competing for change...entrepreneurial excellence in our inner cities. more importantly the inner...

INNERCITY100Competing for Change

Thank you for another spectacular year!

The Inner City 100 sponsors and partners are critical to the success of the Inner City 100– and what a success it has been! With a record number of nominations, the 2003 InnerCity 100 are faster growing and more dynamic than ever.

© 2003 new economics foundation 1

INNERCITY100Competing for Change

John Taylor, Liz Mackie and Reza Hamroun

Unlike other entrepreneurship indexes orawards, the Inner City 100 showcasesand supports new models ofentrepreneurship within some of theUK’s most deprived inner city areas.Importantly, many winners combinemajor growth with strong involvement intheir local communities, often declaringthis involvement to be critical to theirsuccess. The 2003 winners demonstratean average five-year sales growth of575% and have created 5,417 new jobsover the past five years. The winners canbe seen not only as tomorrow’s businessleaders, but also as positive role modelsfor everyone.

The Inner City 100 team at nef supportsthe winners’ future growth via astructured series of events, awards andmedia exposure. Acting as a research andpublishing mechanism, the Index enablesthese companies’ success andopportunities for the UK’s inner cities, tobe captured, analysed and shared, inorder to help support the growth of astronger enterprise culture within the UK.

The Inner City 100 has its origins in thework of Professor Michael Porter ofHarvard Business School in the UnitedStates. A world leader in the fields ofstrategy and competitiveness, in 1994Michael Porter established the nationalBoston-based Initiative for a CompetitiveInner City (ICIC). The New EconomicsFoundation (nef) - think tank of the year

2002/03 – imported and adapted this ideato the UK. The Royal Bank of Scotland,Natwest and Ulster Bank are the leadsponsors, and the Financial Times ourlead media partner.

In brief, to be considered for the InnerCity 100, firms must be:

x Located in inner city areas rankedwith in the bottom fifth of mostdisadvantaged wards in the UK;

x Fast growth over five years;x Employing at least five people in

2002.

The Inner City 100 Index ranks firms onthe basis of their five-year growth rate(for detailed criteria see the Methodologysection at the end of this report).

INNER CITY 100 RESEARCHThe Inner City 100 research report for2003, Choosing to Compete analyses ourwinners’ fast growth tactics, providingunique insights into trends in inner citybusiness development and urbanregeneration. A must-read for anyoneinterested in fast-growth businesstactics, urban regeneration, businesssupport strategies, venture capital,entrepreneurship, sustainability andcorporate social responsibility.

In 2004, we plan to publish a series ofproprietary white papers on relatedinner-city business themes. Please

contact [email protected] forfurther information on thesedevelopments.

INNER CITY 100 MASTERCLASSESThe 2003 Awards Ceremony isaccompanied by a series ofMasterclasses held at the LondonBusiness School, in which our winningentrepreneurs can learn from recognisedexperts in the field, as well as sharingtheir own best practices within facilitatedsessions. There are also opportunitiesfor the winners to meet with businessadvisers.

This year, we were able to accompanysome of our 2002 winners to HarvardBusiness School, where they were ableto attend masterclasses organised by theInner City 100 in the US, as well as tocreate business developmentopportunities with a variety of potentialclients, partners and suppliers.

INNER CITY 100 POLICY FORUMHeld at the day before the Awards eventand Masterclasses, this unique eventbrings together our winning inner cityentrepreneurs with private sectorleaders and policy decision-makers in aseries of face-to-face debates aroundbusiness support and urbanregeneration issues

About the Inner City 100.The Inner City 100, dubbed the ‘Enterprise Oscars’by the Rt. Hon Gordon Brown MP, is a yearlybusiness index which locates and celebrates the 100fastest-growing inner city enterprises in the UK.Led by the New Economics Foundation (nef) andbased on world-class research and expertise, theInner City 100’s mission is to change the perceptionof the inner city from a no-go area to a vibrant placeto do business; to advance UK inner city businessgrowth; to launch a national movement of inner cityentrepreneurs; and to champion inner cityrevitalisation across the country.

2. INNERCITY100. 2003

INNERCITY100. 2003. 3

Dear Honoured Guests, Welcome to the third annual Inner City 100 Awards Ceremony. Thank you for participating with us in this uniqueendeavour to build a sustainable economic base inour inner cities.The Inner City 100 is about recognising outstandingbusiness success in areas that suffer fromdisadvantage and stigma. Yet these businesses aresucceeding, competing and making a positive impactin their local communities.

Our Inner City 100 entrepreneurs aregoing from strength to strength, with anaverage 5-year turnover growth that isincreasing year on year, from 274% in2001 and 503% in 2002 to an astonishing575% in 2003. These one hundredcompanies are also responsible forcreating 5,417 new jobs over the past fiveyears – a truly remarkable achievement.

Our key focus this year has been to lookat the driving forces behind thephenomenal levels of growthexperienced by Inner City 100 firms andwhat role the public and private sectorhave had in this. The results areremarkable and reinforce the messagethat the Inner City 100 entrepreneurs aredynamic, pragmatic and innovative.

Now in its third year, the Inner City 100has established itself as the leadingadvocate on enterprise-led regenerationand compliments our work at the NewEconomics Foundation in providingalternative models of local economicdevelopment.

The Inner City 100 would not be possiblewithout the support of a number ofremarkable partnerships. It is a privilegefor us to thank The Rt. Hon GordonBrown MP, our patron, for championingthe initiative in so many ways.Wholehearted thanks also go to theRoyal Bank of Scotland, Natwest and theUlster Bank, our lead sponsors who haveplayed a pro-active role in thedevelopment of this initiative, and theFinancial Times as our media partner.

We hope that the Inner City 100 willcontinue to inspire us all in valuing theentrepreneurial potential of our innercities, which is critical as the UK strivestowards building a more just andsustainable economy.

Stewart Wallis Sarah ForsterDirector Programme Directornneeff Inner City 100

The Inner City 100 is helping to create amore dynamic, innovative andenterprising Britain. For far too long, theimage of enterprise in this country hasbeen of a closed circle with millions leftout. But I believe that there should be nono-go areas for enterprise culture, andthat the British economy will do bestwhen men and women from the nation’shigh, as well as low, unemploymentcommunities – and from all socialbackgrounds – have confidence that theycan transform their ideas and hopes intobusiness start ups and growing firms,building an enterprise culture genuinelyopen to all.

So in every area of Britain I want theenterprising to go as far as their talentsand potential can take them: a Britainwhere you can work your way up fromunemployment to employment to self-employment, from micro business to

growing business; a Britain where peopleknow what matters is not where youcome from but what you do, not whereyou were born but what you aspire to;and a Britain where we break down theold barriers to opportunity and everyonehas the chance to move ahead.

And the way forward is neither morebenefit offices nor just bricks-and-mortar subsidies but encouraging theentrepreneurial to create and supportprofitable businesses. For the first time,the Government plans to transformblack spots into enterprise areas – freeof stamp duty and red tape, with fasttrack planning – will define inner citiesnot as intractable social problems but asnew markets with competitiveadvantages – such as strategiclocations, underdeveloped retailmarkets, or an untapped workforce.

But now is the time to do more. So inDecember, the Pre-Budget Report willmake it easier to start up a business,help bridge the equity gap, and, becausewe should deregulate where possible,cut the time and cost of VATadministration and announce lower auditburdens on small firms.

This is not just the old way of simplybacking zones of enterprise andforgetting about the people. It is aboutbacking people of enterprise. And withthe help of the Inner City 100, we areuncovering entrepreneurs with ideas andambition, celebrating the success of thefastest growing firms in our mostdeprived areas and changing perceptionsof the inner city as a business location.

I am delighted to support the Inner City100 and proud to be one of its patrons.

Chancellor of the Exchequer, the Rt. Hon. GordonBrown MP. Foreword for Inner City 100, December2003. The Inner City 100 is helping to create amore dynamic, innovative and enterprising Britain.For far too long, the image of enterprise in thiscountry has been of a closed circle with millionsleft out. But I believe that there should be no no-go areas for enterprise culture, and that theBritish economy will do best when men andwomen from the nation’s high, as well as low,unemployment communities – and from all socialbackgrounds – have confidence that they cantransform their ideas and hopes into businessstart ups and growing firms, building anenterprise culture genuinely open to all.



Foreword. This is the third year in which we havecelebrated The Inner City 100 Awards and we canlook back with great pride over what has beenachieved since their launch in 2001. The Awardsprogramme recognises and celebratesentrepreneurial excellence in our inner cities.More importantly The Inner City 100 has begun tobreak down the perception of Britain’s inner citiesas places where it is difficult, if not impossible, forbusinesses to flourish.

The Royal Bank of Scotland Group is theleading lender to businesses in thepostcodes covered by The Inner City 100,our most deprived inner city areas. Wehave been delighted to partner with theNew Economics Foundation inrecognising the success of thesebusinesses and to promote debate onhow we stimulate even more enterprisein these important areas.

The achievements of the 100 companiescelebrated in this year’s awards areimpressive. They employ well over 8,000people between them, they are profitablewith average profits of over £400,000 andin the past five years Inner City 100companies have created close to 5,500new jobs. Interestingly 83% of them ratetheir location as a good place to dobusiness with 63% stating that the innercity is a better place to do business than

it was 5 years ago, acknowledgementthat Britain’s inner cities have seenimportant improvements during thatperiod.

I would like to congratulate all those whohave won awards this year, once again,they are an inspiration and an example ofwhat can be achieved. I wish themcontinued success.

Fred GoodwinGroup Chief ExecutiveThe Royal Bank of Scotland Group


Contents

7 Introduction9 Changing the Inner City

through Competition12 Innovative Strategies

for Growth15 Competing for Finance18 Snapshot of the

Inner City 10020 Winning Contracts23 Government and

Inner City Enterprise

26 Conclusion28 Special Awards29 Regional Awards and

Hall of Fame list30 Micro-start – Street (UK)31 Winners List

Methodology/NominatorsAcknowledgements


Now in its third year, the Inner City 100Index has demonstrated the competitiveadvantages conferred by inner citylocations. The Inner City 100 arerealising the business benefits of beingclosely engaged in their communities,and the majority strive to employ locallyand purchase from local firms. To makethe list this year, a company had to grow167% over the five-year period. Theaverage five-year growth rate of all 100companies was a whopping 575%. Thesecompanies are the true urban “gazelles.”

The Inner City 100 shows that firms areachieving sustainable growth ensuringthey will continue to make contributionsto their local areas and the UK economyfor the long-term. With 97% predicting apositive or very positive future, the InnerCity 100 firms look set to continue theirextraordinary success.

The impact? The companies that makeup this year’s Inner City 100 have—

x created thousands of new jobs,opening up opportunity to inner-cityresidents from a wide variety ofethnic backgrounds;

x generated wealth for entrepreneurs,investors, employees, and entirecommunities through the operationof profitable, tax-paying businesses;

x demonstrated that the distressedareas once viewed as no-go areascan, in fact, be places of opportunity;

x complemented the efforts of publicand non-profit agencies—themselvesunder budget pressure—with private-sector investment and job creation;

x pioneered innovative approaches torecruiting, managing, and developingemployees who in many cases arenew to the UK labour force;

x driven the UK’s knowledge economyas engines of innovation andentrepreneurship;

x served as models and sources ofinspiration for future generations ofentrepreneurs in the UK’s inner cities.

Introduction

Although the national economy has been stable and steady overthe last two years, we haven’t seen nor have we been able torecover the fast-paced growth of the 1990s.

However, there is one bright spot: the 2003 Inner City 100, a groupof dynamic entrepreneurial companies that are growing andthriving in the UK’s economically distressed urban areas—areasonce thought to be the toughest environment anywhere to dobusiness. With combined turnover of £750m and employing over8,300 people, the Inner City 100 are making major contributions tothe inner cities and the UK economy.

In effect, the Inner City 100 represents theleading edge of a new approach to the UK’surban crisis—an approach that relies not oncharity but on the practical competitiveadvantages businesses can find or create ineconomically distressed areas. Thesecompanies are the forerunners and exemplars of this new approach. They showthat it works.

