Is this the future of UK business? According to HSBC it is – and it doesn’t include Manchester….
What does the future hold for the UK’s small businesses? According to a new report by HSBC, innovation, high-tech manufacturing, collaboration and overseas trade are likely to reshape our economy and drive recovery over the next few years.
The Future of Business 2011 report – based on interviews with 500 owners and managers of small and medium-sized businesses – predicts that we’ll see highly-developed regional industries clustered around seven ‘super-cities’. In their midst will emerge four distinct ‘tribes’ of entrepreneurs who will give a new face to UK enterprise.
If this is where the UK economy is going, what does it mean for small firms? Read on for a summary of the major findings, an overview with comment from someone who is in the thick of UK innovation and a case study of Shutt Velo Rapide, an ordinary British business showing how small firms are adapting to economic change.
The Future of Business 2011: a summary of the main findings
- British businesses are innovating their way towards recovery. Digital communications, biotechnology and low-carbon technology will be the major growth areas over the next decade.
- We will see a revival of high-tech British manufacturing. The need for resilient supply chains that can withstand economic shocks and rising energy prices will bring specialist manufacturing back to the UK. 3D printing, advanced materials manufacture and just-in-time manufacturing are all areas where the UK can excel.
- A ‘Trust Economy’ of regional collaboration is emerging. Strong personal networks may be as important as financial backing in doing business, and more business leaders will spend time consulting for other firms.
- Business will look to emerging export markets. “Exportable inventions are our way towards a safer, more intelligent future,” says Sir James Dyson.
- Seven ‘super-cities’ will act as hubs for regional specialisms in growth sectors: Newcastle (scientific research), Leeds (financial services), Liverpool (cultural and branding services), Brighton (the alternative economy), London (creative industries), Glasgow (renewable energy) and Bristol (advanced manufacturing).
- Four new ‘entrepreneurial tribes’ will reshape the way we do business: ‘collaborateurs’, ‘hybrid entrepreneurs’, ‘local heroes’ and ‘exportentials’.
The Future of Business – a closer look
Innovation and growth in the UK
One of the report’s major conclusions is that innovation in high-tech industries will drive economic growth in the UK. With a focus on invention, rather than volume, we can anticipate a revival of high-tech manufacturing in the UK, using existing skills and infrastructure to specialise in industries where there is international demand for quality and originality.
Domestic manufacturing will be reinforced by a growing belief among business leaders (74% of those interviewed) that we need resilient supply chains as cushions against economic shocks and rising energy prices. In other words, British businesses should make their goods in the UK.
Nick Sturge, director of high-tech business accelerator SETsquared in the ‘super city’ of Bristol, says these trends are already coming to the fore.
SETsquared provides practical and financial support to high-growth, high-tech businesses, and many of the firms Sturge helps are working with advanced materials, microelectronics and biotechnology. “This year we’ve seen double the number of new companies coming in,” he reveals. “They’re a mixture of brand new start-ups and established companies realising they are better off working with people like us to help them grow.”
A culture of collaboration
The Future of Business says that greater collaboration between businesses with the same or different areas of expertise will create a ‘Trust Economy’ supported by strong personal networks.
In Bristol, notes Sturge, the closure of the Regional Development Agency has brought many smaller support providers together under the umbrella of the new Local Enterprise Partnership.
“We’ve found 45 different providers of business support in the city,” he explains. “We’re now connecting them all together so that it works efficiently.
“Another trend I’m seeing is businesses from different industries working together more closely. A year ago you would have said ‘That’s creative industries, nothing to do with ICT’. Now we’re seeing collaboration.”
The network extends beyond the businesses themselves: SETsquared is also drawing professional service providers into its network, including lawyers, accountants, even investors. By educating them in the needs of high-tech, high-growth companies, they’re creating a hub of expertise in which businesses can grow.
“In the UK, we can’t be so cheap that we can do volume manufacturing,” Sturge reflects. “But we can do design, collaboration and innovation.”
The report’s final big finding is that businesses can secure growth by taking their innovations overseas. More than half (52%) of the business people interviewed saw emerging economies as the greatest opportunity for UK business; currently, however, only one in five were actually focused on selling abroad.
“Exportable inventions are our way towards a safer, more intelligent future,” comments the inventor Sir James Dyson in the report. In July, the UK signed a £1.4 billion trade agreement with China – the prospects for getting into the biggest international market may have just taken a leap.
Bristol’s long history of international trade means it already has strong international links. One SETsquared member, TVS, has just opened an office in Bangalore, India, to provide its software and hardware testing service to India’s thriving ICT market.
What’s in it for small businesses?
Although the Future of Business 2011 focuses on high-growth sectors and up-to-the-minute ways of running a business, Sturge points out that all businesses can benefit in regional growth areas. These may range from lawyers servicing the growth businesses to plumbers and builders in their supply chain; even the shops that take money from their employees.
“If you create jobs, everybody gains,” he stresses. “If I’m running a business, it’s in my interest that all the companies around are succeeding because that puts more money into the system. Businesses are tied into supply chains and it’s in everybody’s interests that all businesses succeed.”