Memorandum from Business Link West Midland
(WM 05)
EXECUTIVE SUMMARY
Between April 2008 and March 2009, Business
Link West Midlands (BLWM) provided support to almost 72,000 established
businesses, (generating on average a 15% Gross Value Added improvement
in businesses helped) and supported over 3,000 new businesses
to start.
INTRODUCTION
1. West Midlands Brokerage Services Limited
and Gateway West Midlands Limited, hold the West Midlands Business
Link service contract, which is funded by Advantage West Midlands.
It is the first organisation in the UK to offer businesses and
individuals starting a business an integrated generic, skills
brokerage and leadership and management support service.
2. The goal of BLWM is to support the objectives
of the West Midlands Economic Strategy and Skills Action Plan,
particularly in the closure of the £10 billion output gap
between the West Midlands and the average of the other English
regions. The role of BLWM is to support businesses to start, develop
and grow.
3. BLWM has been proactive in addressing
the needs of businesses during the economic downturn and recognises
the important role it has in helping businesses to survive the
recession and to position them for future economic recovery. In
2009-10 the service will further increase its sophistication,
with the launch of a range of specialist advisory services, enhanced
diversification support and help with accessing new sources of
finance, including financial restructuring and recovery, demonstrating
flexibility and commitment to providing relevant and timely support
to the region's businesses.
FUNDING OF
THE SERVICE
4. In the year 2008-09, BLWM received funding
of nearly £42 million to deliver its extensive range of business
support programmes to companies in the West Midlands region.
5. Core funding of £24.7 million was
provided by Advantage West Midlands (AWM) to deliver the core
Business Link service. Core funding included £3.0 million,
which was specifically ring-fenced to provide consultancy grant
support to client businesses in projects relating to Diversification
and Access to Finance. In addition, AWM funded other programmes
such as Leadership and Management, Designing Demand and various
Social Enterprise programmes costing £1.5 million in the
year.
6. European Regional Development Fund(ing)
of £8.6 million was used to provide targeted support for
specific industries and areas of the region. This number included
£6.6 million of consultancy grant funding used to assist
those businesses, resulting in 2,334 jobs safeguarded; 1,488 jobs
created; £347 million sales safeguarded and £126 million
of new sales.
7. The Learning and Skills Council provided
£4.4 million to fund delivery of the skills Train to Gain
programme, plus an additional £0.9 million (including grant
funding of £0.6 million) to fund the Leadership and Management
(Director Development) programme. BLWM also managed a Joint Investment
Framework programme on behalf of the West Midlands Strategic Health
Authority, administering the payment of training grants totalling
£1.4 million in the year, to the regional NHS trusts and
hospitals.
8. AWM provided additional funding of £1.4
million over and above the core contract value. BLWM operated
a Credit Crunch Hotline to provide expert, practical advice and
support to businesses impacted by the economic downturn, in addition
to operating a number of specialist events and workshops. Additionally,
BLWM has diverted around £350k of consultancy grant funding
to provide support to businesses in need of specialist advice
on financial restructuring and other recovery measures.
PERFORMANCE/IMPACT
MEASUREMENT
9. Over 26,000 individuals requested
advice on starting up a business from BLWM in the past year and
14,797 individuals then received further support following
their initial enquiry. This resulted in 3,069 new businesses
in the region starting up.
10. The total number of established businesses
who requested a Business Link branded service was 71,980: of these,
13,996 received an in-depth review resulting in an action
plan, which reviewed their critical business processes, skills
and leadership proficiencies, helping businesses to achieve their
goals and aspirations. 20% of the business who had in-depth support
were classified as being rural.
11. Evidence of the impact which BLWM has
on those businesses it supports is reflected in the Gross Value
Added calculation. At a macro level, this equates to Gross Domestic
Product. When measured at business level, it is defined by net
profit plus depreciation plus wages and salaries. At the end of
March 2009, the Gross Value Added improvement for businesses supported
showed an average of 15%. Of those businesses supported intensively
through an in-depth review, 544 are considered high growth
businesses ie £200k turnover over a two year period.