The companies demonstrate something elseas well, something we Britons shouldremember but often forget. Given anopportunity, people from all sorts ofbackgrounds will work hard to build a betterfuture for themselves and their communities.Entrepreneurship has universal appeal. Itbenefits whole communities, not just a fewindividuals.

This report - organized around the questionsmost frequently asked about the Inner City100 - is the story of the remarkablecompanies that make up this year’s list, and ofthe remarkable people who are building them.


WHAT DOES THE TYPICAL INNER CITY100 FIRM LOOK LIKE?Well, none is really typical. But theaverage Inner City 100 company lookslike this:

Date founded: 1992Number of full-time employees: 822002 Sales: £7.4 millionFive-year growth rate: 575%

UNDERSTANDING THE INNER CITY 100BUSINESS MODELCompeting for Change examines fivecentral themes that are integral to thecompetitive performance of the InnerCity 100. These are: location; growthstrategies; finance; customers; andgovernment support for the inner citiesand inner city business.

Five key questions form the basis for thisreport:

What are firms’ impacts on the innercities?The Inner City 100 has demonstrated thecompetitive advantages of being based inthe inner city. Competing For Changetakes this one step further and looks atthe advantages Inner City 100 firms bringto their local communities. We examine

how closely linked the Inner City 100 arewith their local labour markets, localfirms, and the communities in which theyare based. Is there a virtuous cycle forcompeting firms, customers, workforcesand communities?

What are the growth strategies of InnerCity 100 firms?The Inner City 100 have grown rapidlyand successfully. This report examinestheir attitudes to risk and their growthstrategies. Insights are offered intowhich models of growth are mostsuccessful and how to support thesehigh growth firms.

How do the Inner City 100 financegrowth?The Inner City 100 have an extraordinaryaverage five-year growth rate of 575%.Growth of this magnitude requiresaccess to appropriate finance. Competingfor Change builds on earlier Inner City100 reports to examine what type ofgrowth financing Inner City 100 firmshave considered, and what they prefer. Itparticularly examines venture capitalfinance.

Who are the Inner City 100’s customers?This section examines Inner City 100

firms’ customer base. The focus is ondetermining the success firms achieve ingaining public or major private sectorclients. Inner City 100 firms areexamined to understand the challengesthey face in winning contracts andbuilding long-term customerrelationships.

Is Government support working forinner city business and their locations?In recent years, the Government hasbeen making renewed efforts to supportinner city business. This reportinvestigates Inner City 100 firms’awareness of government support fortheir businesses and local areas. Thisprovides insights into the effectiveness ofgovernment policy and initiatives, andinto how implementation of programmescan be improved.

This report and the data gathered fromthe Inner City 100 companies will beused to help direct ongoing research andconsulting programs, as well as tolaunch new research projects in 2004.The Inner City 100 will continue toproduce cutting-edge research that willchange perceptions of the urbanlandscape as pockets of poverty toplaces of opportunity.


Inner City 100 firms are central to theeconomic and social fabric of their localareas and play a crucial role inregenerating the UK’s inner cities.

Last year’s Inner City 100 research foundthat many inner city enterprises wereintimately connected to their localcommunities – the same is true of thisyear’s Inner City 100.

Inner city firms employ local people,purchase from local suppliers and areinvolved in community-related activities.Motivated by a mix of pragmatism andaltruism, all recognise the contributiontheir business makes to inner cityregeneration and, in turn, the benefitsthis brings to their ‘bottom line’.

Inner City 100 firms have impacts ontheir local areas in three significantways:

x Purchasing of goods and servicesfrom local suppliers;

x Employing a locally based workforce;and

x Making contributions, both financialand others, to their local community.

LOCAL PURCHASINGThe majority of Inner City 100 firms buy local goods and services. Of these,70% state that there are clear businessbenefits from local purchasing. This is particularly true regarding theservices firms require, where local

companies often provide a faster andmore flexible response to the needs ofInner City 100 firms. Local suppliers are also able to delivergoods quickly. This is essential for acatering company like PJ’s Foods Ltd,which relies on the delivery of freshproduce. For other companies, thebusiness benefits of local purchasing liein generating reciprocal business – “It’spart of networking…if we buy locally thenpeople will buy from us locally” [KGBCleaning Group].

For some Inner City 100 firms, a localpurchasing policy is part of theircommitment to revitalising inner cityareas. It is a contribution made less forreturns on their business and more inthe belief that they should give back totheir communities. These companiesclearly understand that enterprises canlead regeneration efforts and use theirpurchasing power to achieve this.

Some specialist goods and servicessimply cannot be bought locally and evencompanies highly committed to localpurchasing are forced to source morewidely. The increased popularity of e-commerce may also impact on localpurchasing. TechnoPhobia, otherwisecommitted to buying goods locally, buysall its IT equipment on-line. In addition,the relative decline of manufacturing inthe UK has forced many firms to sourcegoods from outside their locality and, insome cases, from overseas.

LOCAL RECRUITMENTAround three quarters of the Inner City100 have a process in place to attract alocal workforce, suggesting that theircommitment to local recruitment isserious. The benefits of employingpeople who live locally are clear: localpeople know the area and theircommunities and many firms find that alocal workforce is a loyal workforce.These factors result in a highercommitment to the company that helpsreduce staff turnover.

Inner City 100 firms use a range ofrecruitment methods to attract localemployees. Most advertise in localpapers or use local agencies and JobCentres. Some find that ‘word of mouth’works best. Moonfish Limited use anincentive scheme which pays anemployee £200 if someone hired on theirrecommendation stays in post for sixmonths and a further £200 if they stayfor a year. Other firms have builtrelationships with key pools of labour,for example with local universities, tofind the higher level technical skills theyrequire.

Despite this local focus, some Inner City100 firms find that they have to recruitfrom the regional or national labourmarkets where there are skill gaps orshortages locally. As these businessescontinue to grow, their dependence on ageographically widespread workforcemay increase.

Inner City 100 Insight: OneChanging the Inner City through Competition

‘We don’t get a better service or a better price from localcompanies…we do it because we believe in supporting the localeconomy’ (Dundees Ltd).


COMMUNITY INVOLVEMENTMost of the Inner City 100 are involved intheir local communities. We identifiedthree broad groupings of firms:

x ‘Spectators’ - those with littleengagement with their community;

x ‘Strategists’ - those for whombusiness growth and communityinvolvement are intrinsically linked;and

x ‘Saints’ - those who make positivecontributions though they are notinherently linked to growth.

Only a small number of Inner City 100firms are ‘spectators’, with the largestgroup being ‘saints’ followed by asignificant group of ‘strategists’. Thisunderlines the extensive engagement offirms with their local communities.

Over 75% of the Inner City 100 makefinancial or other contributions to theirlocal communities, most commonlythrough sponsorship of local events,clubs or charities or through links withlocal schools and colleges. A substantialnumber of companies are involved inactivities that demand significant levelsof commitment and resource, that gobeyond simply writing a cheque.

Findings show that over 26% of InnerCity 100 entrepreneurs participate inmentoring programmes for buddingentrepreneurs and 13% for young peopleconsidered ‘at risk’. Admiral Leasing Plcis an example. In addition to sponsorshipof a local childrens football team, thefirm has initiated a campaign for

improved customer service byintroducing an award for the best localcompany as voted by readers of theOldham Evening Chronicle. AdmiralLeasing Plc believes that these activitieshave raised its profile in the communityand positioned it as passionate aboutcustomer care. Among the benefits thisbrings is a reputation as a goodemployer; enabling them to attract andretain ‘a good local workforce who arereliable, intelligent and methodical’.

Paver Downes Associates take a broadview of the firm’s role believing that bybuilding a reputation for quality andexcellence, they are helping to buildMerseyside’s reputation as a centre ofmarketing excellence and as anattractive place to do business.

CCoonncclluussiioonn So roles do the Inner City 100 play intheir local communities?

x The majority of Inner City 100 firmsbuy local goods and services andrecognise the ‘business benefits’ ofpurchasing locally. They also believethat a local purchasing policy is partof their commitment to revitalisinginner city areas.

x Around three-quarters of the InnerCity 100 have a process in place toattract a local workforce, suggestingthat their commitment to localrecruitment is serious. Most of theInner City 100 firms find that a localworkforce is a loyal workforce.

x Some firms experience recruitmentdifficulties and have to recruit outsidetheir locality for people withprofessional or niche skill sets.

x Most of the Inner City 100 have someform of active engagement with theirlocal communities, believing there isa competitive advantage in doing so.

KKeeyy rreeccoommmmeennddaattiioonnss x The government, economic

development and enterprise agenciesmust be pro-active in ensuring thatlocal supply chains are both enabledand strengthened to ensure localenterprise activity continues to thriveand prosper.

x A skilled workforce and local labourpool is critical to the productivity andcompetitiveness of Inner City 100firms. Skills gaps and shortages inthe inner cities must be addressed inpragmatic ways by the Learning andSkills Council and the Sector SkillsDevelopment Agency. Targetedprogrammes aimed at inner cityfirms offer strong potential for skillsdevelopment, such as the London-focused Inner City Entrepreneurs’Fund.

x To maximise the benefits of firms’engagement in the inner cities, abroker is required to bring firms andcommunity activities together. Localenterprise agencies, Local StrategicPartnerships or RegionalDevelopment Agencies could play thisbrokerage role.

‘Merseyside suffered from a poor image for many years. If the citydoes well – including our competitors and our suppliers – it’s goodfor everybody in Liverpool.’ [Paver Downes].

Do you Procure Goods and Services Locally?

Inner City 100 Firms in the Local Community

80

Yes

Are There Business Benefits of Local Procurement?

Are There Benefits of Local Employment?

70

71

82

Do You Have Processes in Place to Employ Local Workforce?


Hackney Community Transport is asocial enterprise combining successfultrading with strong social benefits forits local community. Based inHackney’s Ash Grove Bus Depot,Hackney Community Transportprovides for people unable to usemainstream public transport. Theseinclude the disabled and ‘sociallyexcluded’ groups, for example loneparents and refugees.

Through successfully competing forcommercial contracts, the firmgenerates surpluses to fund its coreservices. Hackney Community Transportwins commercial contracts on the basisof its financial proposition and strongrecord of performance. “What we’vedone” says Chief Executive Dai Powell,“is to fund a lot of our work by taking onmainstream bus work”.

Founded in 1983 as a coalition of some 25voluntary sector organisations thatworked together to provide local minibustransport, Hackney Community Transportis intimately tied to its inner city location,both in terms of its mission and itsworkforce. The firm employs the majorityof its staff from the local area, ensuringhigh quality customer service and helpingto retain wealth locally. In addition, thefocus is upon developing staff from entrylevel into management positions, withEnglish language training offered forthose who require it. Hackney CommunityTransport also provides companyresources to the local community andprovides opportunities for training andvolunteering in the area. This, combinedwith the service provided to those notable to access mainstream transport,creates a huge positive impact for thelocal area.

The outlook for Hackney CommunityTransport is very positive, with growthcontinuing apace as the firm increases itsprofile and the value of contracts. Itsinner city location is providing advantagesin terms of proximity to suppliers andcustomers, availability of skilledworkforce, and access to independent,not for profit business support. The firmis also well networked, for example, withthe Community Transport Associationand Transport for London.

Hackney Community Transport is a majorand popular employer in its area, with200 staff that will rise to 300 by January2004. With impressive five-year salesgrowth of 364%, this social enterpriseregularly tops London Transport’sperformance league tables. HackneyCommunity Transport is a company thatknows where it’s going and is arrivingahead of schedule.

Inner City 100 Insight: OneCase Study

HACKNEY COMMUNITY TRANSPORT


x Minimise the need for externalfinance and borrowing;

x Maximise the entrepreneurs’ controlin maintaining the business;

x Increase their market presence; andx Improve economies of scale.

