Entrepreneurs' Survey 2011 - Nabarro

Entrepreneurs’ Survey 2011
A regional perspective of the Yorkshire and Humber region

Contents
01 Foreword
02 Introduction
04 Key findings
06 Case study: R3 Products
08 Challenges and opportunities
10 Case study: Fan Frames
12 Funding
14 Case study: Little Helper
15 Case study: Tailormade Conference Management
16 Priorities for businesses in the region
18 Case study: VeryPC
20 Enterprise culture
22 Case study: Go Outdoors
24 Methodology
25 About us

Entrepreneurs’ Survey 2011
Foreword
This report is both timely and illuminating. While the
Government is calling for an enterprise-led economy, the
entrepreneurs surveyed are displaying the characteristics
which single them out from the crowd. They’re independent
(most firms are self- or family-funded): many have realistic
plans for growth: the majority are cautious of carrying debt
(only a quarter has any bank borrowing): and they know
that cash is king (the priority for 90% of them is cash flow).
In other words, they’re born survivors.
While self-reliance is commendable, it can also have its
drawbacks. Fifteen percent of firms have raised external
equity finance, less than half of them from publiclysupported
venture funds and a similar number from EISqualifying
private investors. Also, many are experiencing skills
gaps, with finance and marketing singled out for mention.
Three years ago when the economy turned tail, reducing
costs was a good survival strategy. But going forward, firms
are unlikely to grow without more capital. And, external
informal investors – venture funds and business angels
– have much to offer businesses besides injecting new
money. We bring advisors and non-executives with fresh
thinking and additional skills. We generally have a wider
perspective than a single business owner and offer a sharedrisk
approach. It’s clear from this survey that, with wider
exposure, venture funds and angels can play a major role. I
commend the sponsors of this survey, Nabarro and Barber
Harrison & Platt for supporting this work.
Entrepreneurs need an environment that rewards
successful risk taking. Equally as important, an
unsuccessful business venture should not be treated as a
failure but as an aspect of learning about business on the
route to future success.
Entrepreneurs have a ‘can-do’ belief which is in the DNA
of this region. This needs to be further fuelled by
Government, business advisors, teachers and parents. We
also need to build more links between industry and
academia and build practical knowledge of industry and
technology trends. We hope that this excellent survey will
serve as a catalyst for some of these issues and that this
year’s MADE: The Entrepreneur Festival in Sheffield will
provide the platform for further debate and action.
Brendan Moffett
Director, Marketing Sheffield
Andrew Burton
Chairman, Yorkshire Association of Business Angels

Introduction
“If you’ve been turning over
a good idea for years - now is
the time to make something
of it. If you’re working for a big
firm but know you could do a
better job on your own - now
is the time to make that leap.
If you’ve been dreaming about
starting up the next great
British brand – now is the time
to make it happen.
“There are thousands of
people out there who are
entrepreneurs but they just
don’t know it yet. There are
millions of success stories that
haven’t been written yet. So
seize this moment. Take these
opportunities. Make it happen
- and together we can drive
our economy forward.”
Prime Minister David Cameron
on StartUp Britain
Government policy
With the Government’s call for an enterprise-led economy and with the vast
majority of the country’s enterprises comprised of SMEs, much weight is being
placed on entrepreneurs to deliver the increase in private sector jobs to meet
economic growth forecasts.
The Coalition Government has set the challenge of making this decade the
most entrepreneurial in the UK’s history. It has committed to creating the right
long-term environment to help people to start and grow their enterprises;
focusing on improving small business performance and growth. It has set its
budget and programme with the intention of galvanising growth, encouraging
enterprise and supporting small business particularly through the initiatives
highlighted in the box opposite.
Focus of report
This report seeks to identify the key trends and factors affecting enterprise and
entrepreneurship in the Yorkshire and Humber region (the “Region”). It also
seeks to focus on areas where the Government’s strategies are intended to
make an impact and looks at some of the key opportunities and challenges for
SMEs and factors affecting entrepreneurial culture. From these findings the
report seeks to identify the key priorities for the Region.
The report also includes a number of case studies from companies within the
Region at various stages of development, from a start-up to an entrepreneurial
company which is achieving great success.

Entrepreneurs’ Survey 2011
Government initiatives include:
• creation of a national network of Technology and Innovation Centres
(announced in October 2010);
• establishing 22 new Enterprise Zones;
• introducing a package of tax reforms to reduce rates of corporation tax,
increase the threshold for national insurance contributions and providing
a national insurance holiday for Regional new businesses;
• extending the lifetime limit for Entrepreneurs' Relief from capital gains tax
from the first £2m to the first £10m of gains;
• increasing and extending Enterprise Investment Scheme tax relief;
• committing to a cut in regulation – introducing a ‘one in, one out’ rule to
reduce regulatory burden;
• introducing measures aimed at ensuring 25 per cent of Government
contracts will go to SMEs;
• extending the Enterprise Finance Guarantee Scheme for the next four
years;
• introducing a number of tailored business solutions including: on-line
advice (e.g. the new StartUp Hub); a mentor scheme through the
Mentoring Gateway; and the targeting of established SMEs with high
growth potential through the Business Coaching for Growth initiative (to
be launched January 2012);
• specialist support for manufacturers (with the Manufacturing Advisory
Service being relaunched in January 2012); and
• discussion at regional level between the Government’s UK Trade &
Investment Department and Local Enterprise Partnerships on trading
internationally.
“After all, it’s not Government
that creates wealth – it’s
private enterprise”
Mark Prisk, City of London
Conference,
The Guildhall, London

