The business of business success

Hard work and plenty of support are vital when starting up a new venture. Luckily, new schemes at regional level can help
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The Independent Online

A sk any successful entrepreneur how they made it and you'll be told that turning good ideas into profitable businesses takes more than inspiration. Hard work and a good network of support and advice can make the difference between growth and failure. So, with the Government keen to encourage a culture of enterprise, making sure business support is both easily accessible and easy to understand is a high priority. Already, the Department of Trade and Industry (DTI) has streamlined the support schemes available to business, and in an effort to bring business support closer to the people it should serve, is passing new responsibilities to its champions for economic development, the Regional Development Agencies (RDAs).

Still only five years old, RDAs are seeking to translate broad central government strategies into clearly defined, practical regional policies to support enterprise and drive forward economic growth. Public sector bodies with business people at the helm, RDAs bring together public and private sector organisations and funding to work towards common regional goals. The premise is simple: when resources are effectively targeted towards common objectives, the whole is greater than the sum of its parts.

Enterprise support - where business and government cultures collide - is important territory for the RDAs.

Until 1999, business support in the UK was centrally driven. Organisations such as Business Link, training and enterprise councils, development corporations, as well as local authorities and government offices, all played a key role in delivering business support. But the priorities, strategies and means by which they used to do that tended to be determined either at a national level or at the other extreme, a local authority level.

Coordination between different organisations was difficult, and services to a large extent were policy-led, rather than demand-driven. Consequently, the businesses that were supposed to benefit from the plethora of support initiatives were faced with a confusing maze of overlapping roles and responsibilities.

Regional integration and coordination

As part of the Government's policy of decentralisation of economic development, nine RDAs were set up to coordinate regional development policy in the UK.

In terms of business support, their role was to bring together the range of different enterprise development activities in each region to provide a regional approach to economic development and to tie in both existing and new business support services to a regionally cohesive strategy. The RDAs take the overarching national priorities of the Government and interpret them from a distinct, regional perspective.

"One of the roles of the RDAs was to make business support demand-driven rather than supply-led. They sought to look at the long-term needs of business in the regions, what was best addressed on a regional scale and what was more appropriate at a local level in order to help businesses compete," says Ian Harrison, head of economic development at the East Midlands Development Agency (EMDA).

Unlike predecessor organisations which were often perceived as operating in public sector bunkers, with little consultation with real businesses, the RDAs all have private sector representation on their management boards and are led by successful former business people. Many of their individual programmes and initiatives are driven by joint public-private sector management teams.

The RDA's role is largely strategic rather than operational. In conjunction with business support delivery bodies such as Business Link and Learning and Skills Councils, private sector representatives and central and local government, each sets out the framework for supporting business in its own region. Very often, however, those organisations that actually deliver the support to the businesses, that interface directly with the private sector, are not the RDAs themselves. It is more likely to be a local Business Link, the Chamber of Commerce or a specific industry initiative that is the public face of business support. But behind them all sits the RDA, supplying the strategy, the infrastructure and the funding to support the region's enterprises.

"It is in our interests and in the interests of business in the region for us to work with intermediate organisations. It doesn't matter who it is, our job is to make sure the customer receives joined-up support, not 20 people knocking on his door trying to engage him in one initiative or another," says Susan Johnson, director of business development at Yorkshire and Humber's RDA, Yorkshire Forward.

Sector focus

The Manufacturing Advisory Service (MAS) is one of the most successful national business support initiatives to date (see case study). It provides hands-on consultancy advice to manufacturing companies using a network of highly experienced manufacturing specialists, covering areas such as research and development, technology, new materials and production systems.

David Wright, chief executive of MAS West Midlands, believes that the tight, industry-specific focus of initiatives such as MAS is a key part of their success.

"It is focused on one specific sector and does not try to be all things to all men. It uses experienced manufacturing professionals who have years of practical expertise. It is an indication of how effective a specialist service can be," he says.

The concentration on specific industries and sectors is the defining characteristic of how the RDAs deliver business support. Each RDA has designated priority industry sectors, known as clusters, on which it focuses its enterprise support activities, although not to the exclusion of other sectors. The clusters can be broken down further into initiatives aimed at specific niches within that cluster.

Clusters are not necessarily the largest sectors within that region, rather they are the sectors which offer the most development potential, as Jeff Alexander, director of business and international at the South East England Development Agency explains."The chemical industry in the South-east is huge, second only to one other region in the UK, but it is not one of our target clusters. We don't feel any intervention on our part could bring any great benefit. The marine industry on the other hand is far smaller, but one to which a cluster approach to business support can make a big difference," he says.