Inner City 100 firms are dynamic. Theirsuccessful growth strategies includemergers, acquisitions, formal supplychain linkages and diversification ofproducts and services. Nearly all (98%)have considered at least one of thegrowth options outlined in Table 1 below.The table below shows the growthstrategies that companies haveconsidered and those that have beensuccessfully executed.

Acquisition of other companies is themost popular potential growth route, butone which less than a quarter of thoseconsidering have actually executed.Finding the right acquisition is the mainproblem, although this has not been anissue for every firm.

Diversification of core business activitiesis the second most popular growthstrategy considered by the Inner City 100and one with a 61% follow through rate.Companies have diversified in every way:new products, new markets, newservices and spinning off new companiesinto new sectors. This diversification hasoften helped companies to groworganically without compromising their

independence – two features that reflectthe Inner City 100 ethos. However, someInner City 100 firms are operating inniche markets, so for themdiversification may be less viable. Mergers have proved much trickier toimplement. Although nearly half of firmshave considered a merger, only 9% ofthese carried this through and not all ofthese produced happy results – ‘We didone and it was awful, we nearly losteverything’ [Tempest Technology Ltd].

When risk taking goes wrong, the resultcan be bankruptcy. None of the Inner City100 has ever been declared bankrupt.But a majority (56%) has been directlyaffected by the bankruptcy of anotherfirm. The main impact is from unpaiddebts, ranging from £4,000 to more than£100,000. This can have an impact onfirms in their most critical phases ofgrowth. Other effects of bankruptcyinclude:

x Increased nervousness in theindustry; and

x Depreciation of company stock whencheap liquidated stock floods themarket.

To minimise exposure, some of thelarger Inner City 100 firms are reticentabout doing business with small firms –‘we deal mainly with blue chips and thepublic sector [because] they are stableclients.’ But for others the risks are

unavoidable – ‘about four or five times ayear we are hit with outstandingbalances when a client goes bankrupt.We have to work with early stagetelecoms companies, which is a risk. Themajority of our business is in thissector.’ [Tempest Technology Ltd]

A majority of the Inner City 100 (77%)think that bankruptcy is inappropriatelyregulated and believe that somecompanies deliberately go bust,‘cheating’ their customers and creditors.

“One catering company…went intoliquidation on the Friday. In the sameunit with the same team they were inbusiness again on the Monday’. ‘We haveseen directors trading when they are infull knowledge that they are insolvent.This is diabolical, but currently difficultto prove.”

The Inner City 100 would like to seebankruptcy regulations tightened tocombat fraud. This could be achievedthrough investigating trading before acompany is allowed to become insolvent,or by ensuring that a firm does not re-emerge shortly after defaulting on itsobligations with a subtle name changeand with the same directors in place.These ‘phoenix firms’ undercut theircompetitors on price because they haveno intention of paying their creditors.

Inner City 100 Insight: TwoInnovative Strategies for Growth

In a culture where entrepreneurs are often viewed as life’s big risk-takers, the Inner City 100 are relatively cautious in their risk taking.Not that they are averse to change and development. Far from it –virtually all are actively considering ways of growing their business,but their preferred growth strategies are those that:


56

44 100

Is bankruptcy appropriately regulated?

Yes

No No

62

38

Is bankruptcy a valuable Łlearning experience?

Has another firm’s Łbankruptcy affected you?

Have you ever been Łdeclared bankrupt?

23

77

At the same time, many Inner City 100entrepreneurs wish genuine businessfailure to be less stigmatised and tomake it easier for entrepreneurs to takerisks and start afresh. The Inner City 100also believe that the attitude tobankruptcy in the United States carriesfewer stigmas and creates a healthierenterprise culture – ‘You’re never anentrepreneur in the US if you haven’tbeen bankrupt’ [Caldeira Limited].

CONCLUSIONSo what can we learn from the Inner City100 about growth strategies?

x Virtually all of the Inner City 100 areactively considering innovative waysto grow their business.

x Consistent with their approach tofunding, Inner City 100 firms’preferred route to growth minimisesthe need for external finance andborrowing while maximising marketshare.

x Lack of market intelligence ongrowth options and appropriatetechnical support may hinder thedevelopment of Inner City 100 firms.This could lead to poor investmentdecisions being made or firms beingdissuaded from pursuing particularmodels of growth.

x Bankruptcy of firms that Inner City100 firms trade with is a common,though not frequent, experience forInner City 100 firms. This leads tosome of the larger firms to avoiddealing with small firms.

KEY RECOMMENDATIONS x Improved understanding is required

of why firms don’t proceed withparticular growth strategies todevelop solutions to overcomecurrent barriers to external growthfinancing.

x Greater direction is needed forbusiness advisors on the mostappropriate growth strategies for

inner city firms. This would also be auseful source of information for firmsseeking advice and hoping to reducethe risks associated with adoptingnew strategies.

x A tightening of bankruptcyregulations is required to combatfraud and prevent the resurrection offailed firms. The Enterprise Act 2002has made significant steps towardsreducing the penalties forentrepreneurs that face bankruptcy,and ensuring creditors receivemonies, but more is required.

Have you considered Łor executed the following? Considered Executed

Merger

Strategic Alliance

Partnerships

Acquisitions

Formal supply Łchain linkages

Diversification

49 9

40 26

43 34

67 23

32 32

55 61

2 firms have not considered any of the options Ł98 firms have considered at least one

TABLE 1: STRATEGIES FOR COMPETING

INNER CITY 100’S VIEWS ON BANKRUPTCY


Squirrel Storage Ltd of Leeds specialisesin providing fully managed documentarchive and retrieval services to theprivate sector. The firm has more than onemillion boxes and eight million separatefiles on its database. Squirrel Storage wasformed in 1991 after a successful £1.5mmanagement buyout. This willingness ofthe management to take responsibility forthe firm’s future has underpinned SquirrelStorage’s development.

A positive attitude towards taking riskshas helped Squirrel Storage prosper.Originally the company offered self-storage as its only service, but when acustomer said they would leave for amore comprehensive service elsewhere,Squirrel ‘thought fast’ and said that it toooffered the same services. The

management immediately bought a van,hired new staff and offered the servicesrequired. This responsiveness andpreparedness to invest in retainingcustomers demonstrated a willingnessto take calculated risks.

When Squirrel Storage wished to compilea major tender for work requiringpartnering with another organisation, the directors visited London, sat in arestaurant and searched the YellowPages for potential partners. They thenvisited the companies identified untilthey found a good match for the tenderand for Squirrel Storage. This highlypragmatic approach initiated a five-yearpartnership bringing considerablecommercial and competitive benefits. At the conclusion of the partnership,

Squirrel Storage bought the other firmand has since bought an additional firm.These partnerships and acquisitionshave helped capture new customers,deepened the service offering to existingcustomers and proved an excellentmethod of expansion. The directors have become experienced at managingdifferent methods for achieving growth,with one director recruited with extensiveknowledge of growth and changemanagement.

Through adopting a considered approachto taking risks, Squirrel Storage hasachieved a five-year growth rate of 216%.The firm has acquired severalestablished clients along the wayincluding Touche Ross, Leeds GeneralInfirmary and Barclays.

Inner City 100 Insight: TwoCase Study

SQUIRREL STORAGE


START-UP FINANCEThe patterns of start-up finance for InnerCity 100 firms provide valuable insightsinto their choice of growth finance.Although the average level of start-upfinance for the Inner City 100 isapproximately £20,0001, most startedwith a much lower amount of capital,with nearly half (48%) relying on lessthan £10,000. Sources of start upfinancing for the Inner City 100 aremarkedly different from the nationalpattern where around seven in tenbusiness owners fund or part fund theirown start up costs2. Virtually all InnerCity 100 firms (98%) used their ownmoney to start the company, drawing ontheir savings, family and friends,redundancy settlements or personalborrowing through overdrafts and credit cards.

Despite this self-reliance, publicly fundedbusiness finance schemes have become amore important source of finance forstart-ups over the past three years.Nearly a quarter (23%) of Inner City 100firms have used these as a source offinance, an increase from 16% in 2002.Five of this year’s companies usedventure capital for start-up finance, whichis also higher than in previous years.

GROWTH FUNDING Nearly all Inner City 100 firms haveambitions to grow and understand thataccess to growth finance is critical.However, venture capital is not thepreferred financing option for the InnerCity 100. Although nearly two-thirds(65%) have considered the suitability ofventure capital, few have pursued this.The main reason is that entrepreneursare reluctant to lose full control of theircompanies.

This hesitancy to use venture capitalseems justified when hearing exampleslike that of Admiral Leasing Plc, whichraised money from a venture capital firmthat then tried to put the company intoreceivership. Yet venture capital canwork for some firms. Three-time InnerCity 100 winner Americana InternationalLtd, and Andor Technology Ltd have usedventure capital to finance their growth.These notable successes should bedisseminated more widely amongst thebusiness community to demonstrate inwhat circumstances venture capital canbe beneficial.

The Inner City 100 are not risk-averse,but prefer organic growth funded byinternal finance to external options i.e.

they prefer to finance growth throughmeans that they can control. By far themost common means of financinggrowth is to re-invest profits back intothe company. This ethos perhaps resultsfrom the huge personal investments intime, money and sheer hard work thatthese entrepreneurs have made. HornerBrothers Print Group Ltd epitomise thissentiment: ‘We have looked at venturecapital for growth funding but are loatheto use it…our ethic is to run the businessthe way we run our personal finances…ifwe can’t afford it ourselves, we can’thave it’.

Inner City 100 entrepreneurs realise that incremental growth is not whatventure capitalists are seeking. However,in several industries significant long-term investment is essential. Many of theInner City 100 seeking investment wouldprefer a financing source that was longerterm and less ‘invasive’ than venturecapital. In addition, venture capitalistsmay want to re-consider their minimuminvestment levels to ensure Inner City100 firms can absorb and manage capital injections.

Inner City 100 Insight: ThreeCompeting for Finance

During the past three years, Inner City 100 research has examinedthe extent to which inner city firms face problems accessingfinance to support their growth. This year we’ve taken a closer lookat venture capital finance to examine trends and the lessons thatcan be learned.

Almost a quarter (23%) of the Inner City 100 identify ‘access tocapital’ as the biggest factor currently limiting the growth of theircompanies. In principle, venture finance is well-suited to supportthe growth plans of these ambitious firms, but historically take-uphas been low.


UNPACKING GROWTH FUNDS To help increase the amount of equityfinance available to small businesses,various growth finance packages havebeen introduced. These include:

x The Bridges CommunityDevelopment Venture Fund – thisprovides venture capital to viablesmall businesses that demonstratehigh growth potential and are locatedin the 25% most deprived wards inEngland;

x Regional Venture Capital Funds –overseen by the RegionalDevelopment Agencies and managedby private sector Fund Managers,these funds aim to tackle the ‘equitygap’ faced by small businesses; and

x Early Growth Funds – thisencourages risk capital funding ofstart-ups and ‘growth potential’ smallbusinesses.

These initiatives have yet to make animpact with Inner City 100 firms, withonly 12% being aware of the EarlyGrowth Funds and none reporting anapproach to (or from) their RegionalVenture Capital Fund Manager. However,Bridges Community Ventures are pro-active in engaging with Inner City 100firms. Such efforts need to beencouraged by all stakeholders if thegrowth fund market is to become moreaccessible to inner city businesses.

Lack of knowledge about where to go forfinancing and how to put a financingproposal together are also factors in thelow take-up of external funding. As one

Inner City 100 winner, ImpactCommunity Developments noted: “Weare considering venture capital at thisvery minute…although we are unsurewhether we would be eligible, or for thatmatter attractive, to a venture capitalfirm”.

