I recently had a conversation with the head of Economic Development of an outer London Council who were bemoaning the fact that their borough was failing to create  economic activities, jobs or “excitement” needed if their part of London is going to reverse what increasingly seems like an inevitable economic decline. Why can’t we get the private sector to create another “Shoreditch” in our part of London was the envious cry?- Where is our Tech Hub, Trampery, Book Club or Brick Lane, Spittlefields market they cry?- Where are our exciting new start-ups or future growth hubs?

I replied to the council officer ( perhaps optimistically) that their future high growth businesses and entrepreneurs are likely to found locally ( after all it is still London) but that their London borough obviously does not yet have an entrepreneur ecosystem to attract and nurture todays and tomorrows talent and that it will not have until they do something about it.

Presently places like Shoreditch, Soho, Farringdon, South bank and upcoming areas such as Dalston, and Greenwich Peninsula have all the advantages of being clusters that have a “critical mass of entrepreneurs” that attract other entrepreneurial talent. They work because:

A: The “Buzz” or “Hype” of being the place to be – (The hard facts are that 12-18 months ago the centre of London’s thriving digital economy was not Silicon Roundabout- Tech City ( that title in terms of numbers and scale of digital business belonged to either Soho or perhaps Victoria) but 12 months on from the initial PR story  it is becoming true for now everyone( entrepreneurs, talented staff, investors and cool businesses) wants to be in Tech City or at least somewhere near Old street roundabout.

B: The psychological and practical benefit of having other entrepreneurs in close proximity.- It is a great motivation being around other entrepreneurs, the informal learning opportunities are great and just as importantly knowing that others around you are constantly trying to do something new and innovative in face of enormous uncertainty of succes makes the entrepreneur believe what they are doing is a little less crazy.

C: Good Connectivity. -This is a necessary condition but anyone who has been to Shoreditch will attest it is not the easiest or quickest place to get to and get around.

D: Cheap and flexible accommodation- A place where costs are low so you can experiment and most importantly reduce the initial cost of starting and scaling a business.

E: Support services including those provided by Capital Enterprise members (Universities, Enterprise Agencies, Incubators) and the less formal peer-to-peer learning and support groups such as techmeet-up http://techmeetups.com  , minibar http://www.meetup.com/minibar   etc

In essence entrepreneurs want to start and grow a business in places that are less risky and more fun. This can occur naturally but I contend that local councils and corporate sponsors can give it a little hand. The reason why the private sector is not creating mini Shoreditch’s across London with their own incubators, meet-ups and trendy social clubs is because it is too dam risky. The barriers are too high and the chances of success are too low for everyone but the most imaginative/daring entrepreneurs with the deepest pockets. ( I tend to meet a lot of entrepreneurs with former rather than the latter attributes).  I believe that local councils could work with these entrepreneurs and with their local business support infrastructure ( Enterprise Agencies , Universities etc) to create an eco-system that could seed a cluster of high growth, job creating, exciting, PR worthy businesses in their borough. I think that most (if not every) council in London should co-invest with their local private and not-for profit companies in a plan that will create:

A: Touch down or meet-up space for local entrepreneurs (similar to dreamstake http://www.dreamstake.net  ) in the best connected part of their borough. ( A great use for underused libraries by the way)

B: A hatchery offering free or heavily subsidised desk/office space to at least 10 potential high growth businesses. I would run a competition with the local media to find these entreprenuers with growth potential and offer them a package of support including space at the hatchery, on-going support micro credit, free publicity in the local press etc)

C: A high quality mentoring service for those in both the hatchery and those further along the growth path

D: Access to a high quality training and development programme provided by a business support agency or university.

E: A permanent pop-up shop space where new and existing real world and on-line retailers can try out their latest offerings. ( This will bring back excitement to Town Centres better than most of the ideas funded through the £10m Outer London Fund http://www.london.gov.uk/priorities/business-economy/investing-future/outer-london-town-centres/successful-bids  )

F: A local Entrepreneur dynamo/ champion whose job will be to coordinate activity, organise and facilitate local entrepreneur led meet-ups and to personify the “buzz” around entrepreneurship.

How much will it cost a council to seed is dependent on scale etc but I think most if not all of it could be done for between £50-100K per annum if you could enlist the support of existing players.

Will it work ?- There are no guarantees but I think it is worth a try. The recent McKinsey report on how entrepreneurship and new businesses are driving innovation and job creation       http://www.wamda.com/web/uploads/resources/the-power-of-many-mckinsey-report-20110310.pdf  -  explicitly declares there is a role for government, universities, not for profits and the private sector to work together to create an Entrepreneur Ecosystem.

Capital Enterprise is more than willing to play its role to engage our members and to find and raise corporate support. So we now require London Councils to step up to the plate, embrace new thinking and do something ( rather than nothing) to reverse the otherwise economic decline of their boroughs.