Key findings
Challenges and opportunities
• A diverse range of businesses cited “cash flow and funding” as their biggest
challenge (44 per cent reporting this). Other common challenges included
markets and customers (23 per cent), time pressures (13 per cent) and the
need to generate greater sales and address skills needs, primarily in finance,
sales and marketing.
Funding and priorities
• 81 per cent have used self-financing or family resources to fund their
businesses.
• 75 per cent have not borrowed from a bank.
• 86 per cent expect future working capital to come from cash generated
internally, with only 13 per cent expecting it to come from banks.
• 39 per cent intend to reduce debt in the next year.
• Only 7 per cent have received investment from Finance Yorkshire, South
Yorkshire Investment Fund and Partnership Investment Finance (the Region’s
Government-backed funds for SMEs).
• External equity (15 per cent) comes from private equity and venture capital,
including family and friends, with only 1 per cent from angel investors.
• Only 8 per cent have made use of Enterprise Investment Scheme relief (EIS).
• No one had used the Enterprise Finance Guarantee Scheme.
• Of those that have looked for funding in the Region, over half believe there
are constraints with access to funding. One third do not know how to go
about accessing funding more widely.
Growth and opportunities
• 75 per cent with an established business achieved or exceeded projected
revenue growth.
• 73 per cent are projecting more than 10 per cent growth in the next 12
months and of these 22 per cent in excess of 50 per cent growth.
• Key growth strategies include development of new products, technology and
innovation (6 per cent), and expansion into export markets (8 per cent). 34
per cent expressed an interest in moving into new markets and export.
However, 83 per cent are currently trading in the UK and still see the UK as
the best opportunity for growth over the next three years.
• 61 per cent of respondents believe that they have opportunities to expand
and grow.

Entrepreneurs’ Survey 2011
Priorities
• Priorities include cost reduction (more than 50 per cent), increased
productivity (71 per cent), new products and services (75 per cent) and new
markets (70 per cent).
• 6 per cent cited failure of competitors as their main opportunity.
• Low priority was ascribed to renegotiating finance and growth by acquisition.
Enterprise culture
• Those surveyed were the decision makers, and of these, 65 per cent were
aged 35–54 with only 1 per cent aged under 25.
• Almost all surveyed were men.
• 74 per cent employ fewer than five people; 86 per cent fewer than 10 people.
• One third use staff incentives to remunerate staff.
• Advice is readily sought from accountants (74 per cent) and less frequently
from lawyers (38 per cent).
• 30 per cent intend to use mentors in the next 12 months.

Pictured (l-r) Doug Anderson and Kevin Parkin of R3 Products.

Entrepreneurs’ Survey 2011
Case study
R3 Products
Start-up, shortly to commence trading
Kevin Parkin has an impressive track record in turning around lossmaking
manufacturing companies. His most recent success being the
turnaround at DavyMarkham.
Kevin’s latest business venture is a
start-up called R3 Products which he
co-founded earlier this year. The
company manufactures products for
the civil engineering and construction
markets from mixed waste plastic,
catering for companies which need to
meet environmental targets and
green legislation requirements. The
start-up expects to achieve turnover
of £3m and employ 20 people in its
first year and has ambitions to trade
internationally. Full production will
soon begin at a 45,000 square-foot
factory in Sheffield, close to the M1.
The launch was funded by a £3m
investment, including a mix of asset
based and invoice finance. Kevin, the
non-executive chairman, is joined in
the launch by a finance director (Paul
Sapsford) and a sales and marketing
director (Doug Anderson).
Kevin attributes the success of the
start-up to the management’s
perseverance in pursuing potential
funders and the strength of their
contacts in the different
marketplaces. R3 is a great example
of how bank funding is available for
start-ups with a strong business plan
and a management team that is
willing to invest a great deal of time,
effort and expense in order to get the
business out of the starting blocks. 33
per cent of the funding came from
private equity and 67 per cent from
the banks. However, Kevin stressed
that obtaining bank funding was
extremely difficult. “It took two years
and only one bank supported us from
the five that we approached.
“It’s probably the most difficult deal I
have worked on in terms of the levels
of deal fatigue, red tape and overall
frustration. Funding decisions have
taken much longer than I expected.
Some of the banks say they do not do
start-ups and I respect their honesty.
Others said the company needed
more equity. We needed equipment
financing and invoice discounting
facilities – some could not offer
both”.
Kevin is critical of the attitude of
some banks, which he said failed to
be transparent in their decision
making. “The banks need to tell their
customers exactly what the process is
rather than just saying that it is being
reviewed. There should be a defined
timescale agreed with milestones and
feedback.”
R3 will need more funding over the
next eighteen months to further
expand the business. Kevin estimates
that the business will create up to 50
new jobs over the next three years.
But, future growth will not be
without its challenges; he cites red
tape and funding as they key barriers
going forward.
Kevin believes that the success of the
start-up was independent of any
regional support. “The region, given
the exception of the professional
advisors we engaged, played no role
at all in starting up our business and
we didn’t get any support, there were
no grants and no assistance in
recruitment.” Kevin is keen for
changes to be made at a Government
level both locally and centrally to
help entrepreneurs like him.
Despite the lack of support, Kevin
remains keen to operate from the
region, but he believes there is much
more the region can do to help
entrepreneurs and business start-ups,
“I would like to see a regional fund for
debt and equity to support start-ups
like R3”.