CONCLUSIONSo what can we learn about growthfinance and the Inner City 100?

x Inner City 100 firms prefer long-terminvestment options and to re-investprofits to finance growth. If there is atrade off between acceleratinggrowth and retaining control, amajority of the Inner City 100 will optfor control. This demonstrates theirdesire to remain in control over allaspects of their business and to takerelatively low risks to fund theirgrowth.

x Despite the UK having the mostsophisticated venture capital marketin Europe, take-up by the Inner City100 is surprisingly low, thoughincreasing year-on-year.

x Inner City 100 entrepreneurs may nothave appropriate exit strategies inplace or be ‘investment ready’ toreceive venture capital or othergrowth finance schemes.

x Almost one quarter of the Inner City100 view ‘access to finance’ as thebiggest constraint to their growth.

KEY RECOMMENDATIONS x The marketing of venture capital,

intelligence on potential venture

capital beneficiaries and othergrowth fund options needs to beimproved significantly to inner citybusinesses. Regional DevelopmentAgencies could seed investor forumsto bring investors and growthbusinesses together. This isparticularly important becauseventure capital networks are quiteclosed, excluding many Inner City 100firms, particularly women-owned andblack and minority ethnic businesses.

x Success stories of growth fundingfrom external sources need to beactively promoted.

x Mainstream business support andenterprise agencies need to providecustomised services to inner cityfirms across industry sectors to makethem ‘investment ready’. They alsoneed to identify appropriate growthfund packages for these firms.

x Inner city firms need investmentproducts that are attractive to theinner city market: low risk, long termand not severely diluting ownershipand control.

x Growth finance schemes are requiredthat recognise the desire of someentrepreneurs to grow more graduallyand retain greater control of theirbusinesses.

1 Global Entrepreneurship Monitor, United Kingdom,20022 ‘Small Firms, Big Business’, A review of small andmedium sized enterprises in the UK, SBS, 2003

6

38

265

35

Have you actively Łconsidered Venture Capital?

Venture Capital and the Inner City 100

Yes

No

15

10

8

14

Some companies had more than one response

Why have you not pursuedVenture Capital?

Share profits

No need

Share ownership

Don’t want to lose control

Firms combining Venture Capital (VC) with Early Growth Funds (EGF)and/or Small Firms Loan Guarantee Scheme (SFLGS)

VC and EGF

VC and both SFLGS and EGF

VC and SFLGS


B-Plan Information Systems Ltd is athree-time winner of the Inner City 100.Founded in 1993 by two innovative anddetermined brothers from Kurdistan, B-Plan is realising its vision to lead thefield in business planning and financialmanagement software. By carefullyseizing opportunities, Chief ExecutiveShirko Abid and his brother Farhad arenow major players in the UK’s budgetingand costing software markets. B-Planwas the first of a growing cluster ofsoftware firms in Manchester’s SciencePark and has capitalised on its inner citylocation.

In this year’s Inner City 100, B-PlanInformation Systems has a five-yeargrowth rate of 194%; this follows growthrates of 167% and 405% in the 2001 and2002 Inner City 100 competitions.Sustaining B-Plan’s extraordinary growthhas required an innovative approach toraising finance.

To maintain its competitive edge, B-PlanInformation Systems has raised venturecapital no fewer than three times. On thefirst occasion, venture finance was raisedto develop a new web basedbenchmarking service. In 2000, B-Plansecured venture finance to make thestrategic acquisition of Basingstoke-based APTOS Financial Solutions. Thisacquisition significantly enhanced thefirm’s product offering and marketpresence, representing a significant stepforward for B-Plan. APTOS now formsthe core of the company’s service to bothpublic and private sector organisations.APTOS also provides a strong platformfor growth in the pan-European financialsystems and services market.

This was not the end of B-Plan’s venturefinancing and in 2001 the companyraised £1 million to fund future growth,enabling re-financing and offeringadditional flexibility for the firm’sexpansion. This ability to raise finance

required commitment and robustinternal processes to manage venturecapitalists’ due diligence processes.Whilst this due diligence was lengthy and required great detail about thecompany’s operation and accounts, B-Plan was successful on all threeoccasions.

Choosing the venture capital route tofinance growth has been the right choicefor B-Plan. The firm continues to deliverhigh quality client-focused solutions andhas built partnerships with several majorfirms including Microsoft and Oracle. B-Plan now has 65 full time employeesand a turnover in excess of £5.5million.

B-PLAN INFORMATION SYSTEMS LTD

Inner City 100 Insight: ThreeCase Study


Top 3 Competitive Advantages1. Transport Infrastructure2. Access to customers3. Availability of good,

affordable premises

Top 3 Competitive Disadvantages1. Perception of crime2. Actual crime3. Availability of good,

affordable premises

Top 3 Ways That Companies DifferentiateThemselves from Competitors1. High quality customer service2. Specialisation in product/service3. Range of product/service offerings

Top 3 Factors Limiting Growth1. Recruiting skilled workforce2. Access to capital3. Lack of market demand/attracting

customers

2002 average profitability was 6.9%, mean was 6%

Profitability PercentageLoss 80 % 91 – 5% 326 – 10% 2011 – 15% 1416 – 20% 921%+ 8

Competitive Advantages & Disadvantages

Profitability (%

83% rate their current location as a good or excellent place to do business.

63% rate their location as a better or much better place to do business compared to 5 years ago.

Snapshot of the 2003 Inner City 100

Industries (%)

Agriculture 0Energy, water 1Manufacturing 7Construction 10Wholesale / Retail 15Hotels and catering 2Transportation& Communications 6Financial 5Business activities 27Education 4Health & Social 6Other, high tech 7Other social/personal activities 5Other 5

Sector Profile

Location

Average 5-year growth rate 575%Average age of companies 10 yearsAverage 2002 sales revenues £7.4 millionTotal full-time equivalent employees 8,238New jobs created between 1998 and 2002 5,417

Growth

Sector (%)

Size (%)


City TotalBelfast, NI 3Birmingham 3Blackpool 1Bolton 2Bradford 3Bristol 1Coventry 1Dundee, Scotland 1Glasgow, Scotland 6Halton 2Ipswich 1Kent 1Kingston upon Hull, 1Leeds 3Leicester 1Liverpool 3London 25Manchester 7Middlesborough 3Newcastle-Upon-Tyne 1Newtownabbey, NI 1Norwich 4Nottingham 4Oldham 1Peterborough 1Plymouth 1Rochdale 1Rotherham 1Salford 3Sefton 1Sheffield 4Shipley 1South Tyneside 2St. Helens 3Stoke-on-Trent 1Sunderland 1Wolverhampton 1

96% of companies are involved with their community (in one or more ways)

Type of Involvement Number of companies involvedVisits/placements/links with schools/colleges 57Sponsorships of local events/clubs/charities 61Use of company resources for local community group 18Membership of civic, charitable, local bus or education 41Free or subsidised provision of goods & services 22Involvement in local environment initiatives 19Company support for staff involvement in charity 44Mentoring of other entrepreneurs 26Mentoring of at-risk young people 13Other 12

Inner City 100 companies employ 8,238 people

Inner City 100 companies have created 5,417 new jobs in five years

Inner City 100 firms paid their employees, on average, a minimum of £5.70 per hour

12% of Inner City 100 firms state that at least 50% of their workforce is from ethnicminority groups

City Representation

Community Impact

Workforce

2001 Index 2002 Index 2003 IndexAverage Growth Rate 274% 503% 575%Average Revenues £5.1 million £6.8 million £7.4 millionAverage FTEs 57 70 82New Jobs created 3,500 4,559 5,417% Ethnic-Minority 11% 15% 12%% Female sole founder 4% 13% 5%% Female founder/co-founder 4% 17% 35%

Three year Analysis

Region TotalEast Midlands 5Eastern Region 6London 25North East 7North West 24Northern Ireland 4Scotland 7South East 1South West 2West Midlands 6Yorks & Humberside 13

Regional

Average age 44 yrs

Female founder / co-founders 35%Female Managing Directors 9%Male founder / co-founders 65%

ETHNICITYWhite 87%Total Ethnic-Minority 12%No answer 1%

Black Caribbean 3%Indian-Caribbean 1%Indian 4%Pakistani 1%Other 3%

40% of MDs had immediate family members that owned and ran businesses.77% of MDs founded their company.

MD/Founder Information

The Future

How do you describe the overall outlook foryour business in the next 5 years?

97% of the Inner City 100 are positive to very positive on the overall outlook for their business in the next 5 years


Winning contracts to supply the publicand private sector underpins thefinancial health of Inner City 100 firms.At the same time, public and privatesector procurement can be a lever tostimulate local enterprise activity andimprove the local economy. So what arethe experiences of Inner City 100 firms inwinning public and private sectorbusiness?

SECURING PUBLIC SECTOR CONTRACTS Inner City 100 firms supply goods andservices to the private sector (82%) andthe public sector (68%).

Much public sector procurement isthrough staged processes, which includeapplication and acceptance onto anapproved supplier list prior tocompetitive tendering for specificcontracts. Although most of the 68 firmssupplying the public sector are onapproved or preferred supplier lists,getting there is ‘a cumbersome andlongwinded process’ [Stairlifts (Scotland)Limited]. It can also be an expensiveprocess, over and above the costs ofpreparing applications – ‘you have to payto get on some lists…the public sectorbody has contracted to a company whodemands payment for being on the list’[Squirrel Storage].

In some cases, the public sector requireslarge volume supplies and highlyregulated quality of goods and services.This presents a restriction for someInner City 100 firms in winning contracts,as many favour a customised approachto delivering goods and services. Evenfor companies that are successful insecuring public sector contracts, thedemand for high volumes can be difficultto meet. For example, the cateringcompany Dundees Ltd often has aproblem with the scale of public sectororders and loses out on this work tolarger suppliers.

The frequency with which companies applyfor public sector contracts varies hugely;from daily for the home lifting installationcompany Stairlifts (Scotland) Limited toonly a few times each year for StarfinderLtd, a customer contact company. Successrates are similarly varied and probably saymore about the competitiveness ofdifferent sectors than about the strengthsof individual companies. GreenwichLeisure Ltd, with a 100% success rate insecuring public sector contracts, is anestablished player operating in a nichemarket, while Gas Call Services facesgreater competition for its gasmaintenance services and secures onlyone in ten of the public tenders theysubmit. For some firms, quality assuranceaccreditation can be an important factor in

meeting public sector procurementrequirements. The Punjab Kitchen findsthat ‘having all the right accreditation’ is akey factor in their 50% success rate inwinning public sector contracts.

PUBLIC OR PRIVATE SECTORPROCUREMENT?Although there are many successstories, some Inner City 100 firms are sodiscouraged by the low returns on theirinvestment when competing for publicsector contracts that they have stoppedapplying for them. Others find that thepublic sector procurement processdoesn’t enable them to demonstratetheir strengths – ‘we are able to sell ourapproach much more effectively tocorporate clients than through themonotonous public sector applicationprocess’ [Moonfish Ltd].

Of the Inner City 100 firms that supply toboth the public and private sectors,almost all prefer to work with privatesector clients. It is not necessarily easierto win private sector work, but theprocess is clearer and easier forbusinesses to relate to. Inner City 100firms find the more interactive process ofsecuring private sector contracts moresatisfying than the bureaucracy of thepublic sector. Factors such as personalrelationships can be critical in securingprivate sector work.

Inner City 100 Insight: FourWinning Contracts

‘Winning private sector contracts is a simpler process and onceyour ‘slippers are under the bed’ they come back to you…you don’thave to re-qualify every time you are providing a slightly differentproduct’. McGrattan Piling


However, winning private sector clientsalso takes time. It took TempestTechnology Ltd two and a half years toget on the approved supplier list forBritish Telecom, while another Inner City100 winner, Interactive Ideas Ltd,suggest that it can take five to sevenyears to cultivate clients. The processrequires perseverance, determination,and hard work – qualities which InnerCity 100 entrepreneurs have inabundance.

Nonetheless, both public and privatesector procurement have theiradvantages: with the public sector thereis minimal risk of bad debt and relativelyprompt payment, whereas with theprivate sector there is less bureaucracy,both in bidding for and executing work.

