What makes Teesside a successful place to nurture entrepreneurs and what more needs to be done to support them?
The Debate: After introductions around the table, the debate began with a focus on infrastructure.
David Shawcross spoke positively about Teesside’s “tremendous” port facilities and a rail network with the potential to be “reopened to what it once was”. But he added that the lack of a flight from the area to London is “appalling”.
He said: “We have to have the capability to get to London quickly. Without it we are isolating ourselves.”
Alistair Waite agreed; describing the situation as “a nightmare”. But Max Freer shared her insight as a close partner of Durham Tees Valley Airport – reassuring delegates that plans remain in place to develop the facility as a business hub.
Then Valda Goodfellow reminded London-reliant entrepreneurs of what she sees as an unsung hero of Teesside transport: Grand Central’s rail link which cuts through Teesside on its route to the capital.
It was agreed by most that there are clear areas for improvement to Teesside’s infrastructure.
However, it was also highlighted that the infrastructure created by Teesside’s mass employers of years gone by gave the region an advantage as an entrepreneurial breeding ground today.
Talk then turned to the attitudes on Teesside that might help or hinder its start-up success rate.
Jo Hand explained the importance of a strong work ethic in establishing and growing a business, such as her own flourishing recruitment firm.
“That’s what propelled me in life,” she said. “My parents always taught me you could be anything you wanted to be if you just worked for it. Whatever you put in you get out. That’s been my recipe for success.”
Sue Smith, a relative newcomer to Teesside, having taken up her current post in January last year, said: “When I arrived on Teesside I had heard about a lack of entrepreneurship, but that is not what I’ve seen and we’ve got some fantastic things happening at the university.
“There’s a huge emphasis on trying to solve social problems and a commitment to the community through business. And that work ethic and resilience is something I see oodles of. I had heard about a lack of ambition but that’s not what I’ve seen. Clearly Teesside is relatively small and concentrated but I think we can exploit that as an asset.”
Valda Goodfellow: “We haven’t got to get work ethic among employees mixed up with the work ethic needed to be an entrepreneur because they are two very different things. You need great work ethic for people that you’re going to employ. But I’m not sure you can turn anybody into an entrepreneur if they’re not meant to be an entrepreneur. It is hard and some people should not be in business and it is wrong and even dangerous for them to be in business.”
Jamie Brown: “It’s like that horrendous TV show X Factor which can make anybody a star. People pin their hopes and dreams on becoming a pop star and likewise, the reality is not everybody can be an entrepreneur and run their own business. And if everybody did, who’s is going to form the workforce at what is the backbone of our economy, the small to medium-sized firms?”
Max Freer suggested that the notion of work ethic today had changed dramatically from previous incarnations.
She said: “I mentor up-and-coming digital businesses and what you find, particularly with the digital generation, is that people are really technically minded, but they are often insular to that and don’t really understand the traditional sense of work ethic. We are from the generation which had a pecking order, you went in at a level and we had a hierarchy to climb up. It was a physical work ethic and you would be at work at a certain time every day. Members of the digital generation tend to become entrepreneurial at home and often don’t need to even speak to people, so the world is a very different place now. You can’t compare these people operating in the digital world versus someone who is perhaps in a physical job like manufacturing because the dynamics are completely different.
“That digital entrepreneur could still be working 24/7 to grow their business, but it’s a work ethic that we don’t relate to because our generation is different.”
Sally Waterston: “We don’t have fixed hours or fixed holidays and we employ a lot of young people. They have that work ethic it’s just they don’t expect to work nine to five every day. We measure them on what they do not on the hours they are there.”
Max Freer: “Running a business is about strategically what you want to achieve and does it matter, with technology, where you are as long as the objectives of the business are achieved? I think the older generation struggles with that.”
Aside from work ethic, another influencer on business success is a willingness to take risks, said Alistair Waite. He also highlighted the importance of attention to detail.
“One of the best definitions I’ve heard of an entrepreneur is somebody who is prepared to risk everything in pursuit of a business goal or objective,” he said. “Some of the companies I talk to are just not prepared to do that.”
He added: “Some people need to be protected from themselves. We’ve worked with really technically gifted people with good ideas. But when you ask them to prepare things like who their customers are, their business plan and their rough financials, they can’t do it.”
Jo Hand: “Personally I’ve taken great risks over the years, but they were always calculated because I know what I do and how to do it. And in terms of numbers, I know how much I’m making by the hour every day.”