Pick up the phone- send me an e-mail- let’s talk.

I am rapidly losing faith in the Business Plan after 18
years of writing and reading literally thousands of them. I don’t just mean the truism
that business plans as forecast tools are invariably wrong for they never
survive in one piece after first contact with the real world. No I mean
that the content and process of business planning especially for start-ups is
counter- productive. Eric Reis, founder of the lean start-up concept, defines a start-up as an organization dedicated to creating something new under conditions of extreme uncertainty. I coming round to the thinking that business
advisers, financiers and let’s face it the entrepreneurs, by putting so much
emphasis on the business plan as a means to prove that the new business idea
will work, are trying in fact to deny that a start-up is attempting something new and to use the business plan to falsely state that the conditions they will operate in, are predictable.

Of course some start-ups are more predictable than others such as franchising ( which has a given business model and plan for the entrepreneur to follow) whilst others
are so simple to conceive and execute ( e.g. skillspreneurs such as
consultants, child-minders, couriers etc) that very often they do not need a
business plan. But whilst these types of businesses have their own challenges,
they rarely if ever have the ambition and means to create
there own wealth, there own IP and potentially be big enough to trade globally or
make an impact on the world.

So let’s leave business planning to the franchisers and copycat businesses whilst the rest of
us get on with devising ways we can create something new that can help the entrepreneur cope with “conditions of extreme” uncertainty.

In my view what we should be looking at is how we can
help those with an idea, to bootstrap it until they have a “minimal viable product”
that they can sell successfully to customers. In essence we should be giving these
potential entrepreneurs the benefit of our insights, access to our connections
and resources so that they have the opportunity to test in the real world
whether their big idea can take off.

But I can hear my colleagues in business support agencies and in banks/VC’s saying that it is unrealistic to get rid of the business plan for it is useful as a tool for them
to “sift the wheat from the chaff” and that the process of writing a business
plan at least teaches the author’s some essential business know-how. I concede
the later point but I think the business plan is a clumsy way to teach entrepreneurs
about marketing or finance or risk management. I also think that the business
plan is such a bad tool to determine whether you are going to back, support or
fund a new business that most funders or business support providers ignore it,
looking instead at the make-up of the management team, their own knowledge of
the market, and failing that (in the case of banks) whether the new business owners
is able to pay their debts by selling all their worldly assets if it goes wrong.

To determine whether we should be backing entrepreneurs with scalable business ideas to
bootstrap their new venture (leaving aside the question of whether we can
afford too) I think we need to see if they can answer the following questions:

1.  Does their management team have any previous entrepreneurial experience or business acumen preferably in the sector they are about to enter? ( i.e. Is there any evidence that they know what they are doing?)
2. Does their management team have first-hand experience of the market they are about to launch a product in? ( I mean do they know personally the people they are about to sell to and do they have insights into why these customers are so dissatisfied with what the market presently offers that they will try a new product from a relative unknown).
3. Can the management team design, pro-type, make and deliver the service/product to the market without outside help? (Preferably all the important talent should be inside company but if not then they better have the money and connections to get their product beyond “proof of concept” and “proof of market” stage. Why?- because it is highly likely that no one but family, friends and fools will fund them until they have)
4. Can the management self-fund their own living costs for at least 6 months? ( It is highly likely that the founding management team will not be able to pay themselves any wages until the start-up breaks-even. So what will they live on?- Savings, the goodwill of your partner, other income, fresh air?)
5. Can they earn before you spend? ( Commission vs IP revenue model connundrum- Commission based revenue models depend on getting paid by a customer to develop and deliver a service or product but any IP developed stays with the customer. So its good on the cashflow but bad for long term development if you plan to scale. Damned if you do and damned if you don’t?)
6. Is their sales cycle short? ( If it takes to long to get a client to first want their product and then eventually buy their product then they are likely to run out of money before you get a sale. The answer is therefore is to initially sell something that customers find easy to say yes too)
7. Can they validate the “Sales Funnel” first? (How they are going to reach and then sell to customers needs to be tested prior to start.  Do not trust what their sales channels tell them will be likely demand. Get these channels to confirm their orders first before going into production. From painful personal experience i can tell you that pre-sales are vital).
8. Can they access the “Beachhead” market for free or at least for very little money? ( The beachhead is the first set of customers that a start-up needs to acquire whilst spending as little money on marketing etc as possible. Feedback from these early adopters is vital if they are going to adapt and develop their value proposition so it can sell into a wider/ bigger market. The problem arises if the “beachhead” customer (chosen because they are cheap or free to reach) have little or nothing in common with the wider audience.
9. Can they cut out or delay any cost to a latter stage? ( Can the business be developed in stages -each stage with their own resource and asset needs. If it can then they can delay hiring lots of staff, big premises etc until it is needed. If not then…)
10. Can they within 3-6 months of selling in the market place be in a position to know if the business will succeed or fail? ( If you are going to work for no money for 3-6 month’s and risk money and reputation then they better know whether they will be in a position at the end of 3-6 months to know whether it will be worthwhile to continue)

