Whether it’s Ed Miliband waging war against business, or the in-out EU debate which has industry leaders on both sides of the argument championing their cause, British business is once again a headline story. And it is booming: there has been a record 6.7% increase in the number of businesses since 2013, and 51% since 2000 – that’s an extra 1.8 million businesses in the last 14 years.
It is especially heartening to see how the UK compares to similar countries when it comes to attitudes towards entrepreneurship. The Global Entrepreneurship Monitor United Kingdom 2014 Monitoring Report ranks Britain against France, Germany and the US. It found that the UK scores higher than France and Germany for the percentage of people who agreed with the statement “There are good start-up opportunities where I live in the next 6 months”, and lower for “Fear of failure would prevent me starting a business”. In particular, 45.5% of people in Britain agreed that they had “the skills, knowledge and experience to start a business”, compared to 35.4% in France and 36.4% in Germany, putting the UK more in line with the US (53.3%).
The GEM report also found that attitudes have been in improving in Britain over the last ten years. In 2014, 41.4% of people agreed that “I know someone who has started a business in the last 2 years” (up from 21.8% in 2003 and 23.4% in 2009), and 58% agreed that “Most people consider that starting a business is a good career choice” (up from 52.8% in 2003 and 47.9% in 2009).
All of this enhances the picture of the UK as a hotbed for entrepreneurialism, and underscores the point that British business relies on ordinary people who have great ideas, not on existing large corporations. It is no coincidence that the UK particularly excels in the opportunities on offer for start-ups. But too often, these smaller businesses are overlooked when it comes to measuring Britain’s success, as US giants like Apple, Google and Walmart get all the global coverage. That’s why this week’s report from the London Stock Exchange Group, 1000 Companies to Inspire Britain, is so important, offering an insight into a wide range of small and medium-sized businesses which create jobs, harness innovation, and put British industry on the map globally.
As the report makes clear, these businesses are the lifeblood of the British economy:
“The success of these companies, variously identified as ‘gazelles’, ‘the magic 6%’ or ‘scale-ups’, has a remarkably disproportionate effect on our national economic output. The Scale-Up Report, published last year by Sherry Coutu, found that boosting this ‘sector’ by just 1% would create as many as 230,000 new jobs and add £38bn to UK GDP.”
For those who assume these jobs are confined to the capital, the report goes on to note that:
“And a recovery not limited to London either, with more than 75% of the 1,000 companies drawn from outside the capital. Fascinatingly, Scotland, Northern Ireland and Wales boosted their weighting by 30% from last year.”
The dynamic nature of the top 1000 means that they are able to adapt to our changing world, and in particular to take advantage of ever-improving new technologies. These are businesses which find opportunities in the greater inter-connectivity offered by the internet, globalisation, and the sharing economy, rather than seeing these things as risks.
“The UK has become a tech nation,” writes Baroness Joanna Shields, CEO and Chair, Tech City Investment Organisation. It is the most digitally enabled country in the G7, with 7.5% of the workforce employed in the tech sector, and the combination of top academic institutions and a relatively low corporate tax rate make Britain a centre of digital innovation. It is no surprise that Information Technology is the UK’s highest performing sector, with average annual revenue growth of 350% between 2010 and 2014. From Big Data and cloud computing to more concrete and practical online applications such as ‘fintech’ (financial technology) and marketing, the UK is at the forefront.
Technology is often seen as a soulless industry, confining human contact to computer and smartphone screens and reducing social interaction. It is therefore heartening to see as one of the top profiled businesses in the report a company whose product is bringing people together in real life: Venntro, which specialises in online dating. It owns a range of international dating sites, each with a different USP. The JustSingles.com brand offers a diverse range of sites tailored to individual preferences (divorced singles, parent singles, Christian singles), while Smooch.com has a more casual, social-network style vibe to it.
Venntro has over 40 million consumers, from London to San Francisco to Melbourne, and annual revenues of almost £50 million. It actively grew during the recession, proving that online dating can be a viable business model despite the plethora of competitors offering the service for free. Venntro demonstrates beautifully how new technology and globalisation can be utilised to connect people on a human level.
For those who think that Britain’s manufacturing sector is dead, the report highlights the opposite. 8% of all UK jobs are in manufacturing, and while globalisation may have changed the playing field, some British companies are taking advantage of the new opportunities it provides. For example, Wooltex UK is a textile firm which, rather than flounder in the midst of sharp competition from low-cost Asian producers, has “found a lucrative niche, concentrating on premium fabrics for the office and seating markets”. They produce luxurious materials for window blinds, including a high-quality PVC and glass blend, as well as polyester options.
Wooltex UK’s revenues almost tripled between 2010 and 2014 (from £6 million to £17.5 million), and while they aim to use local suppliers whenever possible to support the UK economy, 90% of their merchandise is exported. One might think that, with such a niche product, Wooltex might be suffering a dwindling market, but in fact their major problem is expanding to meet customer demand. They aim to create 50 to 60 new jobs over the next few years, by investing in infrastructure and personnel training so they no longer have to rely on sub-contractors.
Based in Yorkshire, the historic textile heartland of Britain, Wooltex UK is a shining example of how traditional industries can adapt to new technology and see foreign competition as inspiration, not a threat.
Food and Drink
Britain may not be best known for its food, but that isn’t stopping anyone. Three of the food & beverage businesses featured in the report are companies which bring international cuisines to the UK: itsu, founded by Co-founder of Prêt à Manger Julian Metcalfe, which sells sushi and Japanese-inspired salads to-go, and Mexican chains Wahaca and Barburrito. The world has opened up, and hundreds of businesses are taking advantage of globalisation and cheaper travel to offer British diners food from around the globe.
The sector comes top in the report for job creation, with 400,000 people directly employed in the food & beverage industry. It is also a sector which relies heavily on SMEs – 96% of businesses are micro- to medium-sized. Food is clearly something that Brits feel passionate enough about to consider starting a business. As always, the problem comes with scaling up. Only 0.4% of UK-based companies scale up to beyond 250 employees, and in an industry with fierce global competition, establishing an international presence is a tough challenge.
One company has managed to succeed by focussing on a signature British product: beer. Meantime brews modern versions of classic beers from a brewery in Greenwich, adding an international twist by using ingredients from around the world in English recipies. Their CEO, Nick Miller, explains the company ethos as “Harnessing technology, keeping an eye on tradition”. And it’s working for them – their annual revenue is £10-20 million, and by the end of 2015 their production capacity will have increased nearly nine-fold since 2011.
Even more impressively, Meantime exports to 40 different countries, concentrating in particular on North America, South-East Asia, and Scandinavia. While some businesses are injecting international food products and restaurants onto the UK culinary scene, Meantime has found a way to get British beer on the map.
These are just three examples of companies thriving in the complexities and contradictions of 21st century commerce, seeing opportunity in change. There are 997 more listed in the report. With headlines about wage stagnation, low productivity and Britain’s isolated world outlook, it is refreshing to be reminded that progress and innovation are all around us.