Challenges and opportunities
61 per cent of respondents
believe that they have
opportunities to expand and
grow.
Challenge of cash flow and financing
The entrepreneurs who participated in the survey appear to have two major
and fundamental challenges facing their businesses. The key challenge (44 per
cent of respondents) is cash flow and financing. This is against a background of
85 per cent of the businesses being less than five years old and approximately
75 per cent of the respondents not borrowing from their bank.
Some very interesting questions come out of this:
• Were the businesses undercapitalised at the outset i.e. when they first
commenced trading
• Why do such a high proportion of the respondents not borrow from banks
• Are the businesses less profitable than expected/is it taking longer than
expected to achieve profitability
In turn, this raises questions about understanding the fundamental importance
of business planning, performance monitoring and financial disciplines.
What are the key challenges/hurdles you are facing for your business
3% 3%1% 44%
7%
13%
6%
23%
Cash flow and finance (44%)
Markets and customers (23%)
Establishing the business and expansion (13%)
Staffing and employment (7%)
Location factors (3%)
Wider economic factors (3%)
Other (1%)
No factors cited (6%)
Other key challenges
The second key challenge that emerges is markets and customers (23 per
cent). This should come as no surprise as smaller businesses typically have a
narrow customer base and equally a limited product or service offering. As a

Entrepreneurs’ Survey 2011
consequence there will be times when the business-owners feel very exposed
to competition and/or changes in the market. This challenge will not disappear
as the business grows – it is a fact of business life.
The other key challenges facing entrepreneurs generally arise as a result of the
pressures of establishing the business and expansion. As a generalisation,
young businesses have limited resources at a time when there is much to do.
Time pressures are an important issue for 13 per cent of respondents with
staffing and employment being a top priority for 7 per cent.
Key Opportunities
Turning to key opportunities, there is one statistic that stands out above all the
rest – 61 per cent of respondents believe that they have opportunities to
expand and grow. Interestingly, a significant number of respondents were not
specific as to how this development is to be achieved. Nonetheless this is a
clear, positive and optimistic message.
Export and new products
In addition, 8 per cent of smaller businesses see exporting as an opportunity
with 6 per cent of respondents seeing key opportunities in new products,
technology and innovation. These findings should be considered in the context
of the 23 per cent who have indicated markets and customers as a key
challenge. Conversely 6 per cent of respondents felt that their main
opportunities would arise from the failure of their competitors with 2 per cent
seeing opportunities in improving the level of service that they offer.
What are your key opportunities
2% 3%
3%
4%
6%
6%
8%
7%
61%
Growth/expansion/new markets (61%)
Export (8%)
Failure of competition (6%)
New products/technology/innovation (6%)
Internet (4%)
Renewable energy (3%)
Improving service (2%)
Other (3%)
None (7%)
Ability to exploit opportunities
The belief that opportunities are there to be taken raises some fundamental
issues in the context of the high level of concern over cash flow and finance.
Growing businesses require certain basic ingredients and one of these is
finance. It is generally acknowledged that it will not be easy for businesses to
obtain new funding for the next 12 months at least. Accordingly, management
in businesses requiring finance for expansion will need to find both the time
and the resource to put together a very well-considered, professional and
compelling business case to attract the serious attention of funders. They will
also need to demonstrate to potential funders that they have good systems,
financial controls and reporting within their business.

Pictured (l-r) Keith Gibson, Chris Birkett and Paul Gibson of Fan Frames.

Entrepreneurs’ Survey 2011
Case study
Fan Frames
Commenced trading April 2011
Fan Frames’ business has developed from their innovative concept of
sports branded eyewear. It commenced trading in Hull in April 2011 and
is projecting first year turnover of £240,000. The company is hoping to
create jobs in its second year of trading.
The Fan Frames team all live in the
Hull area and have been supported
by the University of Hull’s Enterprise
Centre, which was funded through
Yorkshire Forward. One of the
founders, Keith Gibson, believes that
the support and network that the
Enterprise Centre has provided has
been vital to the speed and roll-out of
the business; “Clearly keeping costs
down is key at the start of any
business and we have been able to do
this through the Enterprise Centre.
This includes rent, telephone etc.”
Keith comments on how helpful the
region has been in setting up their
business, despite the lack of grant
funding. “Fan Frames received
support from the FEO (For
Entrepreneurs Only) group based in
Hull. They provided an experienced
business mentor who meets with us
regularly to discuss any aspects of the
business where we feel we need
assistance.”
The funding to set up Fan Frames came
from a variety of sources, including
loans from the Acorn Fund (Hull
Business Development Fund), Sirius
(Business Advice Centre), Santander
and some personal funds. “Santander
were very supportive and we obtained a
£25,000 loan from them but we did
struggle with other banks.”
Fan Frames has secured £75,000
investment for 15 per cent of its
equity from family and friends. “In
the early stages Fan Frames believed
we would not need this assistance
and we looked at a number of
options but eventually decided to go
with equity finance. We were very
lucky to have this support and believe
without our investors it would have
been extremely difficult to proceed.”
The Region could be doing more.
“Most of the banks are unwilling to
lend even with the Enterprise Finance
Guarantee Scheme which we found
astonishing. Grant funding should be
available. Even small amounts of cash
can help many start-up businesses.
We were very lucky to receive
financial support but this has not
been achieved without challenge. I
believe there are many businesses
that don’t start up simply because
they can’t obtain cash and feel taking
on a loan is too much risk. We have
found that any unsecured loan to the
company has to be secured
personally.”
As with any business, Fan Frames sees
both opportunities and challenges
ahead. “We have huge opportunities,
not only in selling these products into
football clubs directly but also
targeting large optical retailers for the
optical frames for adults and children.”
The biggest challenge Fan Frames will
face going forward will be the UK’s
economic situation. Ultimately, what
goes on locally, nationally and globally
will impact on people’s disposable
income. Keith believes there will be
many economic challenges ahead: “It
is important that we have a stable
base financially to be able to deal with
any of these challenges. Setting up a
business is a new experience for all
the Fan Frames team and the journey
has thrown up many issues but we
have been able to deal with these with
a common-sense approach to
business which is what we feel is vital
to this company. The whole
experience has been challenging and
will continue to be so.”
As for the future of Fan Frames, the
directors are looking to expand and
would like to import into and
distribute from their own warehouse
and office which will be based in the
Yorkshire and Humber Region. “We
would like to expand internationally
over the coming years but intend that
the Region will always be our home.”