CONCLUSIONSo what do these Inner City 100 firmstell us about procurement?

x Many of the Inner City 100 firmssupply goods and services to theprivate sector and the public sector.Firms cite the more interactiveprocess of securing private sectorcontracts as more satisfying than thelong struggle to apply for and winpublic sector contracts.

x Inner City 100 firms are competitive,but when procurement requiresuniform quality and high volumesupplies (as with many public sectorcontracts), firms often lose out tolarger suppliers.

x Public procurement success ratesvary, which says more about thecompetitiveness of different sectorsthan about the strengths of individualInner City 100 firms.

x Local spend policies can bring hugebenefits to local communities andbusinesses. However, public policieson procurement are not entirelygeared to this objective and theselocal economic impacts are notalways considered.

KEY RECOMMENDATIONS x A customised package of support is

required to capacity build firmswishing to secure public and majorprivate sector customers. This willencourage and retain local firms inthe procurement process, as well asassist local firms to be ‘fit to supply’goods and services.

x Models of good procurement practicewith case study examples need to bedisseminated widely to bring about ashift in organisational culture in boththe public and private sectors.

x The public sector should makegreater efforts to split contracts intosmaller elements and ensure thatthese are marketed to inner cityfirms through.

x The public sector must ensure thatcontracts are open to inner city firmsand streamline the process throughwhich firms can bid for contracts.Improved marketing and guidance toinner city firms is required on how togain approved and preferred supplierstatus.

x The UK should consider developingUS-style regional supplierdevelopment contracts. These aredesigned to provide direct linksbetween corporations in the UnitedStates and minority-ownedbusinesses. The US-based NationalMinority Supplier DevelopmentCouncil started in 1972 and now has3,500 corporate members working toincrease procurement and businessopportunities for minority-ownedbusinesses of all sizes. Theorganisation operates on a regionalbasis to certify and matches morethan 15,000 minority-ownedbusinesses with corporations likeCoca Cola, McDonalds and Verizon.

We have found the private sector tender style advantageous. Itsless cold than the public sector where you just submit your bid inresponse to this big generic public notice. With the private tendersit’s a more involved, more interactive process with the customerwhere we can really specialise and differentiate our service’Horner Brothers Limited

Inner City 100 Insight: FourCase Study


Action For Employment’s (A4e) mission isto ‘Improve People’s Lives’. Sheffieldbased A4e is a pioneer in bridging thegap between the public and privatesectors. The firm has wongroundbreaking contracts with the publicsector, arguing that a private sector firmwith the right skills and ethos can delivermany services appropriately. A4e has awide range of activities including runningnearly 100 Job Centres and operatingtwo Business Link franchises in CountyDurham and Humber, the first privatesector company to do so.

Founded by Emma Harrison in 1991 aftershe grew frustrated with the purpose ofher previous training organisation, A4ebegan by focusing on getting the long-term unemployed back into work. A4e isnow a significant outsourced supplier ofservices to both the private and publicsector with the focus upon recruitment,

training and business solutions. A4e is constantly diversifying and provingitself in new fields that have traditionallybeen the preserve of government ormajor private sector firms. Mark Lovell,Group CEO, is continually seeking newmarkets and business opportunitieswhilst being careful to ensure thatsystems are in place to cope with thefirm’s extraordinary growth. By operatinga carefully organised divisional structurewith in-house expertise in tendering forgovernment contracts, A4e has beenable to manage its growth without over-stretching the capacity of its seniormanagement. The firm now has anumber of divisions including A4eTraining, A4e Educate and A4eConsulting.

A4e has leveraged its experience ofpublic sector contracts to deliver‘Business Success for Childcare’, a

national programme providing freebusiness support and training tochildcare providers. The Programme is aSure Start initiative developed anddelivered by A4e. The firm also operatesthe Swindon Brokerage, an initiative tocombine the purchasing power ofschools, nurseries and colleges toensure that they receive competitiveprices from national suppliers of goodsand services.

A4e’s track record of delivery to thepublic and private sectors has helped itgrow by 1,892% over the past five yearsand it now employs over 1,000 people.With plans to diversify further and withcurrent forays into childcare amongothers, A4e looks set to benefit from itsstrong track record and relationshipswith government at all levels.

Action 4 Employment Limited (A4e)

The picture is mixed.

KNOWLEDGE AND AWARENESS Knowledge of individual governmentinitiatives to support inner city businessvaries widely. For more recent schemes -such as the abolition of stamp duty on allnon-residential property transactions inthe designated Enterprise Areas –awareness is relatively low at 36%. Thesame can also be said of Early GrowthFunds that provide equity and loanfinance to enterprises in deprived areas.Only 12% of firms have heard of thisinitiative. In contrast, nearly half of theInner City 100 (44%) know of the taxcredit for research and development.

More established schemes are widelyknown – nearly two thirds know about theSmall Firms Loans Guarantee Scheme(SFLGS). However, given its potentialusefulness in helping firms access loans,this is a scheme all Inner City 100 firmsshould know about. Feedback on theSFLGS is generally positive, with InnerCity 100 winner Bio-Kinetic Europe Ltdaccessing it twice to help fund theirexplosive growth, first receiving £50,000and then £200,000 to move premises.However, some firms report that banksare reticent to use the SFLGS, effectivelypreventing firms’ access.

In all, the variance in responses from theInner City 100 suggests that themarketing of new and existing businesssupport schemes is inconsistent.Whether this is due to the methods usedby business support agencies or the wayin which certain ‘products’ are positionedin the market is unclear. Nonetheless,this requires attention by the Governmentto ensure all business support schemesare marketed in an appropriate mannerto inner city firms.

BUSINESS SUPPORT Many of the Inner City 100 have usedbusiness support schemes, but nearly 1in 5 of the entrepreneurs avoidgovernment-sponsored business supportprogrammes altogether, finding them‘difficult to access’ and ‘convoluted’.

One entrepreneur commented thatgovernment assistance is directed to thefirst year of a firm’s existence, but that thethird year is the time of real challenge.This is a sentiment shared by many. SomeInner City 100 firms saw themselves asineligible for support, due to:

x The over-emphasis of currentbusiness support services on helpingstart-ups;

x Operating in a ‘traditional’ sector thatis seen by business support agenciesas too ‘unattractive’ to assist; and

x Being too ‘large’ to receive help.

Among the Inner City 100 receivingbusiness support, most comes fromBusiness Links (64%) or their LocalAuthorities (47%). Benefits received bythe Inner City 100 include assistance inaccessing grants and loans, support togain quality assurance accreditation suchas ISO 9000 and identifying and sign-posting training opportunities.

A minority of Inner City 100 firms usemore than one agency to access businesssupport and are ‘clued-up’ on how tocreate the right package to resource theirneeds. This small group have become‘experts’ at accessing public funding andsupport, and thus, have developed goodrelationships with business supportagencies and public authorities. As onefirm put it, ‘whatever initiative is going,we will try to make the most of it’. This highlights two important lessons.

First, if firms want to benefit fromgovernment-sponsored business supportprogrammes they have to be pro-active intheir efforts. Second, the governmentneeds to find better ways of simplifyingand making more demand-responsivetheir business support schemes. Oursurvey with the Inner City 100 suggeststhat this has yet to be realised on awholesale basis, which means that thedialogue between business supportagencies and the Inner City 100 is not asstrong as it could be.

ENTERPRISE-LED REGENERATION The government is committed to involvingbusinesses in policy making. Yet lessthan 10% of the Inner City 100 have beeninvolved in developing policies or beenconsulted about them. When it comes toenterprise-led regeneration initiatives,awareness amongst the Inner City 100 isrelatively low. Several former Inner City100 winners said that they had learnedabout government regeneration initiativesonly after becoming winners on the InnerCity 100 Index.

Approximately 1 in 5 of the Inner City 100knew about Business ImprovementDistricts, City Growth Strategies orBusiness Planning Zones1. Moreimportantly, just a third of the Inner City100 knew of the Neighbourhood Renewalprogramme, which indicates how effectivebusiness engagement is in this flagshipprogramme designed to improve socio-economic conditions in deprived areas.

The government recognises the leadingrole businesses can play in regeneratinginner cities and the Inner City 100 aretypically aware that their localitiesreceive regeneration monies. However,there is still room for the government toengage them more in strategies and

Inner City 100 Insight: FiveGovernment and Inner City Enterprise

The government has made progress on improving support forbusiness in the UK’s inner cities, so just how helpful are Inner City100 firms finding government initiatives? How involved are InnerCity 100 firms in government-funded regeneration schemes andhow relevant are these?


Premises

Crime

Training

Finance

General environment

quite/very unhelpful

neutral quite/very helpful

24

23

55

33

51

40

44

30

38

31

33

36

15

29

18

How helpful is ŁGovernment support Łfor Inner City 100 firmsfor...

Supported by and/or engaged with?

Local Authority

RDA

LSP

URC

Business Link

Gvn Office

Yes

47

33

27

11

64

27

18 noneŁ82 at least one

% firms with knowledge of ?

Stamp Duty

SFLGS

CDFIs

Early Growth Funds

R and D Tax

Yes

36

63

22

12

44

% of firms aware of

Neighbourhood Renewal

Business Planning ŁZones

City Growth Strategies

BIDS

33

16

20

20

20 had heard of none80 had heard of at least one

Yes


initiatives designed to regenerate innercity areas.

Where the Inner City 100 have beenengaged in ‘policy making’, this ispredominantly at a local level with theregeneration or neighbourhood renewalteam of their local authority, rather thanat sub-regional or regional level wherereal policy is developed and strategicdecisions are made. For example, only13% of the Inner City 100 have beenapproached by a Local StrategicPartnership and just 11% by a RegionalDevelopment Agency. Again, this saysmuch about the dialogue (or lack of)amongst strategic regeneration playersand the Inner City 100 - firms that arecritical to enterprise-led regeneration.

However, there are a few exceptions. Onecompany, based in Hoxton, belongs to theLocal Economic Partnership, works inpartnership with the LondonDevelopment Agency and Hackney’sNeighbourhood Renewal team. It also co-ordinates the Shoreditch Business Forumand is a member of the London BusinessSupport Network. Such examples arerare and whether the City GrowthStrategies initiative can eventuallyprovide the ideal enterprise-ledregeneration model is to be determined.

What is fundamental to enterprise-ledregeneration is to give businesses real‘purchasing power’ in the decision-

making process, rather than thetraditional ‘business representation’model that currently exits. The Inner City100 is proof of a viable concept – that theUK’s inner cities have tremendousmarket potential and that these dynamicbusinesses hold the key to revitalisingeconomically distressed areas.

CONCLUSIONSSo what do the Inner City 100 tell usabout government initiatives for businesssupport and enterprise-led regeneration?

x Many Inner City 100 firms areunaware of the range of businesssupport schemes available. Moreworryingly, a significant number offirms choose to disengage frompublic sector programmes altogether,believing them to be overlybureaucratic and offering the wrongtype of support. However, Inner City100 firms that do use publicly fundedbusiness support programmes findthem of benefit to their business.

x A majority of the Inner City 100 arenot engaged in enterprise-ledregeneration initiatives, even thoughthey are aware that their areasreceive regeneration monies. Thissuggests that they do not possess theinformation or contacts to becomeengaged.

KEY RECOMMENDATIONS x Government and agencies at all levels

must be more ‘entrepreneurial’ aboutsupporting the Inner City 100: greaterresponsiveness to business needs,improved dialogue and fewer, butmore effective programmes arerequired. In general, the marketing ofnew and existing business supportschemes needs to improve.

x The public policy focus onencouraging start-ups in deprivedareas overlooks the importance ofsupporting existing businesses insustaining and growing theiroperations. It also underminesincentives to retain businesses intheir inner city locations. A greaterfocus on business retention wouldensure that businesses remain thekey drivers of job and wealth creationin these areas.

x If enterprise-led regeneration is towork, then there has to be moreeffective engagement of Inner City 100firms with Local StrategicPartnerships, Regional DevelopmentAgencies and, where appropriate,Urban Regeneration Companies. Themodels of engagement that aredeveloped must give these firms a realvoice in the decision-making process.