12. In 2008-09, BLWM supported 5,600 employers
through an impartial and independent skills diagnostic and routed
over 75,000 potential trainees to training providers.
13. Over 63,000 calls were received
by the Customer Service Team in the period April 2008 to
March 2009, of which 10,464 calls were from individuals interested
in starting their own business (access to services is available
through the single contact number 0845 113 1234 and
e-mail info@businesslinkwm.co.uk). This is a 6% increase in call
volume against the same period in 2007-08. Calls also increased
in the period from October to December by 15% and in the month
of March (2009) calls were up by more than a third against last
year (almost 2,000 more enquires). The Customer Services
Team made over 200,000 calls to clients to follow up and
recruit new clients to the service.
14. Enquiries to the website www.businesslinkwm.co.uk
which provides topical business information and online tools,
increased year on year by 35% (visitors only counted once). In
January 2009, almost 10,000 people visited the site.
BUSINESS LINK
WEST MIDLANDS'
RESPONSE TO
THE CURRENT
ECONOMIC CLIMATE
15. The volume of business starts has increased
during the year, with more businesses starting since the recession
began. In this difficult period, BLWM has therefore increased
its focus on helping individuals to start their own business.
A telephone hotline was introduced in February 2009, to give individuals
thinking about starting a business easy and quick access to expert
information. Almost 400 individuals received advice from
this hotline. This service now continues via the main 0845 telephone
number.
16. Amongst the many individuals it has
helped, BLWM has provided specific start-up support and advice
to potentially redundant employees of larger local companies and
has provided information and support through events, outreach
centres and via telephone and e-mail. Individuals who have taken
advantage of this service have received (or been offered) one-to-one
sessions to explore self-employment opportunities with the option
of attending a pre-start event which plans to help them to determine
whether starting up a business is right for them, to acquire the
relevant business skills and to assist them in the overall business
planning process.
17. Anecdotal feedback about individuals
who are made redundant indicates that many people have long wanted
to be self-employed and generate profits for themselves rather
than for someone else, and being made redundant can spur them
on to achieving that dream. See the example in Table 1.
18. Table 1: Case study—X-Cel
Profiles Ltd.
Support following redundancy has helped a new
company based in Stone (Staffordshire) get their business off
the ground. X-Cel Profiles Limited specialises in laser cutting
and also offers machining, welding and CAD drawing services. The
owners (husband and wife) were made redundant from the same manufacturing
firm and attended a redundancy workshop to benefit from start
up support. They eventually ploughed their life savings and redundancy
money into the new business. Speaking about herself and her husband,
the new owner said:
"We were given half an hour's
notice that our jobs had gone, and then the firm closed…I've
been in the manufacturing industry for 15 years managing
a leisure centre, so I'm no stranger to change. I'm extremely
optimistic about the future despite all the prevailing doom and
gloom".
Source: News Release 9 March 2009 (Business
Link West Midlands). Redundancy no barrier to Staffordshire laser-cutters.
19. BLWM will hold an awareness session
in Birmingham during May 2009 to link 30 Jobcentre Plus
clients to the start up service. A further example of work with
Jobcentre Plus is featured below in Table 2.
20. Table 2: Case study—Sealine
In January 2009, Business Link West Midlands
supported employees of Sealine, a manufacturer of luxury boats
and yachts, based in Kidderminster (Worcestershire) where 30 staff
were being made redundant.
Working with Jobcentre Plus, Business Link West
Midlands helped individuals at the company receive support, to
raise their awareness about the opportunities for self-employment.
This has led to three businesses starting up and a further six
individuals are in the process of starting their business.
Business Link West Midlands has also worked successfully
in consultation with the trade union UNITY, to support employees
at both Wedgwood and Fole Dairy who are at risk of redundancy.
21. In October 2008, BLWM set up a dedicated
Credit Crunch Hotline (available to clients from 0800 to
1800, Monday to Friday) to give practical advice to businesses
that were being impacted by the current economic downturn. It
was set up in conjunction with a series of How To guides and workshops
which provide information and guidance to help businesses weather
the economic storm. Many companies are referred to Business Advisers.