Funding
Growth – outlook
Much of the growth that is hoped for in the Region and across the UK
economy is expected to come from successful entrepreneurs, hence the
Government’s focus on improving small business performance and growth.
The respondents to the survey have a very positive outlook with 73 per cent
projecting growth of more than 10 per cent in the next 12 months and, of
these, 22 per cent anticipate growth of 50 per cent or more.
Access to funding
A critical platform for the future growth of any business is to have a suitable
funding structure in place. 44 per cent of the respondents indicated that a key
challenge to growth in the next 12 months is access to funding to finance
expansion. The next biggest challenge to growth was the impact of markets and
customers which was highlighted by 23 per cent of the respondents. This puts
into perspective the importance of access to funding to businesses in the Region.
Further evidence that access to funding remains difficult is the source of
finance that businesses have utilised in their business. 75 per cent of
businesses had not borrowed from a bank; in contrast 81 per cent of
respondents had used their own funds. 86 per cent expect future working
capital to come from cash generated internally.
So what does all this mean On the one hand it reflects the difficult funding
environment, on the other hand business owners appear to be reluctant to take
on the risk of external funding in the current challenging economic conditions.

Entrepreneurs’ Survey 2011
Government initiatives
If the commercial banks are having difficulty providing the level of funding
required by entrepreneurs, what of Government initiatives in this area None
of the respondents had obtained funding from the Enterprise Finance
Guarantee Scheme which has now been running for over two years. Perhaps
more importantly, none of the businesses believe that working capital will be
funded by the scheme in the next 12 months.
Other sources of funding
The Yorkshire and Humber Region is fortunate to have organisations such as
Finance Yorkshire and networks of business angels such as the Yorkshire
Association of Business Angels (YABA) on the doorstep to provide a route to
alternative sources of finance. Finance Yorkshire is continuing to collaborate with
banks to enable funding packages to be put together to provide development
and working capital funding for companies in the Region. Of the businesses
surveyed, however, there appears to be very little third party funding. Only 16 per
cent of businesses had received any form of external equity funding. More
interestingly, a mere 7 per cent had received debt or equity financing from the
local public sector-backed funds (Finance Yorkshire, South Yorkshire Investment
Fund and Partnership Investment Finance). This is disappointing.
‘Go for growth’
In summary, entrepreneurs need to focus on what makes them special – ‘go for
growth’. Businesses need to have the confidence to take the step to embark on
growth projects but will need to approach funding with a little more
imagination. Collaboration with a number of funders will often be a key
feature of any solution. It is even more important than ever before for projects
to be strategically sound, properly planned and researched, adequately funded
and presented professionally.
44 per cent of the
respondents indicated that a
key challenge to growth in the
next 12 months is access to
funding to finance expansion.

Case study
Little Helper
Commenced trading in 2005
More than six years ago, parents Kim and Sean Johnson conceived the
FunPod to keep their daughter safe in the kitchen. The Little Helper
brand was initially launched to enable Kim and Sean to sell the FunPod
and the FunPod High Chair to UK consumers.
Now operating across four continents
and offering over 1,000 SKU’s, the
company has grown from the original
concept, but still aspires to the same
values.
The company designs and
manufactures fun, funky and safe
children’s products, but now also
distributes high quality, inspirational
children’s furniture and nursery goods.
Based in Sheffield, Little Helper now
employs five people, and Kim puts
the success of the business down to
hard work and perseverance, along
with building a team of people with
complementary skills. As she explains,
“because South Yorkshire was an
Objective 1 area, we benefitted from
enormous help in terms of advice and
support from Business Link Yorkshire
and Yorkshire Association of Business
Angels (YABA) and were lucky to
obtain grants and investment which
were pivotal to the company’s
growth. Without the grants and
investment, we would not have been
able to get the business up and
running as fast as we have done nor
expand our product range as quickly.
We have been able to invest in R&D
and protect our designs and products
for future security. Business Link were
also able to put us in touch with a
great bank manager who supported
us in the early days.”
The initial funding to set up and grow
the business came from a mix of
sources – the bank, angel investment,
personal funds and grants. “YABA
were instrumental in helping the
company obtain investment and we
found this a fluid process. Alongside
our initial investment, we have a
syndicate of professionals via YABA.”
Little Helper found that in the early
days bank finance was a lot easier,
they operated with funding provided
by HSBC under the Small Firms Loan
Guarantee Scheme and a small
overdraft. Recently, they have found
it much more difficult getting funding
despite good financial performance
and they have had to rely on cash
flow and investment.
A major challenge that is being faced
by Little Helper as they grow is
funding the supply chain from
overseas suppliers, and also dealing
with large UK national customers
who operate on long payment terms.
“We want to grow our product range
constantly and as such, we may need
funding in the next 12-18 months to
help to achieve this objective and
create more jobs in our region”.
The team at Little Helper were
disappointed at the demise of the
local Business Link adviser team.
“With Business Link you knew that
you were dealing with people who
had access to a vault of knowledge
and contacts. Grants aren’t always
the answer but good quality and
affordable mentoring can be
invaluable”
Looking forward, Little Helper
definitely plans to continue trading
from its Sheffield base. The children’s
sector is growing substantially within
the national retail sector and the
company has a huge opportunity to
get a foothold with these retailers
– having recently set up accounts
with Boots and Tesco whilst
substantially growing the business
with Kiddicare, Mothercare and
Amazon. Many retailers want an
abundance of products, and new
products from one brand so this is a
great opportunity for them.
“The challenges for us will be the
funding and systems placement to
facilitate these opportunities.”