These are the 10 questions I would ask before determining what kind of help (from funding to mentoring, from free accommodation to access to my contacts  etc) i can provide to enable them to bootstrap their new venture.  You may have better ones- I would be happy to hear your suggestions. We can then together develop a “action plan” (similar to a project plan) which we can use to help the entreprenuer bootstrap their venture. A Cashflow forescast would also come in handy and before we know it we are back to …. Damm.

So since I am down on Business Plans for start-ups it might seem a little ironic that I am running a Business Planning course this Thursday for graduates of the business bootcamps. Hopefully most of the attendees will be past initial start-up stage and will now have some real world market data and experience which will enable them to plan to scale. If not, it could be a little embarrassing…

Today, we celebrated the half way mark in the Business Bootcamp programme at the launch of the Green Growth Bootcamp organized by Kingston University and Merton Chamber of Commerce.

Over a 100 people gathered at the Knights Park Campus exhibition space to learn about the green businesses and initiatives pioneered by Kingston, as well as the Business Bootcamp aimed at the sustainable sector.  The Mayor of London was one of several guest speakers, who came to show their support for the programme.

Martha Mador, the head of Enterprise Education opened the event by stressing the importance of promoting enterprise among students and building a support ecosystem that extends beyond university. Thom Kenrick, Group Sustainability of RBS Group spoke about the support that RBS and Natwest provide for entrepreneurs, their new fund for green business and clean tech initiatives and the eagerness to see more startups in the sector. Julius Weinberg, the Vice-Chancellor of Kingston University, made a brilliant comment that university is about changing lives. Design is about changing ways of seeing, and thus being and doing. The green agenda is very high on their priority list and the exhibition of the projects coming out of the university is good testament to that. Kingston University is soon to unveil a new building, that will be one of the most sustainable in the UK.

Boris Johnson entertained the crowd with his take on the underwear made out of mould and stories about the lack of ‘Boris bike’ thefts during the riots.  On a more serious note, he stressed the importance of going green, encouraging innovation and supporting businesses that are contributing to a cleaner and better tomorrow. After his speech he tried out the electric scooters, leaving a few people worried he had wizzed off back to London!

Capital Enterprise did not fall short, and we also had a go at the adorable but mighty Ecospin — a new vehicle which will be aimed at businesses that require a lot of distribution (such as the Royal Mail).

Overall we had a brilliant morning, inspired by fantastic ideas coming out of Kingston University and all the great people we got to meet at the event. We are looking forward to meeting the Green Growth Bootcamp attendees and welcoming them to our Alumni network.  With so much talent, a sustainable future is not a far reach!

To see more photos from the event check out our Facebook album

http://tinyurl.com/5weo4cs

This week sees the 6 month anniversary of the launch of the Business Bootcamp programme and to mark the occasion we have again the Mayor of London- Boris Johnson- coming to lend his support at the Green Technology Business Bootcamp at Kingston University http://capitalenterprise.org/event-details/?eid=81

Since the kick off in April, Capital Enterprise University members have organised and delivered 12 RBS sponsored business bootcamps’ for new and early stage entrepreneurs who are seeking to start or grow a business in sectors as diverse as Bio-tech, Fashion, Film & TV, Mobile, Creative Design, Professional Services, Theatre Production and Restaurants.  Running alongside these bootcamps have been 8 free of charge business bootcamp extra workshops delivered by experts and entrepreneurs on the theme of financing a high growth new business. We are happy to report that so far:

345 entrepreneurs have attended a 2 or 5-day business bootcamp.

402 entrepreneurs have attended a Business Bootcamp Extra event

The feedback from those who have attended has also been better than expected with the average score out of 5 given by attendees when asked to rank the value of the bootcamp being 4.2.

We have also have the testimonies of scores of entrepreneurs who through the business bootcamp have been able to start a growth business, launch a new product, raise significant amounts of business angel funds, win awards and secure large new orders.