A lack of awareness of such entrepreneurial traits as knowing numbers and taking risks is clearly an issue which needs addressing on Teesside.
But Norman Peterson suggested a deeper problem may be holding would-be entrepreneurs back in the region.
“If you have an entrepreneur with a good idea to bring forward, you can often see that as they are with their current team they aren’t really investable. But if you could put a team around them and they were prepared to let your team come in, you’ve got a good chance of them raising the capital to get them on the journey.
“But if they’re not open to that, and they can’t get the money from the bank, then they’re really just stuck with a really neat idea that has been proven and works, but without the capital to get it going. We’re finding it really tough to get them to accept that.”
Vinay Bedi: “I’ve always found there’s an attitude issue in the North East and particularly on Teesside in getting people to realise that it’s not just about starting a business it’s also about growing your business by accepting capital from elsewhere and taking a smaller piece of the pie.”
Norman Peterson: “Ten years ago you could raise a big amount of capital pretty quickly and you could go to the banks for support but you can’t do that now. With our current business we’re starting again and, because we can’t get bank capital, I’m quite happy to have 20% of something that has the potential to get to a big opportunity than own the whole lot and be stuck struggling along with something.”
David Shawcross: “The attitude tends to be ‘if I go that next step I’ll have to part with control and I don’t want to be answerable to anybody’. That’s one of the reasons for the belief that people on Teesside aren’t desperately ambitious. They’ve got the ideas, the skills and the networks, but they make a conscious decision to sit back and say ‘that’s enough for me, I don’t want to grow bigger’. This is why we don’t have so many PLCs headquartered in Teesside. Control is a big part of all the entrepreneurs I come across. They all have that great determination and resilience but they want to hang or fall by their own decisions. So it’s quite tough to get somebody else to influence decisions.”
Vinay Bedi: “There’s no doubt in my mind that this attitude of mind is restricting growth in the region. We have to instil into entrepreneurs from the beginning that the business is an entity in itself and the business isn’t them.”
Ammar Mirza: “Some of the barriers I found when I was starting out came from this micromanaging attitude. I originally thought I knew it all and knew it better than anyone else. But it was only when I started utilising other people’s expertise that I managed to grow.”
Drawing on the experience of growing Asian Business Connexions, which has supported over 250 new start-ups and has gained the involvement of around 4,500 individuals in the last five years, Mirza added: “It isn’t all rosy in this region, but through collaborations, which I am a huge advocate of, we’ve achieved great things.
“For me the underpinning things to success are around collaboration, utilising the correct expertise and actually giving something back. They have to be the fundamentals of whatever you do – and you have to enjoy it.”
Alistair Waite: “I worked in London for a while, and when we talk about ambition I do see differences between there and here. Over half of the workforce on Teesside work for companies that employ over 1000 people, so that doesn’t leave an awful lot left for the start-ups.
“But what really frustrates me is that people don’t look beyond the region to sell their goods. Around 6.5% of everything this region produces is exported. In London it is 44%. So we just need to lift up our eyes a bit and think a bit bigger and further.
“I also think we’re not blessed with as many entrepreneurial icons as other regions. You would find it difficult to name 10 real icons that you would look up to and think I really want to do what they’re doing.”
Jo Hand explained how her company has used technology to broaden its horizons by utilising Skype video calls to interview candidates from outside the region. “That’s been very fruitful for us,” she said.
For Sally Waterston, building trust has been the key to her firm’s success beyond the North East: “We don’t advertise but we keep our customers and that’s hugely important. The most important thing in our business is trust and, because we trust our customers, with some of them we don’t even have contracts, which people are sometimes shocked to hear. But it works.”
Max Freer believes success in business always starts with a strong relationship: “We’ve just done a global campaign for Huntsman, [the manufacturing and chemicals giant] across 11 global regions. It took me two years to build that relationship with them.
“We just love what we do, we have a lot of integrity and we just want to do a really good job at the end of the day. If you do that, clients stay and you can even become an extension of their team.
“But a lot of people assume that we wouldn’t have clients like this being an agency based in Middlesbrough.”
Sue Smith: “We need people in this region to shout about these successes more. I think this type of modesty is indicative of the North East.
Vinay Bedi: “And my response would be to ask why shouldn’t your firm have done Huntsman’s work?”
Jo Hand: “When the steelworks were mothballed we had Tata Steel as a client at the time and we carried on calling them every week even though we knew they didn’t have anything for us. But when SSI came in to save the day, they approached us because everyone told them we were the only agency that didn’t drop us like a hot potato. Within months we put 400 employees into the company and we’re still working with them today. That’s purely based on not giving up on a relationship because you don’t know where it can lead. I don’t think there’s enough of that in the marketplace.”