The clusters started off as channels of communication between the RDAs and key industry sectors, enabling those sectors to feed back to the RDAs information on their strategic needs.

Increasingly however, the clusters have become business groupings, facilitated by the RDAs, that both generate business between each other and cooperate together to win business elsewhere.

On Humberside, Yorkshire Forward has just completed an initiative with several local players in the sea food sector, part of its food cluster. Traditionally viewing each other as competitors, there was little communication between different companies and, as a result, no coordinated voice to express the development needs of the sea food industry.

It wasn't well connected to the logistics infrastructure, there was little training, it didn't communicate with the ports and airports, and as a result was not best placed to exploit business opportunities in the UK and abroad.

"We brought four or five companies together and got them talking to each other. The cluster approach is about looking at where collaboration can have bottom line results. We've set up joint training projects, international trade initiatives, we are talking to the port and airports about logistics, the fish markets about distribution. We worked with them to design the strategy and get the funding. We are now starting to implement it," says Yorkshire Forward's Susan Johnson.

Integrating the Business Links

The next stage in the RDAs provision of business support comes in April, when they take over responsibility for the national Business Link network, formerly managed centrally by the DTI's Small Business Service.

Three RDAs - EMDA, Advantage West Midlands and the Northwest Regional Development Agency - have been managing the Business Links in their region on a pilot scheme for the past 18 months. In April 2005, all the RDAs take over responsibility on a permanent basis.

Operationally, it will still be the Business Link brand that delivers the enterprise support, with the RDAs working to ensure the highest levels of quality and consistency in the support available.

The brokerage model - linking up organisations with qualified expertise from industry - has been used successfully in initiatives such as MAS and is a key element in EMDA's plans.

"Businesses like to know that there is a broker available which can put them in touch with practical, relevant expertise. As an agency, our priorities are to engage more companies into that business support, ensure it is high quality, consistent and easy to access, and to keep them coming back for more," says Sue MacDonald, acting chief executive of business services at EMDA.

Manufacturing Advisory Service (MAS)

Unveiled in May 2002 as part of the Government's first manufacturing strategy for over 30 years, the Manufacturing Advisory Service (MAS) is a national initiative to provide companies with advice, guidance and assistance to improve their manufacturing and technological operations.

The initiative is inspired by the Manufacturing Extension Programme in the US. Each region has its own MAS, funded by the DTI and the individual RDAs. The service aims to respond to every manufacturing question it receives, not only via a team of office-based and specialist consultants, but also through a network of specialist manufacturing advisers who visit and assist businesses on site. It can also refer in assistance from other organisations, such as universities, professional institutions, technical organisations and industry forums.

MAS has become a key source of practical advice, boosting manufacturing by more than £39m in 2003, its first full year, and delivering on average £104,000 of added value to every manufacturer that it assisted, according to the DTI.

Since its launch, MAS has responded to over 20,000 enquiries, visited over 5,500 companies to carry out initial diagnostic health checks and gone on to complete more than 1,200 in-depth consultancies.

Initially funded for three years (2002 to 2005), the Chancellor Gordon Brown recently announced in his annual spending review that further funds would be allocated to extend the programme.

Virtual Enterprise Networks

Pioneered by Yorkshire Forward, Virtual Enterprise Networks (VENs) are legally binding frameworks which allow companies within specific sectors to work together to win major contracts.

Each VEN consists of up to 200 member companies, carefully selected according to their quality, deliverability, commercialism and responsiveness. They work together to integrate themselves into a ready-made supply-chain network, enforced with clear rules covering obligations and rewards.

Jointly funded by the European Union, VENs aim to revolutionise the way SMEs compete for major contracts by allowing them to negotiate and trade as a single entity.

Four VENs have already been established in Yorkshire and Humber in advanced engineering and metals, chemicals, digital and healthcare. The results are already positive. In March, the advanced engineering and metals VEN was awarded the first of what could be several multi-million pound contracts with Norway-based Rolls-Royce Marine.

Leeds Bronze beat off competition from across Europe to secure a multi-million pound deal with Rolls-Royce Marine Engines to supply bearings. The contract will see its turnover grow by nearly a third as a direct result. Bids by a further 11 companies in the VEN for contracts worth potentially £25m are already in the pipeline.

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