The average number of calls to the hotline has been 61.5 per
month, with the highest number (80) being received in March 2009,
in addition to those callers who use the standard 0845 telephone
number.
22. Incoming calls to the hotline have been
taken from businesses across the region, shown in Table 3.
Table 3
CREDIT CRUNCH HOTLINE
|
| Sub region | % of calls
| % of total regional
businesses*
|
|
| Birmingham and Solihull | 20
| 18 |
| Black Country | 22 | 16
|
| Staffordshire | 17 | 20
|
| Coventry and Warwickshire | 19
| 17 |
| Hereford and Worcester | 13
| 18 |
| Shropshire | 7 | 11
|
| Out of area | 2 | n/a
|
|
| *Source: BERR 2008 | |
|
| |
|
23. Analysis of the 369 calls to March 2009 shows
that 53% of businesses had between 0-4 employees. Approximately
62% of companies who called were less than five years old and
37% of the enquiries were from a business less than 12 months
old.
24. In November 2008, BLWM launched a series of "Credit
Crunch workshops", to give businesses practical support and
advice on managing their business through the recession. The workshops
covered key issues for business including: Managing Cash Flow,
Reducing Energy and Raw Material Costs and Dealing with Redundancies.
25. The initial series of 71 workshops resulted
in 559 delegates attending from across the region. A further
34 workshops covering Managing Cash Flow, Saving Money on
Suppliers, and Dealing with Redundancies ran in the period January
to March 2009, attended by 400 delegates. Events have also
been targeted at specific sectors (eg Automotive) which are known
to be significantly affected by the current trading climate. Comments
made by a customer attending a workshop are shown below in Table
4.
26. Table 4: Customer survey January 2009
One client who was surveyed following support commented:
"It is nice to have somebody who you can ask
for support and advice and who is impartial. It can be lonely
sometimes when you are running your own business"
Source: Business Link West Midlands Customer Survey (January
2009).
27. Events form an integral part of the support to businesses
and are available in both rural and urban areas. BLWM is delivering
a programme of 20 events per month in 2009 covering
the following topics: Effectively Trading On-line; Managing Money
and Making a Profit; Employing People: Managing Time Effectively
and Marketing and Selling Skills. These events will be promoted
via e-marketing and outbound telemarketing activity.
28. The introduction of the bite sized modules of training,
rather than full NVQ qualifications, reduction of employee eligibility
to the region's skills offer from 10 to five employees (to
access the Train to Gain Leadership and Management offer) and
access to support for employers through pre and post redundancy
training in conjunction with Jobcentre Plus, enables BLWM to maximise
the region's skills offer to businesses.
ISSUES FOR
BUSINESSES IN
THE WEST
MIDLANDS
29. The sector profile of businesses in the West Midlands,
with an above average representation of financial and professional
services, construction, manufacturing and retail businesses, exposes
the regional economy to the effects of the economic downturn to
a greater degree than other areas of the UK. The current economic
climate is leading to a rapidly increasing number of redundancies
in the West Midlands, adding to the benefits claimant register.
30. Feedback from manufacturing clients suggests the
following support is needed to address the current economic crisis
affecting the sector:
— wage support for retaining current skills/workforce;
— provision of Credit Insurance;
— support/grants for capital investment;
— training—Lean/six sigma/help with continuous
improvement;
— legal requirements (eg TUPE) from taking over the
supply contracts from the purchase of another business.
31. To understand more deeply how the current economic
climate is affecting businesses in the region, BLWM conducts a
survey which collects feedback from clients on key issues. During
the period January to March 2009 feedback from 450 clients
suggested:
— 33% of businesses have seen sales remain the same
compare with last month, with 21% seeing higher sales and 34%
experiencing falls.
— 40% of businesses expect their cash position to be
the same, with 30% expecting deterioration and 3% forecasting
an improvement.
— 45% of businesses were not able to obtain finance
facilities, whilst 30% could not obtain what they were seeking.
— 36% saw no change in the business outlook, 31% saw
an improvement, whilst 20% were expecting conditions to worsen.