Meanwhile, a pressing issue preventing start-ups on Teesside from blossoming remains its dearth of small industrial units, according to Jamie Brown.
He said: “Teesside is still proud of its manufacturing and engineering heritage but the new firms coming through need small industrial units of perhaps 500 to 1000 sq ft. But they are like hens teeth; you just can’t get them. There are plenty of big units which are of no use to anybody at the moment. And likewise with office space, if you need something smaller with a modest rent, you just can’t find it here. Commercial landlords should be looking at more of these ‘easy in, easy out’ arrangements.”
Max Freer: “Many businesses now are much smaller, agile and flexible, perhaps because of technology, and they don’t require big spaces.”
Hugh McGouran: “We’ve shrunk our staff quite considerably and we are rattling around like a pea in a drum where we are at the moment and it’s expensive for what we get. There are 60s and 70s office blocks out there but they’re probably unsuitable and the broadband is probably terrible. I think we need new builds.”
Vinay Bedi: “Middlesbrough itself desperately needs some new investment in terms of commercial property. It’s got no chance of surviving unless it really does that.”
Max Freer: “I do believe a lot of landlords in the town are sat on space that they may not realise could be used.”
Aside from providing better spaces for emerging businesses on Teesside, Caroline Theobald asked what other measures would boost the area’s entrepreneurial potential.
Hayley Lumby explained that starting up in business could be a lonely place and so greater awareness of the various support networks available to start-ups would help considerably. “There are networks in place to help, but many people just wouldn’t know to go to them,” she said, adding that clearer advice on all aspects of starting up would be advantageous to Teesside. “Even in terms of networking, people need to know where to go in the first place.”
Staying on the theme of networking, Jo Hand and Max Freer both explained how important it was that budding entrepreneurs got out and met new people as much as possible.
“You have to be a networking whore,” joked Freer. “When I started out freelancing I didn’t know who my customers were but I knew what my skillset was and ultimately I just went out and networked and went to every event going.”
Sally Waterston: “When I started out over 20 years ago – before the internet - I wrote down everyone I knew, no matter how I knew them, even if they were parents of my children’s friends. I systematically contacted all of them and told them what I was doing and that I’d quite like to send them a brochure. I think I got to number three on my list when someone said ‘I think I might know someone who could use your service’. In fact we still do that as a business by going through our vast data.
“We also do seminars but don’t overtly sell stuff. We get work not by being pushy, but by building relationships and giving stuff to people. If someone wants to engage us they will, or we give them all the information and, if they want to do themselves, they can.”
Jo Hand said “having fun when marketing” has given her business huge rewards as it has grown. “We’ve done some crazy stuff over the years which we’ve had shedloads of new business from,” she said.
Caroline Theobald: “What other practical advice could delegates offer aspiring entrepreneurs on Teesside?”
Valda Goodfellow: “You can’t afford to be sentimental about your business idea. You have to think about whether there is actually a need. You can’t get mixed up between a passion and a pipedream and you have to talk to somebody about whether you actually have a pipedream or whether you’ve got a passion that can actually make a proper sound idea work. Also, if you are lacking something, go and find somebody who has it.
“But I think there is a massive trust issue about the quality of advice there is out there. I’ve experienced public sector and paid-for advice and there are some shocking advisers out there. I met one adviser who had sold ball bearings for 25 years, for example. How could he go out and advise somebody on their business? Unfortunately public sector [business support] is littered with ball bearings salesman.”
Jo Hand: “A lot of my advisers were really just sign-posters and didn’t really give me any business advice, they just pointed me towards form filling.”
Like advisory support, grant funding is another commodity which can shape entrepreneurial success. But accessing it can be tricky and, in some cases, not worth the hassle, according to Hayley Lumby.
“You apply for grant of £3,500 and it takes three months to get. It needs to be easier to apply for help than it is currently, particularly for smaller to medium-sized businesses. The mid-sized businesses have the resources to go through application processes but smaller businesses often don’t.”
Valda Goodfellow: “You have to know the tricks of the trade. People dishing out grants have employees who go out with boxes to tick and you can tell them to fill the forms out for you. Those people need you in their figures to satisfy the quota. But unless you’ve been through it you wouldn’t know that.”
Ammar Mirza, who is well versed in the power of collaboration for the greater good,suggested the creation of a grant-funded network of professional services providers to counter current failings in grant and support systems.