Entrepreneurs’ Survey 2011
Case study
Tailormade Conference Management
Established business, commenced trading in 2002
Established in 2002 by Chris Wilson, Tailormade Conference Management
(TCM) offers a variety of conference management services to all those
involved in planning and organising events across the UK and
internationally. The company currently employs 7 people.
Chris came up with the idea for the
business whilst running the York
Marriott Hotel. He identified the
opportunity for a conference
management company in the Region
owing to a large, untapped market,
good infrastructure and limited
competition.
TCM is the driving force behind the
successful Venturefest Yorkshire
entrepreneur event that takes place
at York Racecourse each year. The
event attracts more than 1500
delegates, 100+ exhibitors and
showcases the activities of Yorkshire’s
entrepreneurs.
Chris puts the success of the business
down to delivering consistent levels
of good customer service to their
clients.
Whilst Business Link provided some
advice at the outset, it was Chris’
hotel management background that
gave him the skills needed to make
the business the success it is today.
As no large costs were involved in
setting the business up, it was
possible to refinance the venture
entirely from personal savings.
Over the next 12-18 months, Chris
will require bank funding for a move
to larger premises which will enable
the company to target new
customers and hopefully create up to
15 new jobs.
Chris envisages operating in the
Region long term. “It’s ripe for
opportunity from a conference and
events perspective. York, Harrogate
and Leeds are big markets for us.
They have the infrastructure in place
to bring visitors into the region and
have a reliable and trusted network of
suppliers.”
However, Chris believes that much
more can be done to help
entrepreneurs in the region, especially
when it comes to bureaucracy. “Rules
and regulations relating to small
businesses are too stringent, you
creep beyond what is permissible and
there is little flexibility. The myopia is
beyond belief when it comes to
business documentation.”
His main challenge going forward will
be how to remain competitive whilst
creating good margins. “Competition
has increased over the last year,
coupled with a decline in work from
the public sector. There are a lot more
companies bidding for the same
work”.
Chris is also setting up another
venture - a consumer product for the
retail market and will need significant
investment to push the button on the
production process. Chris will be
looking for investor partnerships and
has started discussions with YABA
and Finance Yorkshire.
Chris is keen to promote
entrepreneurialism and to assist
young entrepreneurs in setting up in
business but firmly believes that the
support should start at school and
college. Chris has been into colleges
to present on working in the
conferencing and events sector but in
some cases came away feeling
deflated by the apathy and the low
level of desire and business acumen
in students. “This needs to be
addressed within the education
system. Young people need to be
inspired. I offered the students
opportunities for experience on some
large projects we were running but
very few came forward, it was very
disappointing.”
Chris concludes that despite this
there are some great beacons of light
in the Region “NYBEP in York and the
Peter Jones Academy in Sheffield are
positive steps to foster the right sort
of environments for the future”.

Priorities for businesses
in the region
Whilst the findings above report on respondents’ key challenges, the chart
below considers the relative priorities for the year ahead of those surveyed.
Business owners were asked to rank various factors as high or low priority
during the next 12 months.
High priorities cited by entrepreneurs were the management of cash flow (87
per cent giving it some priority in the next 12 months) with more than half
indicating a need to tackle cost reduction and 71 per cent suggesting increased
productivity as one of their priorities. 75 per cent are prioritising development
of new products and services, with 70 per cent giving some priority to new
markets with export seen as a growth area. In contrast, low priority was
ascribed to renegotiating, finance and growth by acquisition. Does this reflect
Provide an indication of whether the following are of high or low priority over
the next 12 months in terms of business strategy
Cash flow
New products services
Increasing productivity
New markets
Reducing costs
New capital
Reducing debt
Re-negotiating finance
Growing by acquisition
Buy backs
Asset disposal
4
9
13
75
25
71
29
70
30
54
46
44
56
39
61
36
64
23
77
87
96
20 40 60 80 100
91
High
Low