1. We recognise that some schemes are attheir pilot stages.

GovernmentSupport and theInner City 100

Frustrated with the quality of pre-packaged meals available in UKsupermarkets and inspired by his travelsin Asia, Charlie Bigham decided to createand manufacture high quality, ‘ready tocook’ meals.

Starting from a kitchen table in 1996,Bigham’s Ltd now employs over 80people and supplies to several householdnames, including Waitrose and Harrods.

After founding the firm, Charlie Bighamvisited fifteen banks in an attempt toopen a business bank account but wasrefused by them all. He had writtenbusiness plans professionally in aprevious job and the banks liked his plan.However, because Bigham had noexperience of the food industry, thebanks refused to open a businessaccount or loan the £20,000 he wasseeking. Undeterred, Bigham found thestart-up capital from his own pocket.

Perhaps this experience led him toconsider public sector support for hisgrowing business. This avenue ofsupport has been instrumental in thefirm’s growth and has helped Bigham’sachieve the scale required to compete inthe food manufacturing industry.Bigham’s is based in the Park RoyalBusiness Park in London, one of thelargest collections of businesses inEurope and home to a significantpercentage of London’s food industry.Park Royal Business Park is managed bythe Park Royal Partnership, which isfunded by private sector businesses, thelocal authority and London DevelopmentAgency. This public-private partnershiphas been central to promoting andimproving the general environment ofPark Royal and in nurturing new firms.

Bigham’s has been greatly assisted bysuccessful applications to the SmallFirms Loan Guarantee Scheme. This has

enabled Bigham’s to access funds tobuild the firm’s capacity and to developthe high standards of food productionrequired by major clients. CharlieBigham’s success in accessing publicfunds and support programmes is partlyattributable to his knowledge of fundingstreams developed in his earlier role asa management consultant. In addition,he has built a management team that isable to construct professional bids, forexample, for staff training through theInner City Entrepreneurs Fund.

With an extraordinary five-year growthrate of 1,292%, and having recentlydiversified into catering, Bigham’s iscontinuing its success with little publicassistance. However, the initial supportreceived was instrumental in building thebusiness to where it is today.

BIGHAM’S

Inner City 100 Insight: FiveCase Study


Inner City 100 firms are finding profitableopportunities across the UK and in themajor industrial sectors. Theydemonstrate that there is no relationshipbetween an area’s level of disadvantageand achieving business success. TheInner City 100 are important role modelsfor aspiring entrepreneurs in the UK’seconomy.

FIRMS’ POSITIVE IMPACTS Fast growth Inner City 100 firms have acrucial role in creating and retainingwealth in the UK’s inner cities. Thesefirms have major positive impacts ontheir communities through theemployment of local people, spending onlocal goods and services, and providingdirect financial contributions to theircommunities. Their intimaterelationships with their local areasprovide the Inner City 100 with significantcompetitive advantages that are

essential to the continued regenerationof the UK’s inner cities.

RISKS AND REWARDFirms in the Inner City 100 are a bedrockof innovation and entrepreneurship in theUK. These firms have adopted innovativestrategies for growth includingacquisitions, mergers, diversifying theirproduct portfolios, and forming strongsupply chain linkages. Supporting thesefirms in identifying appropriate growthstrategies and providing them withenhanced market intelligence will helpmaximise this innovation. Ensuring thatthis entrepreneurial activity continues toprosper is central to the the UK’sknowledge economy.

FINANCING GROWTH Inner City 100 firms have accessedexternal sources of finance, but arereluctant to enter agreements that

involve losing any control of theirbusinesses. This reflects their ethos ofindependence, hard work, andwillingness to bear responsibility fortheir firms’ performance and workforce.Nevertheless, much can be done tobridge the gap between current venturecapital offerings and inner city firms,both in terms of improved informationand networking, as well as with newproducts that offer more ‘patient’ capital.

PROCUREMENTThe majority of Inner City 100 firms areactively trading with both the public andprivate sectors. Ensuring that Inner City100 firms have access to both public andprivate sector procurement opportunitiesis central to continuing their wealthcreation in the UK’s inner cities. Thepublic sector must ensure that contractsare open to inner city firms andstreamline the process through which


ConclusionContinuing to Compete for Change

The Inner City 100 have achieved the holy grail in business ofcombining growth and profitability with huge positive impacts ontheir local communities. With record five-year growth rates andstrong profitability, this year’s Inner City 100 have created over5,400 jobs in the past five years.

firms can bid for contracts. In addition, toenhance small firms’ access to largeprivate sector players, supplierdevelopment networks should be built tocreate new supply chain linkages asexemplified in the United States.

GOVERNMENT SUPPORTThe Government has made considerableprogress in supporting inner cities andtheir firms, with over 60% of firmsreporting improvements in their localenvironments. However, weaknessesremain in the design and marketing ofappropriate business supportmechanisms. Though many of the InnerCity 100 have engaged with some publicsector agency for business support,there continue to be frustrations with thetimeliness and quality of support offered.

WOMENFemale entrepreneurs have made

significant progress in this year’s InnerCity 100, with 35 women either foundersor co-founders of firms. This is verypositive, but much more needs to bedone to ensure that women areencouraged to start firms and haveaccess to established financial networks,particularly venture finance. It is asobering thought to consider that thereare only nine female managing directorsin the Inner City 100.

THE FUTURE97% of Inner City 100 firms areoptimistic about their business prospectsover the next five years. This is not naïveoptimism, but rather reflects their pastsuccess in achieving growth andprofitability and their plans for thefuture. The old image of inner city firmson the brink of financial disaster lurchingfrom crisis to crisis has been dispelled.Inner City 100 firms are capitalising on

market opportunities in theircommunities, at a national level andinternationally, while making hugecontributions to their local areas. Bigbusiness could learn a few lessons fromthese inner city firms about how tocombine outstanding financial successwith significant positive impacts on theirlocal communities.


Training for Life

CAPITAL MANUFACTURING AWARD Over the past few years, themanufacturing industry has been on arelative decline in the UK. However, theInner City 100 Index has shown some realresiliency and innovations in this sectorwith 12% of the index coming from themanufacturing sector. Sponsored by theLondon Development Agency, this awardgoes to the fastest-growingmanufacturing firm located in London. Winner: Bighams Ltd, LondonSponsor: London Development Agency

CAPITAL PEOPLE AWARD The Inner City 100 companies haveshown that they are very committed totheir workforce and, on average, offermore benefits than many mainstreamcompanies. Staff training is an importanttool for filling skill gaps and retainingemployees. Sponsored by the LondonDevelopment Agency, the Capital PeopleAward goes to the London firm thatinvests the highest percentage of its totalturnover on staff training. Winner: Training for Life, LondonSponsor: London Development Agency

COMMUNITY LEADERSHIP AWARDLast year, the New EconomicsFoundation created an inner city ‘ImpactIndex’, which measures business impacton local employment, local purchasingand community giving. NEF has carefullyexamined the social and economicimpacts of the winners on theirsurrounding community. It shows thatover half the enterprises are having asignificant positive impact on theircommunity and some of the most positiveimpacts come from the fastest growingcompanies. Businesses having a positiveimpact on their communities are one ofthe most encouraging aspects of theIndex. Sponsored by the Office of theDeputy Prime Minister, the CommunityLeadership Award is presented to thebusiness that has had the greatestimpact in their local community. Winner: Hackney Community Transport,London Sponsor: Office of the Deputy PrimeMinister

ECONOMIC INCLUSION AWARD When a business employs inner cityresidents, it has one of the greatestimpacts on the community by helping tocreate jobs, income and wealth for localresidents. Sponsored by the SmallBusiness Service, the Economic InclusionAward is given to the Inner City 100 firmthat employs the highest number ofpeople from within a 1-mile radius of itslocation. Winner: Dundees Ltd, Newcastle-Upon-TyneSponsor: Small Business Service

ETHNIC MINORITY ENTREPRENEUR AWARD Twelve per cent of the Inner City 100 arefrom ethnic minorities, higher thanexpected from the UK average populationand double the national rate for smallbusiness. Finding and celebratingexamples of successful ethnic minorityenterprise is an important aspect of theInner City 100 Index. Sponsored byBusiness Link for London, the EthnicMinority Award is presented to one of thefastest-growing ethnic minority-ownedbusiness on the Index. Winner: 2XL Recruitment, LondonSponsor: Business Link for London

GREEN AWARD Companies that show a commitment toenvironmentally friendly policies, are pro-active in implementing them andrecognise the business benefits of thesepolicies are real environmentalchampions. Finding and celebratinggreen companies is very important to theNew Economics Foundation. Sponsoredby Norwich Union, the Green Award ispresented to the most environmentallyfriendly business on the Index. Winner: Teswaine BusinessCommunications Ltd, LondonSponsor: Norwich Union

RISING STAR AWARDLast year, the Rt. Hon Gordon Brownestablished the Rising Star Award torecognise a young company that is havinggreat impact in its community. Inner City100 companies have generated 5,417 newjobs over the past five years. The RisingStar Award is presented to one of theyoungest founders who has created asignificant number of new jobs in thecommunity. This award celebrates notonly job creation but also encouragesyoung people to start businesses.Winner: Associated Network Solutions plc, ManchesterSupporter: HM Treasury

SOCIAL ENTERPRISE AWARD With primarily a social purpose andworking for a social benefit rather thanshareholders, social enterprises play animportant role in urban regeneration.The presentation of this award showsthat entrepreneurial drive and growth canco-exist with social objectives.Sponsored by the Social Enterprise Unitat the Department of Trade and Industry,the Social Enterprise Award is presentedto the fastest-growing social enterprise. Winner: Future Health & Social CareAssociation, Birmingham Sponsor: The Social Enterprise Unit atthe Department of Trade and Industry

WOMEN ENTREPRENEUR AWARD Women represent approximately 50% ofthe population, yet they continue to beconspicuously absent from theentrepreneurial scene. With 35% of theInner City 100 Index being founded or co-founded by women, we must continue tosupport and showcase successful womenentrepreneurs. Sponsored by the NewEconomics Foundation and Prowess, theUK-wide network for the promotion ofwomen’s enterprise support, the WomenEntrepreneur Award is presented to thefastest-growing woman-foundedcompany.Winner: Action for Employment,SheffieldSponsor: New Economics Foundation

2003 Special Award Winners


2003 Regional Award Winners

Hall of Fame Winners

REGIONAL AWARDSNationwide representation on thelist is an important way tounderstand what is working inregional economic development.Our goal has been to have strongregional support for the InnerCity 100 Index. The regionalawards are presented to the topperforming company on the Indexfrom the following areas inEngland, Northern Ireland andScotland.

East of England WinnerFM Holdings Limited,PeterboroughSponsor: East of EnglandDevelopment Agency

West Midlands WinnerFuture Health & Social CareAssociation, BirminghamSponsor: Advantage WestMidlands

East Midlands WinnerClinPhone Group Ltd, NottinghamSponsor: East MidlandsDevelopment Agency

London WinnerBCPMS (Europe) Limited, LondonSponsor: London DevelopmentAgency

North East WinnerFM Foods Ltd, SunderlandSponsor: One NorthEast

North West Winner Temploy Recruitment ServicesLtd, St. HelensSponsor: North WestDevelopment Agency

South East WinnerTempest Technology Ltd, MargateSponsor: South East of EnglandDevelopment Agency

South West WinnerSift, BristolSponsor: South West of EnglandRegional Development Agency

Yorkshire & Humberside WinnerAction for Employment Limited,SheffieldSponsor: Yorkshire Forward

Northern Ireland WinnerWilton Healthcare Ltd, BelfastSponsor: Invest Northern Ireland

Scotland WinnerGas Call Services, GlasgowSponsor: Scottish EnterpriseGlasgow

Inner City 100 “Hall of Fame” WinnersTen companies have made thelist every year, a remarkableaccomplishment given theastronomical annual growth ratesrequired. We honour thesecompanies with a specialdistinction – Hall of Fame.