He said: “You need to speak to an accountant and a solicitor when starting a business. So it would be great if there was a grant-funded collaborative network of professional services all coming together. It would mean that everyone would know wherever they went they would get good quality service that’s consistent, fair and hasn’t been inflated.”
David Shawcross then provided an insight into the challenges grant controllers are experiencing in getting funds to viable businesses. “When they’ve got these grants often they can’t find people that actually fit the criteria. The money is there it’s just got too many constraints around it. But grants are actually a bit divisive. If there’s money available, it should be available across the board, not just for the well advised. But there’s a real struggle to get the money to where it’s needed.
“We keep a database of all the current grants to keep our clients informed, and that’s a full-time job in itself. That can’t be right. There must be a simpler way of delivering grants.”
Hugh McGouran, whose organisation providesgrants to charitable organisations, said: “Our grant managers used to go home at the end of the day having stopped 30 people getting a grant and feeling that they’d done a good job because they’d found 30 mistakes in the process, rather than basing decisions on the validity of the applications. It’s taken me a lot of years to get to the position where it’s easier to get the grant than not get it. The problem you have with grants is that the paranoia about making the wrong decision is immense so everybody adds a layer into the system. It’s our job to get the money out the door, not to protect it.”
Alistair Waite: “It’s about understanding the rules of the game when you’re applying for finance or grants. I sit on the panel for Let’s Grow [the £30m Regional Growth Fund programme] and you can spot the dodgy applications a mile off, but the bottom line is how the business has been trading, its track record and whether it’s likely to grow in the future with this grant.
He added, however, that “I would also argue against being grant-led as a business”.
“You need to have a clear strategy which then needs to be communicated to every single person in the company,” he said. “It’s easy to stop one person but if you’ve got everyone in your company buying in to the strategy, that’s really difficult stop.”
Amid much pondering around the table about the future the region’s grants system, Sue Smith reminded delegates of the support available to entrepreneurs and start-ups through universities.
“Universities across the country are good neutral places for businesses to come, but it’s not always in their mind-set for them to do so. Why would they go to universities? But if they get through the doors, there is an enormous amount of resources they can tap into.”
In summarising the debate, David Scordino said: “Clearly Teesside’s infrastructure, attitudes and passions create an incubus for success. However there are also issues to address and greater collaboration between entrepreneurs and businesses and the putting in place of regional structures to get the support that is needed out to businesses, will help drive the local economy going forward.”
Debate helps us to help entrepreneurs
In being eager to host a BQ dinner and debate in the heart of Teesside, UBS was keen to create an event which demonstrated the somewhat underplayed successes of Teesside over recent years. However, we also wanted to demonstrate the tremendous potential, particularly within the SME sphere, for substantial growth in years to come.
To this end the dinner proved a huge success primarily due to the quality of the people who kindly attended. What was achieved from the guest list, even if, admittedly, there was an element of good fortune about it, was a mix of established and well-known entrepreneurs e.g. Alastair Waite, with a splattering of high quality more recently established business people such as Ammar Mirza, Valda Goodfellow and Sally Waterston.
This gave a tremendous opportunity for those already “successful” but still rapidly growing business entrepreneurs such as Max Freer and Jo Hand to gain some tremendous first-hand knowledge from their fellow guests. Excellent contributions came from all of the guests in attendance and we are extremely grateful to those people for coming along and hope that all managed to learn at least something small from the event as much as having a good time. Indeed, it was gratifying to hear Alastair Waite talking about how useful he had found the debate when one would have thought that he would have been the principal educator. Teesside has always had a tremendous industrial and, let’s be honest, traditional history.
The difference is that most of the successful companies from the past were based outside the region. This generation is the generation that has to develop and grow Teesside further by creating the businesses and the business opportunities in this region from scratch. Events like the BQ dinner help convince global organisations like UBS that the Teesside region is both one of rich potential but also ongoing success.
This also encourages UBS to focus more of its resource in the region, to help entrepreneurs grow their businesses and advise as the entrepreneurial journey progresses. UBS is able to assist on both a personal and corporate level and excellent debates like this enable us to understand the issues better and hopefully allow entrepreneurs to overcome problems and grow even faster.
Vinay Bedi, executive director, UBS Wealth Management. Tel: 0191 211 1000.
Email: email@example.com. Web: www.ubs.com/uk
UBS AG, Newcastle Branch 2, St James’s Gate, Newcastle upon Tyne, NE4 7JH.