Entrepreneurs’ Survey 2011
the caution of entrepreneurs in the Region In summary, it appears that there
remains an element of ‘battening down the hatches’.
Cash flow, funding and productivity
Addressing cash flow appears to translate into reducing costs, increasing
productivity, introducing new products and accessing new capital. The
Government’s initiatives have focused on schemes to facilitate provision of
debt and offering tax incentives to encourage external investment. These do
not seem to be having any significant impact on the Region with only 8 per
cent of those surveyed having made use of the Enterprise Investment Scheme
and no use of the Enterprise Finance Guarantee Scheme.
One third of those who have sought finance do not know how to access wider
funding. Only 23 per cent have indicated that banks have provided funding
with 39 per cent citing a priority to reduce debt. This suggests that bank
products are either seen by the Region’s businesses as unaffordable, not in line
with cost expectations or just not available. This is against 44 per cent who
indicated accessing new capital as one of their priorities with 86 per cent
expecting future working capital to have to come from their own cash
resources.
The Government’s recent initiatives to expand the Enterprise Investment
Scheme to encourage wider business angel investment and also to deregulate
to allow SMEs to raise up to €5m (£4.4m) in equity finance without a
prospectus and to a larger pool (up to 150 from 100) may help with funding
opportunities and open up a wider investment in SMEs to alleviate the reliance
on internal cash resources and fund growth.
Clearly, a priority must be to raise the importance of cash management and
improve the understanding of the wider funding resources available. A more
sophisticated and open-minded attitude may need to be nurtured and fears
alleviated and expectations reset that alternative forms of funding will not
result in too much external, unwanted interference.
Expansion into new markets and products
Whilst 34 per cent expressed an interest in moving into new markets and to
export, 83 per cent still expect the UK to be their best opportunity for growth
over the next three years.
New products are the lifeblood of a strong business. Again, this is one of the
priorities for a significant majority of the Region’s businesses.
If established, regional SMEs are to grow at a rate which will deliver the
rebalance needed in the economy and, in particular, to increase employment
to have a meaningful impact, support for expansion into new and export
markets should be a priority. The barriers to accessing new markets need to be
better understood and then addressed.
Mentoring and management
The Survey indicated that 30 per cent intend to access mentoring services.
Regional businesses recognise the importance of mentoring and the need to
access skills. Whilst they recognise this, will they take up the challenge and will
they be willing to develop and, perhaps, more importantly, change in order to
grow Will the Government’s initiatives in this area provide the help so clearly
sought
Clearly, a priority must be to
raise the importance of cash
management and improve the
understanding of the wider
funding resources available.

Pictured (l-r) Simon Bown and Peter Hopton of VeryPC.
Image supplied by MAS. MAS is delivered by GLE Enterprise Partners.

Entrepreneurs’ Survey 2011
Case study
VeryPC
Commenced trading in 2004
Peter Hopton is MD and founder of VeryPC, manufacturers of high
performance, sustainable desktop computers and servers. Their products
are being used in businesses, universities, schools and organisations across
the world and they lead the way in the development of energy efficient
computing solutions, delivering long term value to the customer.
Peter started the business in Sheffield
in 2004 and in 2008 appeared on the
hit BBC show, Dragons Den. He did
not receive the backing of the
Dragons, but that didn’t stop him. The
Company now turns over £2m with
16 employees, plus revenue from two
spin-out companies (one based in the
US), each turning over approximately
£500k and employing 13 people.
Peter believes that his business is
successful due to hard work and
dedication. “Hard work from the
VeryPC team and the opportunity
presented in the market as a result of
‘peak oil’ conditions, such as rising
energy costs and carbon taxation are
the main reasons I believe that the
company has been so successful.”
But what role did the region play in
the success of VeryPC Peter came to
university in Yorkshire and decided
that it would be a good place to start
a business. “The region offers low
cost of living and skilled labour which
has helped the business to grow, but
the lack of local capital investment
has made things more difficult. We
didn’t receive any support from the
Region when we set the business up.
“We obtained start-up training where
the advisors wanted to discuss our
Intellectual Property (IP) but refused
to sign a Non Disclosure Agreement
(NDA). Fortunately we were wiser
than to continue with this service as
disclosure of our IP without a NDA
could have destroyed our ability to
patent.”
Peter believes that changes could be
made to help small businesses by both
local and central Government, by
changing culture to make risk in
procurement acceptable and having a
service that supports smaller firms to
win larger contracts. “I think the
Government needs to force public
sector entities to work with smaller
businesses, currently there is a ‘no risk’
culture that discriminates against small
businesses bidding for contracts.”
Peter has successfully financed the
company’s growth through a variety of
means. Small amounts of savings from
the directors set the company up and
investment by family and friends has
assisted the Company to get to this
point. VeryPC’s spin-out, Iceotope is
venture capital backed to the tune of
around £1.5m and it is a case study for
Finance Yorkshire; “Obtaining finance
was a long process but we eventually
got lucky at Enterprise Ventures/South
Yorkshire Investment Fund by
obtaining funding through their ‘Rising
Stars’ and ‘Seedcorn’ funds. We also
received a £70,000 loan from Viking
Fund Managers”.
The banks have also played their part.
VeryPC got a bank loan for £10,000 in
the early days, which wasn’t difficult
to obtain. The company’s expansion is
now financed with a modern, low cost
factoring facility. VeryPC, like most
SMEs experiencing their level of
growth without significant
investment, is undercapitalised.
Peter explains how VeryPC is now
pursuing equity funding in order to
break from organic growth to seize
the opportunity it has in the market,
which could result in a significant
number of jobs in the region. Peter
hopes that Enterprise Investment
Scheme relief will help to entice
investors.
Going forward, the big challenge for
the company is to secure funding to
take advantage of their lead in the
market, to continue investment in
innovation and to add barriers to
entry for their competitors. Peter
cites carbon taxation, funding for
energy efficiency measures and
legislation in this area as potential
inhibitors to growth.
As for the future, Peter is determined
to remain headquartered in the
Region. But, he warns; “there must be
better investment options for
businesses, better support from local
Government and the local public
sector in terms of ‘pioneering’ higher
risk products/companies through
good risk management.”

