Why Scale-ups Are So Important To The North East Economy

Global Entrepreneurship Week takes place each November across more than 170 countries, and once again the North East used the event to showcase the successes of many of its aspirational businesses.

The Entrepreneurs’ Forum – of which we’re extremely proud to be a corporate partner – hosted an Entrepreneurs’ Conference at Redworth Hall Hotel in County Durham.

Speakers included Mike Welch of Blackcircles, who started out with a £500 grant and eventually sold his online tyre retailing business to Michelin for circa £50m, and Nas Khan of Jennings Motor Group, who rose from graduate sales executive to become sole proprietor and drive the group’s rapid expansion.

Being a corporate partner of the Entrepreneurs’ Forum – which represents more than 300 high growth businesses in the region – allows us to use our expertise to directly support the scale-up ambitions of the next generation of Mike Welchs and Nas Khans in the North East.

There is an incredible wealth of entrepreneurial talent already in the region, across a wide range of sectors. They are demonstrating not only their ability to start businesses but to scale them up into significant enterprises that contribute to local, regional and national economies.

Scale-ups – those early-stage businesses with high growth potential – are vital to the UK’s economic growth, and I was heartened to read that scale-ups in our region and beyond retain ambitious growth plans.

A survey of 500 scale-ups by Deloitte found that almost a third have already expanded overseas, and 51% are targeting international growth within the next three years.

Clearly Brexit has not dampened those growth ambitions, but what it has done is shift the focus from the EU to the US.

Before the EU referendum, 74% of scale-ups said they were targeting the EU as their preferred market, with just 21% targeting the US. Fast forward a year, and those figures have been flipped on their heads. Now just 35% see the EU as their most attractive option for overseas growth, compared with 52% who will target the US.

That’s not to say Europe isn’t on the agenda for our fast-growing start-ups. Its sheer size, along with its familiarity and existing business networks, means

the EU will remain an important export market. And Sterling’s depreciation against the Euro is helping those exports.

Many scale-ups remain highly self-sufficient. More than half of the respondents in our survey (56%) did not seek any form of public or private support to scale-up overseas. For the rest of the scale-up community who did seek support to access new markets, a combination of UK government, trade associations and large businesses were the most appealing options.

Scale-ups also tend to be more likely to exploit innovative technologies like robotics and artificial intelligence. Our research shows that, overall, only 16% of business leaders consider themselves ready to exploit such technologies, whereas over twothirds of scale-ups are already investing in them to help drive growth.

That’s why entrepreneurial businesses in general – and scale-ups in particular – are so important to the future economic prosperity of the North East.