Presentation by ERC to the New Midlands webinar start ups_ February 18th 2021

1. Professor Mark Hart
Deputy Director, Enterprise Research Centre &
Aston Business School
Presentation to New Midlands Workshop February 18th 2021

2. Background
• Clear connection between ‘business dynamism’ and growth in
productivity – at local and national level
• Business start-up and growth metrics crucial to understand
the nature and trajectory of business dynamism in a region
• Innovation – in its broadest sense - at the core of driving
‘business dynamism’

3. PRE-PANDEMIC

4. Number of Registered Start-ups in UK
2007=100

5. Trends in Total Early-stage
Entrepreneurial Activity (TEA)
Global Entrepreneurship Monitor - GEM

6. Trends in Registered Start-ups with at
least 1 employee
(OECD definition of an employer enterprise)

7. Higher than GBS LEP:
South East Midlands
Greater Manchester
Solent
London
Worcestershire
Start-ups per 10k Adult
Population - 2019
(OECD definition)

8. Start-ups £1m+ T/O in
3 years
• 55.1% so almost half of all start-ups do not
make it to their third year.
• Yet what is less well known is the proportion, if
they survive, that go on and generate at least
£1m in revenues after 3 years.
• This threshold, while arbitrary, reflects the
ambitions of many entrepreneurs as they strive
to sustain and grow their businesses – getting
to the ‘first million’ is frequently cited as an
important milestone.
• proportion of UK-owned start-ups that achieve
this early indication of ‘scale’ is very small
indeed (2% nationally)

9. Start-ups in a year of Crisis
• Self-employment significantly reduced1 – decline of 500k over the year
– The strong rise in self-employment in the UK has reversed back four years to 2016
levels.
– Almost half of the total reduction in self-employment in the UK in April-June 2020
compared to Jan-March 2020 happened in London (47% or 109,000 people).
– The dramatic reduction in self-employment is due to more people leaving and
fewer people entering self-employment in April-June 2020 compared to previous
years.
– Counter to the national decline, self-employment grew in Scotland and the West
Midlands between the first and second quarters of 2020
• GEM TEA rate (nascent and new business owners) – fell significantly from
10% to 7.8%
• But……record numbers of start-ups registering at Companies House –
772k+ - increase of 13% since 2019 - struggling to understand this??
– However, many are not active businesses;
– Existing business may register to become a limited company
– So, …..ONS IDBR/BSD data which I used earlier better reflect economic activity at
the enterprise level rather than registrations per se.
1. Changes in UK Self-employment in April-June 2020 - Darja Reuschke, Andrew Henley, Elizabeth Daniel and Victoria Price

10. The Millennial 2000
Insights into 16 years of Survival and Growth - A
cohort Study
• In 1998, 240,000 firms were born (OECD employer
enterprises) – most employed fewer than 5 people
• In 2014 - ~26,000 of these firms still in business (11%)
• 67% haven’t grown at all

11. Who are the Millennial 2000?
– 1,230 firms had 1-4 employees in 1998
But created 40x number of jobs they had in year one
– 1,131 firms had <£100k sales in 1998
But generated 80x amount of first year sales
– 412 firms in both categories
Created 77x number of jobs they started with
AND generated 137x amount of first year sales

12. Millennial 2000 Contribution to the
UK Economy in 2014
Adding Jobs for 16 years Generating Revenues for 16 Years
Employ c.110,000 people and generate around £16bn sales
On average each M2000 firm now employs ~55 people and generates sales of ~£8.5m

13. What we found out?
• Great deal of heterogeneity within the M2000 group
• Clear that exporting and innovation matter - 44.5% sell
internationally and two-thirds currently involved in innovation
activity …… and those that are have been exporting for more
than 10 years
• External finance not a key driver for the whole group of
M2000 firms – nor Government support.

14. Entrepreneurial Ecosystems - GEM

15. Midlands Engine – some faulty
valves!!
• Initial survival and scaling of start-ups a
key concern – not interested in the
volume of start-ups per se
• Very few firms that can be categorised
as ‘high-growth’ or have shown
evidence of scaling
• Growth ambition among early-stage
entrepreneurs and micro-businesses is
low
• Relatively lower levels of innovation
• These ‘weak’ business growth metrics
show some correlation with low levels
of productivity

16. Questions and comments?
More information at http://enterpriseresearch.ac.uk/
Contact us:
Mark Hart mark.hart@aston.ac.uk
This work contains statistical data from ONS which is Crown Copyright. The use of these data does not imply the
endorsement of the data owner or the UK Data Service at the UK Data Archive in relation to the interpretation or analysis of
the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.