Enterprise culture
The Region needs a greater
number of business
leaders who are driven to
accomplishment and to
thinking that ‘small’ is failure.
Addressing the jobs deficit
The hope is that the entrepreneur will jump start job creation and innovation
to support re-focus from a public sector to a private sector led economy. But
is entrepreneurship in the Region able to deliver on this
The report puts into question the ability of SMEs to address the jobs deficit
speedily. Of those surveyed, 74 per cent employ fewer than 5 people and 86
per cent fewer than 10. This suggests that, without considerable growth, the
Region will have to develop many more of these types of businesses in order to
deliver jobs creation of the magnitude needed, particularly in the light of
pressure to reduce costs.
Who are these entrepreneurs and their businesses
Of those interviewed (senior decision makers), 38 per cent were between 35 and
44 with only 1 per cent under 25 and 10 per cent between the ages of 55 and
64. This contrasts with the often peddled image of the young entrepreneur. Is
this an indication of the nature of business throughout the Region
A number of respondents were from manufacturing, building and construction
backgrounds; often associated with more established and traditional sectors.
IT and design were, however, the largest sectors represented, with significant
numbers in marketing, services and retail. This supports a shift in sector
emphasis for the Region.
Given the findings, those in ‘minority’ groups, (for example, women) do not
appear to be engaged significantly in enterprise. Barriers to entry need to be
explored and addressed.
There was a surprisingly low number of respondents in the younger age groups
– this has to be addressed. Is this the product of a society which has focused
too heavily on university education making the young averse to taking the risk
of enterprise and not equipping them in the other skills needed to start and
grow a business Or is it perhaps a result of bankers and investors too often
looking for experienced management teams to de-risk their investment
decisions (‘back the jockey, not the horse’) with younger entrepreneurs getting
stuck in the ‘experience gap’

Entrepreneurs’ Survey 2011
Entrepreneurial culture
Only a third of businesses interviewed use any form of incentives package to
reward their personnel. This suggests that entrepreneurial culture is not
embedded within the businesses surveyed.
A significant number indicated a need for improved finance, sales and
marketing skills. A combination of mentoring of senior management coupled
with a re-look at incentive programmes for staff may help to address this,
particularly given cash flow constraints. Inevitably, addressing skills deficits
may have additional cost and, therefore, investment needs and related funding
issues addressed in the rest of this report may also be relevant.
Do you incentivise your employees with share options or other incentives
100
90
80
Percentage
70
60
50
40
30
20
10
35
Yes
65
No
GAZELLE vs SELF-EMPLOYED BUSINESS OWNER
Should a distinction be drawn between the true entrepreneur and the
self-employed small business owner and is this a particular issue for the
Region The fact that so few of the businesses looked (and intend to look) for
risk capital for their growth, may be an indication that the majority of these
businesses comprise successful (most being in profit or break even) selfemployed
small business owners rather than true entrepreneurs.
It suggests the Region needs more highly aspirational Gazelles. The increase in
growth and jobs that the Government is looking for requires true
entrepreneurs to deliver. The Region needs a greater number of business
leaders who are driven to accomplishment and to thinking that ‘small’ is
failure.
Impact of strategy
It will be interesting to see how the Government’s Business Coaching for
Growth initiative (targeting high-growth companies) will impact on the Region
once launched. Coupled with Technology and Innovation Centres and the work
of the Local Enterprise Partnerships, the strategy is aimed at creating a
dynamic combination of cutting edge, innovative businesses with clear vision,
a unique selling point and the skills to succeed in international markets.
However, there are many who would argue that lower taxes and deregulation
coupled with access to capital may have more impact and these do not
necessarily involve people intervention.
Business people need to be inspired to raise their sights and ambitions and
consider their businesses from a global perspective in an environment that is
not interventionist but supportive.

John Graham of Go Outdoors.

Entrepreneurs’ Survey 2011
Case study
Go Outdoors
Well established rapid growth business
Go Outdoors sprang from CEO John Graham’s innovative concept of a
superstore based on his passion for climbing and love of the outdoors. In
the mid-1990s he put this vision into action, catering for the huge demand
for stores that met all the wider needs of outdoor enthusiasts; stores that
had a range of clothing and equipment for anybody who wanted to take
part in activities such as walking, climbing, camping and cycling. John
believed that the market was potentially enormous – to cater for people,
like himself, who live and breathe the outdoor life.
John’s belief in the demand for
outdoor clothing and equipment, his
confidence in his own abilities to find
the right products, combined with his
ambition to run a business that
would keep him in climbing shoes for
the rest of his life, urged him to buy
the Sheffield business Camping &
Caravanning Centre (CCC). He
completed this acquisition in 1998
when the turnover of the business
was £2m. In the following six years,
John opened a small shop in
Hathersage and acquired another
superstore. Shortly afterwards the
business adopted the name Go
Outdoors.
Since then, Go Outdoors has become
a national brand which has grown to
a turnover of £115m and 30
superstores. It currently has 1,500
employees and expects to create
more than 500 jobs nationally over
the next 12–18 months, with a
number of these in the Yorkshire and
Humber Region.
John believes that Go Outdoors’
success has come from a
combination of being innovative and
listening to customers. “We were the
first large format retailer of outdoor
clothing and equipment in the UK,
selling everything for the outdoor
enthusiast – we like to say that we
can kit customers for any outdoor
activity from walking the dog to
conquering K2! Go Outdoors
communicates regularly and directly
with all of its customers and seeks to
care for their needs – we sell a full
range of products across a wide price
range.”
John puts the company’s success
down, in part to those who have
supported the growth by providing
finance. With funding from the Bank
of Scotland (now Lloyds Bank) and
private equity from British Smaller
Companies Venture Capital Trust and
3i, John has become accustomed to
working with investors. “Private
equity investors are demanding, but if
you really want to grow your business
and you need their funds to achieve
this growth, their requirements are
understandable”.
Even though he is leading a business
that he loves, it has not always been
plain sailing for John. He thinks that
the relaxation of planning laws and a
reduction in VAT and employment
taxes could really boost the economy
and help businesses like his to
continue to grow. He also sees
challenges ahead from “cost price
increases, the squeeze on consumer
spending and fuel prices.” However,
John is positive about the
opportunities for Go Outdoors –
especially in the Yorkshire and
Humber Region where they have four
superstores (Leeds, Sheffield,
Wakefield and York) and where the
company’s headquarters are based.
“Go Outdoors started in Sheffield,
gateway to the Peak District and a
hub for outdoor activity. It has now
grown way beyond that. People from
all over the UK buy our products to
have fun and adventure both when
they are at home and on holiday.”
John stresses that being a good
entrepreneur is not just about having
good business acumen;
“entrepreneurial spirit comes from
the heart”.