32. Finance has been a key topic for clients, figures
show that 33% of companies contacting the Credit Crunch hotline
asked for information on cash-flow, debt management, raising finance
and paying suppliers. The other most requested topic has been
business management, with 47% of callers needing support in this
area. In some cases clients mentioned looking to the future but
indicated they required help on what direction to take. Legal,
health and safety and environmental issues were the least requested
subjects.
33. Of the region's industrial sectors, retail, logistics
and wholesale tied with manufacturing and engineering are the
most prevalent in seeking advice. These were followed by construction
and business and professional services, creative and digital sectors,
tourism, leisure and hospitality. The least number of calls originated
from the science and technology sector.
HELPING BUSINESSES
GAIN ACCESS
TO FINANCE
34. BLWM has supported almost 3,000 entrepreneurs
and 1,000 businesses to improve their understanding of the
financial products available and how to improve their chances
of accessing them. The finance secured has often been packaged
finance eg leasing with Grant for Business Investment or commercial
mortgage and Community Development Finance Institution loans.
High growth companies have raised angel investments and we have
introduced many businesses to the Advantage Funds and angel networks,
including the Advantage Transition Bridge Fund (see point 38),
Advantage Proof of Concept and Advantage Early Growth Fund. A
further 170 businesses have received consultancy support,
where £11.5 million of bank loans, commercial mortgages,
leasing, grant for Business Investment etc. was raised. The consultants
helped to put the paperwork together for the funding applications
and to introduce deals to the right funders at the right level.
35. BLWM is also developing other direct measures, including
proposals to support the short term stability and survival of
businesses through Access to Finance (£1 million) and Business
Diversification (£2 million) grant funding. The core Access
to Finance Programme will be supplemented by a specialist service
that is targeted at addressing the disproportionate barriers to
accessing finance experienced by both high growth and minority
owned businesses. The Business Doctor service will be central
to the offer. The case study shown in table 5 is an example
of the impact of support provided.
36. In February 2009, BLWM launched a "Business
Doctor" service, as an immediate response to the effects
of the credit crunch on small businesses. The service was targeted
at providing face-to-face support with a small element of grant
funded specialist consultancy to help businesses access advice
on financial restructuring and recovery measures to help survive
the acute effects of the economic downturn. This initiative has
delivered specialist support to over 140 businesses to the
end of March 2009, with £340k given in grant awards.
37. BLWM's Chief Executive Officer is a member of the
Regional Task Force. Priorities identified by the Task Force have
led to discussions between AWM and BLWM regarding an extension
of the Business Doctor Service for SMEs and larger companies for
2009-10. At present it is expected that £2 million will be
available to support SMEs, with a further £2 million to support
work with larger companies.
38. Business Link West Midlands actively refers customers
to the Advantage Transition Bridge Fund which was re-launched
by AWM in November 2009. The fund provides established businesses
that have been acutely impacted by falling sales with a life line
to bridge funding gaps and support the implementation of business
recovery plans. Businesses unsuccessful in making applications
to this fund are systematically referred to BLWM for support.
39. Table 5: Case study—APiC UK Ltd.
Guidance from Business Link West Midlands and a £10,000 diversification
grant allowed this local company from Sandwell (APiC UK Ltd.)
who designs, manufactures and installs aluminium curtain walling,
roof glazing and structured glazing systems, to enhance its image
with a new website to achieve spectacular growth and create more
than 100 local jobs. The client said:
"The clear and concise advice we've had
from Business Link has been integral to ensuring we continue to
thrive and prosper. The site is intended to be used as a research
tool for potential stakeholders and customers who can see the
latest projects we've won or completed."
Source: News Release 4 March 2009 (Business Link West
Midlands). Booming business for building industry supplier.
40. BLWM firmly believes that businesses can perform
better and more effectively if they have access to specialist
support. It is currently in the process of implementing new advisory
services in the areas of IT (raising awareness with 7,500 businesses
per annum), innovation (supporting 500 businesses) and resource
efficiency (460 businesses assisted) to provide medium to
longer term support for regional businesses to improve their productivity
and competitiveness.
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