So now we know it works how are we going to make the Business Bootcamp programme grow? Well our plans is to:

1. Stage more Busness Bootcamps. We intend to run a further 18 Business Bootcamps over the next 9 months some of them repeats of past bootcamps but also new ones such as Bricks & Clicks, Social Enterprise revolution, Licence to Profit.
2. Raise our profile. We have just hired the PR agency Matter & Co ( Add link) to shout about our achievements in the press so hopefully enticing more entrepreneurs to check us out.
3. Launch a business Bootcamp network club with it’s own meet-up events (to be help once a month at the 02 centre in Tottenham Court Road), its own link-in group, newsletter, blog‘s from entrepreneurs and exclusive offers. The club membership will be free to all those who have attended a bootcamp but also open to anyone seeking to start a high growth business in London.
4. Improve the “Open Innovation” aspect of the programmes by running a series of the BB extra workshops that encourage and support development collaborations between new businesses and large corporations and universities. Also we intend to  “open” our resources, facilities and know-how to organisations and individuals looking to run their own bootcamp event for high growth start-ups. If you are interested, and have a good idea for a bootcamp or bootcamp extra event, then please let us know.

Now on the whole both Capital Enterprise and our sponsors are very happy with our progress to date but more can be done especially on the tricky question of how to make the Business Bootcamps self-financing once the generous RBS sponsorship ends in June next year.

In the meantime, please feel free to check out the website http://www.thebusinessbootcamp.org I know it is a bit clunky at present but we are planning to re-launch an improved version later this month.

Finally, I will take this opportunity to issue an open invitation to London’s entrepreneurs to join me, our team, our members and Boris Johnson at Kingston University this Thursday.

As the economies of the Western world teeter on the brink of a double dip recession and as the plaintiff cry “Where will growth come from” is raised again and again in the media it is probably a good time to look again at the humble British SME and to see who in London is growing and why?

To this end NESTA has recently published report on the geography of growth to find out who are the growing firms and where are they located. A previous report from NESTA identified that growing firms (defined as SME’s with more than 10 employees who have grown more than 20% per annum over the previous three years) accounted for the vast majority of new jobs created in the UK economy. The latest report found that between 2007-10 there were:

 • 887,000 SME in London that survived the three year period 2007-10

• 151, 401 of these SME’s employ more than 10 people

• 10,287 of these SME’s with more than 10 employees are “High Growth”

So for the UK only 6.9% of all SME’s are high growth and it is these firms that we rely on to create the vest majority of jobs. The picture for London is a little better. In the same period of 2007-10 there were:

 • 24,500 SME’s in London that employ more than 10 people

 • 2,445 of these SME’s are high growth.

So 9.9% of London SME’s with more than 10 employees are high growth companies which is 50% more than average and accounts for the findings that 23.5% of the total number of UK high growth companies are found in London. The NESTA data also reveals that the top three sectors in London are “Other Business Services”, Hotels & Restaurants and what is anachronistically called “Computing”.

Unlike other regions we are not so reliant on sectors such as Construction, Retail and Leisure to fund our growth and not surprisingly manufacturing is not the engine for growth for this region. So if you look at the picture for growth it is seemingly relatively rosy for London but there are concerns.

Firstly “Other Business Services” (which include the professions, consultants , advertising, recruitment and cleaning service providers) have in the past year found growth very hard to come by and there is some evidence that the sector is stagnating or even in decline. However, apart from this caveat, the other sectors are probably set to grow and I am particular confident of the prospects of Londons High Tech sector.

The second concern is more profound and it concerns the maths. London maybe doing well but these still is only 2445 SME’s in London with an annual growth rate of in excess of 20%. Although there is a great deal a variety of sizes and growth rates amongst this category of firms, the fact remains that on average these SME’s are doubling in size every 4 years and unless we expand the volume of high growth companies their splendid efforts will not be sufficient to create the jobs that London needs.

London uniquely in the UK has an expanding young population and therefore needs to create almost 500,000 jobs over the next 3 years just for present unemployment rate to stay the same. Therefore, London obviously for both economic and social reasons needs more High Growth companies. What can we all do, (the government, and business support sector and most importantly entrepreneurs) to create more High Growth businesses?

For its part Capital Enterprise is about to start a consultation exercise with its members, partners and entrepreneurs around how the Department of BIS new initiative “Business Coaching for Growth” can help. In the Greater London region this programme will be around £9m per annum which is set to be spent, not only on supporting the 2445 London High Growth SME’s to maintain and accelerate their growth plans, but also to act as a catalyst to the approximately 5000 pre-revenue, micro and small businesses who the goverment thinks can potentially become companies with more than 10 employees that grow by 20% per annum. The Coaching for Growth service will focus on providing firms with access to entrepreneurs and leading experts who are able to provide business development, investment readiness and innovation support expertise. But how this can be done, and what more can be done, and by whom is up for debate.

Finally, I will leave you with this thought. In a recent research paper presented by Department of BIS it was revealed that although almost 2/3rds of SME’s who received external advice and support found it a significant factor behind their growth or survival, and yet only 40% of all SME’s had ever sort or used external advice or support. So external support apparently makes a big difference to growth or survival and yet…

So, if you have ideas or insights to share on the subject of creating more high growth companies in London or would like an invite to an up-coming consultation event then please drop me an e-mail.

John Spindler