Methodology
The research was carried out during July and August 2011. Voice, an
independent agency, was commissioned to conduct telephone interviews with
senior decision makers at owner managed businesses in the Yorkshire and
Humber Region to obtain their views on a variety of issues including: key
opportunities and challenges, technology, growth, international expansion,
funding, priorities and the Region.
In total, 100 companies were interviewed. To ensure a balance of views
companies were chosen from within the Region across a range of industry
sectors and at varying stages of growth. The companies targeted were less
than 5 years old. 94 per cent of respondents were entrepreneurs and 6 per
cent were intermediaries. In addition, in depth interviews were conducted with
six of the Region’s entrepreneurs which have been included as case studies in
the report.
This report was launched in September 2011 at MADE: The Entrepreneur
Festival in Sheffield.
We are grateful to all those who participated, for giving their time and sharing
their views.

Entrepreneurs’ Survey 2011
About us
Barber Harrison & Platt (BHP) has a
specialist Entrepreneurial Advisory
team made up of some of the
region’s leading specialist advisors.
The team has developed its skills and
experience over decades of
supporting many of Yorkshire and the
Humber’s leading entrepreneurs
through all stages of growth and
development. In addition, BHP has
developed in-depth sector knowledge
of a number of the region’s key
business activities.
The firm has particular expertise in
supporting entrepreneurs in
developing their businesses through:
• Funding growth
--
raising finance
• Supporting growth including
--
tax planning
--
outsourcing (accounts and
payroll)
--
management information
--
strategic business planning
• Planning for growth
--
business planning and
forecasting
BHP’s team of specialist advisors
works with entrepreneurs to fulfil
their ambitions by providing both
practical hands-on financial and
commercial support as well as
advising on business strategy and
planning.
Nabarro is a major commercial law
firm renowned for its positive and
practical approach to our client’s
business needs. It operates in a
number of industry sectors and legal
disciplines with a single aim: to
deliver the highest quality legal
advice as clearly and concisely as
possible, no matter how complex the
situation.
Nabarro has a designated
entrepreneurs group which is focused
on the needs of the entrepreneur
community, having been closely
involved with young growing
companies and their investors for
many years.
We understand the needs of
entrepreneurs, so no matter how
complex the situation we offer plain,
unequivocal advice, not pages of
jargon. We have developed various
products that aim to make the
process as straightforward as
possible, whether it’s raising equity
capital or bank finance or seeking
advice on such issues as the
Enterprise Investment Scheme, share
incentive plans, employment law,
protecting intellectual property
rights, terms of business, real estate
contracts and dispute resolution.
Yorkshire Association of Business
Angels (YABA) is a unique regional
forum which brings together the
finance and expertise of business
angels with entrepreneurs and their
business ideas. Since its inception in
1995 and with support from Yorkshire
Forward, the Regional Development
Agency, since 2000, the YABA
membership has grown steadily to
over 170 Angel and Associate
members.
The Association which is not-forprofit
regularly holds investment
forums at various venues throughout
Yorkshire & Humberside to see
entrepreneurs introduce their ideas to
an audience of business angel
members, associate members and
some of the most influential business
leaders in the region. Approximately
3 in 20 businesses receive investment
following these forums, and this in
turn often releases further funding
from other institutions.
YABA’s introduction service enables
entrepreneurs to not only personally
present their business proposals at
the forums, but also publish an
executive summary on the YABA
extranet where the angel investors
can login to view summaries and
contact the entrepreneurs direct.

Barber Harrison & Platt
Lisa Leighton
T +44 (0)114 266 7171
Barber Harrison & Platt
Leeds
18-22 St Michaels Road Leeds LS6 3AW
T +44 (0)113 2743496
Sheffield
2 Rutland Park Sheffield S10 2PD
T +44 (0)114 266 7171
Also offices in Chesterfield and Harrogate.
For further information visit:
www.bhp.co.uk
Nabarro
Andrea Cropley
T +44 (0)114 279 4157
Nabarro
London
Lacon House 84 Theobald’s Road
London WC1X 8RW
T +44 (0)20 7524 6000
Sheffield
1 South Quay Victoria Quays
Sheffield S2 5SY
T +44 (0)114 279 4000
Also offices in Brussels and Singapore and
links to alliance firms in France, Germany
and Italy.
For further information visit:
www.nabarro.com
Yorkshire Association of Business
Angels
Barbara Greaves
T +44 (0)1423 810149
Yorkshire Association of
Business Angels
Harrogate
1 Hornbeam House Hornbeam Park
Hookstone Road Harrogate HG2 8QT
T +44 (0)1423 810149
For further information visit:
www.yaba.org.uk
Detailed specialist advice should be obtained before taking or refraining from any action as a result of the findings
and comments found in this report. The information is correct at the date of publication.
© Barber Harrison & Platt, Nabarro LLP 2011
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