you can’t get parked for their vans.’’
There is no great secret about the BIC’s success.
“We do believe it’s because of the exposure to business support that we give those companies both from our own staff and making sure that they get absolutely everything that’s available to them from other bodies,’’ says McEldon. “We don’t profess to be advising every business on site on everything but we make sure they are exposed to absolutely everything that’s available from other bodies. If somebody needs to speak to UKTI or Mas or Growth Accelerator or whatever, we just make sure that they get it. We’ve got great relationships with the local authority, so if there’s any support from the local authority we can give to the businesses we make sure they get that. We have good links with the university as well, we have graduate internships promoted throughout all the businesses to make sure they take advantage of that.’’
He adds: “We try to take away as much of the hassle of running a business from the businesses so that they can get on with the bits that got them into setting up the business which is usually about the product or the service or the customers.
“So if we can take away as much of the hassle as possible it helps them to become more successful.’’