Americana International Ltd,ManchesterArmstrong Craven Ltd,ManchesterBlendon Communications Ltd,LondonB-Plan Information Systems Ltd,ManchesterHoxton Bibliotech,London

Mastclimbers Ltd,GlasgowMcGrattan Piling Ltd,GlasgowStrategic Systems Solutions Ltd,LiverpoolTechnoPhobia,SheffieldTeswaine BusinessCommunications Ltd,London


What is a Micro-Enterprise?


Micro-Start AwardStreet (UK)

WINNER OF THE INNER CITY 100 MICRO-START AWARDFor the highest growth enterprise that startedwith less than £1000 capital

Our warmest congratulations to:HARRY BEHARRY, Founder and ManagingDirector, Atlas Property London LimitedProvider of sales, lettings, propertymanagement, refurbishment, supportedhousing, rent guarantee, insurance andmortgage brokerage services

Turnover Employees1998: £38,000 12002: £4.04million 26

Founded in 1986

Biggest milestoneFirst local authority contract from IslingtonCouncil in 1999Key lesson learnedThe need to keep nurturing and re-energisingthe companyGreatest achievement:Building the business from only £600 capital

Future goals:Pan-London expansion and good legacy forthree childrenWhen Harry Beharry started Atlas PropertyLondon Limited, with no office but simply onetelephone box and £600, he exemplified one ofthe most remarkable characteristics of micro-entrepreneurs: their ability to stretch everypenny of capital and create huge value out ofvery few resources. And when Steve Swallow,Runner-Up Micro-Start award winner,established Swallow Security, hedemonstrated another key characteristic: themajor competitive advantage that micro-enterprises can have over larger companiesby virtue of their local knowledge.

Although micro-enterprises are individuallyvery small, together they account for 2.9million out the 3.7 million registeredbusinesses in the UK (2.5 million having nomore than 5 employees). As such, they have avital contribution to make to both the localeconomy and to their whole community.

Gabby, a hairdresser in East Londonsupported by Street (UK), after arriving from

Ghana with no money, now has 5 full timeemployees who were actively recruited fromthe recent immigrant community. Derek,another Street (UK) client, originally soldsecond-hand furniture and now has threeadditional businesses – an ice cream van, awhite goods repair service and a washingmachine home rental and fitting service. Oneenterprising couple offered some of theirwindow cleaning rounds at subsidised pricesto young people helping many of them to geton the first rung of the ladder, in more waysthan one!

These micro-enterprises have also nowbecome important role-models and advisorsto people in their communities that aspire tobecome entrepreneurs.

These examples are just the tip of the iceberg– there are so many ways in which micro-enterprises contribute to their communities:re-investment and continual recycling of theirbusiness profits in the local economy; creationof local jobs; and economic and socialactivities that benefit the local community andstimulate the local economy.

A micro-enterprise is generally defined as abusiness employing no more than 10 people.Most of them have fewer than 5 employees,with a large proportion being sole-traders.Some will be working from home, some inbusiness premises or, in the case of markettraders, in the street. While a proportion willbe registered and regulated, with liabilityinsurance, bank accounts, book-keepers andformal employment contracts, others will besubsisting on a cash basis. A minority will berecent start-ups, while most will have been inbusiness for many years.

All of them however, will be owned and run byextremely hard-working people, passionateand committed to their enterprise anddetermined to make it succeed.

COMPETITIVE ADVANTAGES OF MICRO-ENTERPRISESx They have a deep and continually updated

understanding of the local marketx They have the capacity to create high

value from very small amounts of capitalx Their owners are exceptionally hard-

working and perseveringx Their employees (often family members)

have strong commitment and loyaltyx Their small size enables them to be

flexible and implement decisions quicklyx They can take a common sense-based (as

opposed to rule-based) approachx Their investment decisions can be made

over a longer term time horizon x They can offer more elastic employment

terms and income stability to employees

CONTRIBUTION OF MICRO-ENTERPRISES TO LOCAL COMMUNITIES

Economicx They involve the direct re-investment of

local residents’ spending within thecommunity

x They create local jobs, both within eachbusiness and by stimulating newbusinesses

x They provide opportunities for people withgood ‘street skills’ (vs. formalqualifications)

x Their products and services are moretailored to local needs

x They create opportunities for wide-ranging informal/initial work experience

Socialx They frequently include community goals

within their overall business objectivesx They also provide connection points for

local community residentsx They offer a foundation for the creation of

additional community servicesx They contribute to good health, well-

being, lower levels of crime, andco-operation, by inclusion of allcommunity members as owners,employees and/or customers

ABOUT STREET (UK) AND THE INNERCITY 100 MICRO-START AWARDStreet (UK)’s mission is to support micro-entrepreneurs in the UK with tailored financialand business services, and offer a securepathway to those aspiring to become bankablebusinesses. Street (UK) was launched inSeptember 2000 and made its first loan inApril 2001. It has branches in Newcastle,Birmingham and East London and has to datedisbursed over £500,000 to micro-entrepreneurs borrowing an average of £1,800each. Several of its clients have grown to 4-5times their size and created many new jobs.


1 Atlas Property London Ltd Property developer Haringey (LB) 1996 26 2,500 £4,040,086 10,4962 Action For Employment Limited Recruitment, training and Sheffield 1991 965 1,091 £35,853,847 1,892

business solutions provider3 Temploy Recruitment Services Ltd Recruitment agency St. Helens 1996 20 400 £3,609,294 1,6214 Swallow Security Ltd Security services provider Blackpool 1997 142 14,100 £721,460 1,4275 BCPMS (Europe) Limited Gold and jewellery Brent (LB) 1986 11 120 £26,847,164 1,427

wholesalers6 FM Foods Ltd Ethical food import and Sunderland 1993 18 350 £867,616 1,375

processing business 7 Bighams Ltd Food manufacturer Brent (LB) 1996 67 458 £4,211,158 1,2928 2XL Recruitment Ltd Recruitment agency Haringey (LB) 1997 7 250 £1,487,974 1,2709 The Frappe Vending Co Ltd Vending and dispensing Salford 1996 9 800 £648,071 1,004

systems manufacturer 10 Square Foot Properties Ltd Property developer Islington (LB) 1991 5 150 £6,233,225 98811 FM Holdings Limited Publishing and property Peterborough 1986 12 500 £995,062 975

services provider 12 Gas Call Services Gas services provider Glasgow 1996 63 688 £1,866,064 92013 Central Trust Plc Consumer finance Norwich 1987 263 437 £39,866,290 896

services provider 14 Ultralase Laser eye surgery specialist Leeds 1991 117 631 £18,913,417 86315 Sift IT and on-line Bristol 1996 78 767 £3,121,048 858

communications consultancy 16 KGB Cleaning Group Commercial cleaning Tower Hamlets 1994 106 657 £5,669,001 842

service provider (LB)17 Jump Group Ltd Property developer Leeds 1995 95 850 £17,844,789 767

18 Wilton Healthcare Ltd Clinical waste and Belfast 1993 13 225 £747,394 719health services provider

19 Cardinal Maritime Limited Specialist freight forwarders Salford 1997 19 375 £6,562,643 71120 Diva Creative Ltd Marketing and PR agency Sheffield 1997 12 500 £885,426 70021 ClinPhone Group Ltd Clinical technology Nottingham 1993 234 550 £15,253,651 698

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INNERCITY 100 2003


22 Zen Internet Internet service provider Rochdale 1995 39 105 £3,502,279 69723 River Pro Audio Audio equipment Southwark 1995 6 200 £654,080 690

manufacturer and distributor (LB)24 Future Health & Social Care Association Social housing, training Birmingham 1996 127 2,440 £1,620,135 671

and employment provider 25 Associated Network Solutions plc IT and communications Manchester 1996 50 400 £5,185,182 668

consultancy 26 Soup Ltd Interactive Norwich 1997 22 1,000 £958,112 634

communications consultancy 27 Cash Management Systems Ltd Financial services Halton 1995 7 250 £590,989 589

management consultancy28 mmm Group Limited Multimedia Bolton 1992 14 100 £1,564,101 586

entertainment specialist29 Americana International Ltd Fashion wholesaler Manchester 1993 37 106 £20,006,804 56030 Caldeira Limited Soft furnishings supplier St. Helens 1991 124 313 £4,165,566 53131 Impact Community Developments Social housing, training Bradford 1997 20 567 £403,708 519

and employment provider 32 Smartstyle Technology Training Ltd Professional IT Bradford 1997 10 400 £359,117 491

training solutions provider 33 Stanton Interior Solutions Limited Commercial interiors Brent (LB) 1989 42 367 £9,477,044 490

contractor 34 Town and Country Assistance Motor claims Ipswich 1988 146 143 £29,111,400 477

outsourcing solutions provider 35 Teswaine Business Communications Ltd IT and communications Tower Hamlets 1993 41 720 £8,721,207 477

consultancy (LB)36 Tempest Technology Ltd Telecoms billing and Margate 1996 25 56 £1,554,946 435

software solutions provider37 Mastclimbers Ltd Construction service Glasgow 1996 64 191 £5,108,176 434

provider38 TechnoPhobia Internet technology Sheffield 1995 28 367 £1,097,440 425

consultancy39 Riverside Truck Rental Limited Provider of commercial Halton 1996 21 250 £8,389,779 425

and industrial vehicles 40 Ecco Finishing Supplies Limited Industrial equipment Middlesborough 1995 11 1,000 £1,201,309 414

supplier 41 Live Information Systems Ltd Software developer Stoke-on-Trent 1997 18 350 £539,778 41442 Mediacom North Ltd Advertising and Manchester 1996 23 229 £34,477,290 396

planning agency43 Training For Life Ltd Training and employability City of London 1994 59 638 £1,265,594 394

services provider (LB)44 Kingfisher Building Co Ltd Construction Birmingham 1994 24 300 £8,280,812 391

services provider45 Thorns Group plc Event equipment provider Haringey 1995 116 404 £5,096,780 378

(LB)46 Brambles Foods Ltd Food manufacturer Middlesborough 1991 170 209 £8,412,687 375

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47 Starfinder Ltd Provider of outsourced Liverpool 1981 65 210 £2,009,556 375telecoms services

48 Blendon Communications Ltd Magazine publisher Southwark 1992 47 236 £7,259,124 373and exhibition organiser (LB)

49 Hackney Community Transport Transport services Hackney (LB) 1983 124 164 £3,024,570 364for socially excluded groups

50 PJ’s Foods Ltd Food manufacturer Glasgow 1995 30 500 £805,422 36251 Strategic Systems Solutions Ltd Software developer Liverpool 1995 400 260 £27,944,415 34252 Matrix Research & Consultancy Limited Research and Hackney 1993 35 250 £2,310,140 337

consultancy services (LB)53 Laidlaw Scott Limited Maintenance and Glasgow 1992 60 300 £1,554,504 327

building contractor54 Intelect (UK) Ltd Electrical contracting Middlesborough 1997 66 313 £2,777,667 322

and control panel manufacturer55 The Punjab Kitchen Ltd Health sector South Tyneside 1993 33 200 £1,200,034 317

catering service provider56 Frontline Image Ltd Textile garment manufacturer Plymouth 1992 48 140 £2,713,827 31257 Miller’s Traditional Bakery Ltd Suppliers of hand Newtownabbey 1997 39 290 £1,353,140 310

crafted bread products 58 GB Training (UK) Ltd Training provider Birmingham 1996 27 800 £551,089 30759 Stairlifts (Scotland) Ltd Suppliers of equipment Glasgow 1996 26 225 £2,006,276 300

for people with a disability60 Armstrong Craven Ltd Business intelligence Manchester 1990 43 115 £1,957,488 298

and research provider61 Steps Drama Learning Development Performing arts- Southwark 1992 9 200 £1,258,384 294

based training (LB)62 Andor Technology Ltd Manufacturer of Belfast 1989 91 153 £7,861,000 289

scientific cameras63 Direct Digital Limited Document solutions Lambeth (LB) 1993 98 188 £14,126,551 289

service provider64 Sheffield Rebuild Ltd Construction and Sheffield 1996 163 329 £5,721,417 287

training contractor65 The EV Group Specialist manufacturer Norwich 1987 12 200 £958,296 280

of cameras and systems 66 Mellors Catering Services Ltd Catering contractor Sefton 1997 60 140 £3,085,849 25667 Arrow Mailing Ltd Direct mail services provider Manchester 1992 92 229 £2,534,278 24868 Broadcast Media Services Ltd Provider of digital quality Nottingham 1996 7 133 £397,185 240

video services and media training69 Hydrogarden Wholesale Suppliers Limited Distributor and wholesaler Coventry 1995 28 250 £2,100,036 236

of horticultural products70 P.E.C Building Services Building and Bradford 1977 44 144 £3,123,578 233

shopfitting company 71 Hoxton Bibliotech IT Training service provider Hackney (LB) 1995 44 132 £1,951,067 23172 Williams and Williams Limited Insurance brokers Leicester 1988 40 186 £1,957,543 22673 Greenwich Leisure Limited Leisure services provider Greenwich (LB) 1993 600 87 £21,914,078 221

