North East Local Enterprise Partnership: Evidence to impact – a scale-up success story

The breadth of work carried out by the North East LEP’s Business Growth team over the last decade has been exceptional, says business growth director Colin Bell. 

 

From the creation of the North East Growth Hub through to engagement with our Business Board and partners, we’ve made huge strides towards levelling up by increasing the business start-up rate, business productivity and the number of companies scaling.

While hard to choose, it’s our scale-up achievements that stand out most to me in terms of overall impact.

Roll back the clock to 2016 and here at the North East LEP we were underway with a refresh of the Strategic Economic Plan.

This needed updating to reflect a changed economic environment and renewed focus on our target of 100,000 more and better jobs by 2024.

Most of our European funding had been committed, so our Business Growth mission was to figure out how to get the biggest bang for our buck in terms of making a difference.

As ever, we started with the data.

At the time, wider UK evidence pointed to scale-up businesses having a disproportionate impact on productivity and job creation.

Unfortunately, analysis showed the number of scale-up businesses in the North East was lower than most other regions.

It made our work very clear.

The goal had to be to increase scale-up business density by 50 per cent, which would bring an estimated £260 million GDP and create around 6000 further jobs in the region.

Supporting a fairly small number of companies would deliver a big impact.

Research into the region’s scale-ups to understand their journey over a three-year period was eye-opening.

 

• Colin Bell, North East Local Enterprise Partnership business growth director

 

We discovered just a handful had scaled to £3 million; the majority reached around £1 million and then stopped.

Also, only a few of these fast-growing businesses were in the sectors of strategic importance identified within the Strategic Economic Plan, which meant our intervention would have to be sector agnostic.

Our target became companies with scale-up potential, moving as many as possible from £1 million to £3 million, working with partners who had experience to do this.

Part-funded by European and local growth funding, RTC North was appointed our delivery partner for the Scaleup North East programme, and we worked with the organisation to recruit a team of partners who all had experience of scaling their own businesses.

We secured investment from the Government and expanded the team to deliver a mentoring programme designed to connect those with scale-up potential with business owners who had broken the next phase of growth.

These people weren’t previously in place within the business ecosystem, so it took a lot of work to identify and recruit them.

Next, we developed a Scaleup Leaders Academy with the Entrepreneurs’ Forum, primarily to tap into its membership base of directors with the potential to build a scale-up business.

Getting the narrative around scale-up and explaining what a scalable business model looked like was crucial.

We encouraged awards organisers to introduce a scale-up award, bringing the concept into the mainstream.

A breakthrough moment came when the Scaleup Institute ran a course educating those in regional economic development about the importance of scale-up businesses to the economy.

All of a sudden there was a movement within the North East, with partners creating a more aligned provision and the introduction of events such as the North East Scaleup Summit.

 

 

The thinking and the research carried out led to the development and launch of our High Potential Startup Accelerator programme, creating a pipeline of the future.

Today’s evidence shows this enabled the North East to really turn a corner.

We are now one of the regions with a growing scale-up base whereas, in the past, we were either stagnant or declining.

The North East’s progress has been recognised nationally by the Scaleup Institute, highlighting the region as a national exemplar.

The North East Growth Hub has also had a significant impact, starting with business turnover.

Companies interacting with the Growth Hub have seen an average increase of £378,000 (22 per cent) after a year, compared with £81,000 (six per cent) for those without support.

In terms of productivity, businesses have reported an average increase of £8800 per employee 12 months after receiving support, compared with £300 for non-supported businesses.

As responsibility moves across to the new North East Mayoral Combined Authority, this legacy feels good.

It opens the door to a new ambition for the future: to scale up the scale-up activity.

Watch this space.