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74 Dundees Ltd Sandwich manufacturer Newcastle- 1991 25 108 £893,162 221and event caterer Upon-Tyne

75 Bill Goff Golf Tours Golf tour holiday operator South Tyneside 1995 15 400 £4,289,539 21976 Nottinghamshire Business Venture Provider of professional Nottingham 1982 8 300 £463,153 217

support services for businesses77 Squirrel Storage Limited Fully managed document Leeds 1990 66 313 £3,273,072 216

archive and retrieval services78 Regional Car Parks Ltd Car park operator Norwich 1994 19 280 £997,502 21279 Bio-Kinetic Europe Ltd Clinical trials specialists Belfast 1996 11 120 £1,309,707 20880 Regent Envelopes Ltd Manufacturer of bespoke Shipley 1986 97 33 £4,218,815 207

greeting cards and envelopes81 Newell Palmer Associates Ltd Corporate financial Wolverhampton 1993 36 500 £929,559 199

consultants 82 Cableworld Ltd Suppliers of electrical Bolton 1994 7 75 £1,636,140 199

and data cables 83 Expotel Hotel Reservations Ltd Hotel reservations, Camden (LB) 1972 408 20 £81,951,065 198

conference and event management agency 84 Shield (Insurance Consultants) Limited Taxi insurance providers Dundee 1990 20 300 £1,293,204 19785 Paver Downes Associates Ltd Marketing consultants Liverpool 1997 24 243 £1,207,953 19686 B-Plan Information Systems Ltd Financial management Manchester 1993 65 225 £4,446,876 194

software developer87 MKM Building Supplies Limited Building materials supplier Kingston 1995 203 233 £42,892,453 193

upon Hull88 Office Solutions Europe Limited Office products supplier Salford 1996 12 200 £1,114,467 19189 Interactive Ideas Ltd Distributor of computer Enfield (LB) 1994 29 81 £9,053,501 191

and console software 90 Mask Event Design & Production Event designer and producer Tower Hamlets 1988 9 125 £2,094,062 188

(LB)91 Benchmark Scaffolding Limited Scaffolding access Ealing 1995 136 580 £8,639,557 186

service provider (LB)92 Phoenix Print Finishing Ltd Print finishing Nottingham 1991 31 107 £1,396,822 185

service provider93 Horner Brothers Print Group Ltd Print management services Rotherham 1982 143 138 £12,366,327 18594 Prevista Ltd Management services Islington (LB) 1996 18 50 £1,504,087 181

consultancy 95 Admiral Leasing Plc Leasing of capital Oldham 1990 46 -12 £5,083,174 178

equipment hire and vehicles96 Cross Services Ltd Specialist engineering St. Helens 1988 519 86 £41,845,095 178

services provider97 McGrattan Piling Ltd Specialist civil Glasgow 1995 19 138 £2,128,700 173

engineering contractor98 Kilnbridge Group Ltd Construction service provider Newham (LB) 1992 352 14 £25,527,553 17199 The Bureaux Limited Independent financial advisor Lambeth (LB) 1993 39 179 £2,827,934 169100 Moonfish Ltd Digital Communications Manchester 1994 24 100 £1,188,889 167

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To be eligible for the 2003 Inner City 100companies must:

x Be situated within eligible inner citypostcode areas (in an urban localauthority containing 100,000 peopleor more), in which at least 50,000 ofthe population live in wards in thebottom quintile of the Index ofMultiple Deprivation (IMD) orequivalent. Firms trading in theCentral Business District are noteligible. Over 80 inner cities areaswere eligible this year;

x Be independent, with no othercompany holding a majority share.Not-for-profit organisations musthave at least 50% of their incomefrom non-grant sources;

x Have been founded before January1st 1998;

x Have an annual turnover of at least£25,000 in the financial year ending1998, and a turnover of at least£300,000 in the financial year ending2002;

x Employ at least five people in 2002;

x Act in a socially and environmentallyresponsible manner.

Companies are ranked by percentagesales growth from 1998 to 2002, and thetop 100 are the “winners.” Companieswere shortlisted for the Inner City 100 onthe basis of unverified turnover growthand interviewed, whereupon financialdata was submitted to an independentaccountant for verification. The resultswere subsequently used to compile thefinal Inner City 100 Index.


THE INNER CITY 100 METHODOLOGY


Our first thanks go to the Inner City 100,who are creating such dynamic change inthe UK’s inner cities.

We are also indebted to:

The Inner City 100 patrons: The Rt. HonGordon Brown MP, Chancellor of theExchequer; Michael Porter, C. RolandChristensen Professor of BusinessAdministration at Harvard BusinessSchool and Founder, Chairman and CEOof ICIC; Fred Goodwin, Group ChiefExecutive, The Royal Bank of ScotlandGroup; Sir Ronald Cohen, Chairman,APAX Partners; John Bird, InternationalChairman, The Big Issue; Sir Alan Sugar,Chairman, Amstrad plc; Lord Rogers ofRiverside, Chairman, Richard RogersPartnership; Pauline Tiffen, Non-Executive Director, the Day ChocolateCompany; Ambassador Philip Lader; andLaura Tyson, Dean, The London BusinessSchool.

The Inner City 100 Advisory Boardmembers: Mei Shui, Head of Enterprise,The Princes Trust; Bernadette Bickerton,Social Enterprise Unit, DTI; HilaryBrown, Small Firms Analyst, DomesticFinance Division, Bank of England; NeilWarsop, Policy Analyst, Enterprise Team,HM Treasury; Michele Giddens, Director,Bridges Community Ventures; DrRebecca Harding, Senior Fellow, LondonBusiness School; Kirsty McHugh,Partnership Director, Business in theCommunity; Peter Ibbetson, Head ofBusiness Banking, NatWest; BarbaraPhillips, Director, Social Enterprise Unit,DTI; Dr Ken Poulter, Director of BusinessServices, Small Business Service;Andrew Robinson, Head of CommunityDevelopment, NatWest; Allan Watt, Headof Public Affairs, The Royal Bank ofScotland Group and Mike Young, SeniorManager, Small Firms Team, DomesticFinance Division, Bank of England.

The Inner City 100 founders: MichaelPorter, C. Roland ChristensenProfessor of Business Administrationat Harvard Business School andFounder, Chairman and CEO of theInitiative for Competitive Inner City(ICIC); Deirdre Coyle, Senior VicePresident, and the team at ICIC whofounded the ICIC-Inc. Magazine InnerCity 100 in 1998, on which the UK InnerCity 100 is modelled.

The Inner City 100 sponsors andsupporters: The Royal Bank ofScotland, NatWest and Ulster Bank aslead sponsors; the Financial Times asour lead media partner; GrowingBusiness magazine as our businessmagazine partner; HM Treasury, SmallBusiness Service, The Department forTrade and Industry, The Office of theDeputy Prime Minister, The Bank ofEngland, Bridges CommunityVentures, APAX Partners, Prowess,The London Business School, ThePrinces Trust, Business in theCommunity, The Initiative for aCompetitive Inner City, Norwich Union,Street (UK), Business Link for London,Scottish Enterprise Glasgow, InvestNorthern Ireland and all the RDAs:Advantage West Midlands, East ofEngland Development Agency, EastMidlands Development Agency,London Development Agency, OneNorth East, Northwest DevelopmentAgency, South East of EnglandDevelopment Agency, South West ofEngland Regional DevelopmentAgency and Yorkshire Forward.Thanks also to Stephen Moir, AllanWatt and Gael Pollit of The Royal Bankof Scotland Group; we’d also like tothank David Adam and Jody Chatterjeefrom the London Development Agencyfor their support of the Inner City 100and their commitment towards theInner City Entrepreneurs’ Fund.

The Inner City 100 regional event co-organisers: The Asian BusinessDevelopment Network, Leeds CityCouncil, Birmingham City Council andGlasgow City Council.

The Inner City 100 nominators:Andersons KBS Ltd, Asian BusinessDevelopment Network, BirminghamChamber of Commerce and BusinessLink, Bolton Business Support Unit,Business Link Coventry &Warwickshire, Business Link forLondon, Business Link for WestYorkshire, Business Link for Leicester,Business Link for North and WestLancashire, Coventry Centre forInvestment, DrumchapelOpportunities, Sefton MBC, GlasgowCity Council, Glasgow North Ltd,Gorbals Initiative Ltd, GreaterMerseyside Enterprise Ltd, HaringeyBusiness Development Agency,International Cuisine Group Ltd,Ipswich Borough Council, Macfarlane& Co, Manchester City Council,Manchester Science Park Ltd,Merseyside Special Investment Fund,Middlesbrough Council, NatWest Bank, Norwich City Council, PrestonBorough Council, Salford City Council,Small Business Gateway, SouthTyneside MBC, The Royal Bank ofScotland, Train 200 Ltd and UnityBusiness Centre.

The Inner City 100 interview team:John Taylor, Jessica Bridges Palmer,Julian Oram, Ethan Kline, PradnyaRanade, Kemal Ahson, RachaelOsaigbovo and Alex Macgillivary.

The Inner City 100 team comprises:Sarah Forster, Sajid Butt, John Taylor,Heather Olhausen, Reza Hamroun,Jessica Bridges Palmer, Liz Antcliffe,Carey Young, Polly Raymond and RobBooth, our accountant.

Acknowledgements

nef is an independent think and do tank that inspires and demonstratesreal economic well-being.

We aim to improve quality of life by promoting innovative solutions thatchallenge mainstream thinking on economic, environment and socialissues. We work in partnership and put people and the planet first.

nef was founded in 1986 by the leaders of The Other Economic Summit(TOES) which forced issues such as international debt onto the agendaof the G7 and G8 summits.

We are unique in combining rigorous analysis and policy debate withpractical solutions on the ground, often run and designed with the helpof local people. We also create new ways of measuring progress towardsincreased well-being and environmental sustainability.

nef works with all sections of society in the UK and internationally – civilsociety, government, individuals, businesses and academia – to createmore understanding and strategies for change.

nef works on economic, social and environmental issues through amixture of practical pilot projects and tools for change, in-depthresearch, campaigning, policy discussion, and raising awareness throughthe media and publications. We also incubate new organisations andcampaigns that can create long-term change in society.

nef currently has three ‘hot topics’: international economics andmarkets; democracy; and local economic renewal.

new econmomics foundationJonathan Street, London, SE11 5NHphone 020 7820 6300fax 020 7820 6301email [email protected] website: www.neweconomics.org

www.rbs.co.uk/community

Make it happen

Power to the people The Inner City 100 Index

helps promote enterprise in

disadvantaged communities

Investing in the community is about making sure money goes

where it will make the most difference to people’s lives. That’s

why we’re involved as active, long-term partners in local and

nationwide programmes, like the Inner City 100 Index, promoting

enterprise in the UK’s 88 most disadvantaged communities.

In total last year, we invested over £33 million in the community.

We like to feel it’s done a power of good.

competing for change...entrepreneurial excellence in our inner cities. more importantly the inner...

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