1. Unleashing the potential
of mid-sized businesses
26 November 2012
Tera Allas
Deputy Head – Government Economic Service
Director General – Strategy, Analysis and Better Regulation, BIS

2. 2
Unleashing the potential of mid-sized
businesses: today’s discussion
• Mid-sized businesses are an important part of the UK
economy, with many attractive characteristics
• However, mid-sized businesses face specific challenges
that limit their current potential
• Addressing these challenges is fundamental to achieving
strong, sustainable and balanced growth
• The government has put in place a number of
programmes to help unleash this potential

3. GE Capital
BIS
CBI
3
The definitions of “mid-sized” vary but
refer broadly to turnover of £25-£500m
Definitions of mid-sized businesses
Number of employees
Annualturnover,£m
European
Commission
Note: positioning of the shapes
is illustrative, not precise

4. 4
Mid-sized firms contribute around a fifth of
employment and turnover in the UK
0.5
21.2 19.7
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
# of
businesses
Employment
of all
businesses
Turnover of
all
businesses
Small and large
businesses
Mid-sized
businesses
Contribution of mid-sized businesses to all businesses in the UK
Source: Growth review: Mid-sized businesses evidence base, Department for Business, Innovation and Skills, November 2011

5. 5
The number of mid-sized businesses has
grown rapidly since 2005
No. of private-sector registered firms, by size category
80
85
90
95
100
105
110
115
120
125
130
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
No.offirms(indexedto1997=100)
Small Mid sized
Large
Source: Growth review: Mid-sized businesses evidence base, Department for Business, Innovation and Skills, November 2011
MSBs

6. 6
Innovation is a key driver of growth for
mid-sized businesses in the UK
% of revenue derived from innovation by company size 2009
Source: Future champions: Unlocking growth in the UK’s medium-sized businesses, CBI, October 2011
MSBs
MSBs

7. 7
Within a mixed picture, some mid-sized
businesses achieve very high growth
Source: Growth review: Mid-sized businesses evidence base, Department for Business, Innovation and Skills, November 2011
High-growth
MSBs

8. 8
Unleashing the potential of mid-sized
businesses: today’s discussion
• Mid-sized businesses are an important part of the UK
economy, with many attractive characteristics
• However, mid-sized businesses face specific challenges
that limit their current potential
• Addressing these challenges is fundamental to achieving
strong, sustainable and balanced growth
• The government has put in place a number of
programmes to help unleash this potential

9. 9
Relative to comparator countries, the UK
mid-sized business sector is under-weight
Source: Mid-sized Businesses in Finland, France, Germany, Sweden and the UK – General Statistics, NIESR, December 2011
Mid-sized businesses as % of turnover of all businesses
32.8
32.0
31.5
30.5
19.7
Sweden
Finland
Germany
France
UK

10. 10
A number reasons may be responsible for
the relative “under-performance”
Drivers of mid-sized business (MSB) sector contribution
MSBs as % of
all business
turnover*
MSBs as % of
all business
employment*
MSB turnover
per employee
(productivity)*
Average turnover
per employee in
specific sectors*
MSB sector mix
(relative to all
businesses)*
Number of MSBs
as % of number
of all businesses*
Average number
of employees
per MSB*
MSB specific
productivity
differences*
* Compared to other countries
“Population”
“Size”
“Sector mix”
“Productivity”

11. 11
UK mid-sized firms’ productivity is
considerably lower than other countries
Source: Mid-sized Businesses in Finland, France, Germany, Sweden and the UK – General Statistics, NIESR, December 2011
Turnover (in €) per employee of mid-sized businesses 2009/10
221
268
290 290
301
UK Germany France Finland Sweden

12. 12
UK mid-sized businesses’ productivity is
relatively poor in all sectors
Source: Mid-sized Businesses in Finland, France, Germany, Sweden and the UK – General Statistics, NIESR, December 2011
Turnover (in €) per employee of mid-sized businesses 2009/10
256
228
206
279
363
293
Manufacturing
Other
production
Services
Average of EU
comparators*
UK
* Finland, France, Germany, Sweden

13. 13
Only 26% of UK mid-sized businesses
export more than 50% of their turnover
Source: The Financial Times, 23 October 2012; BIS analysis
46
17
11
9
17
Export more than 75% of their
turnover
Export 50-75% of their turnover
Export 25-50% of their turnover
Export less than 25% of their
turnover
Do not export
Mid-sized businesses’ export intensity in the UK
% of total mid-sized business population
26%

14. 14
UK mid-sized companies employ fewer
graduates than those in other countries
% of managers in mid-sized firms with a degree 2011
Source: Future champions: Unlocking growth in the UK’s medium-sized businesses, CBI, October 2011

15. 15
Unleashing the potential of mid-sized
businesses: today’s discussion
• Mid-sized businesses are an important part of the UK
economy, with many attractive characteristics
• However, mid-sized businesses face specific challenges
that limit their current potential
• Addressing these challenges is fundamental to achieving
strong, sustainable and balanced growth
• The government has put in place a number of
programmes to help unleash this potential

16. 16
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2011 2012 2013 2014
Percentagepoints
Private consumption Business investment Other private investment
Government Net trade
GDP Growth Forecasts
0.9% 0.7% 2.1% 2.7%
Business investment and trade are
instrumental to UK’s economic recovery
OBR* forecast of contributions to GDP growth 2011-2014
* The independent Office for Budget Responsibility
Business
investment

17. 17
Mid-sized businesses are particularly
important in our key export sectors
Source: Growth review: Mid-sized businesses evidence base, Department for Business, Innovation and Skills, November 2011; Industrial Strategy: UK Sector
Analysis, Department for Business, Innovation and Skills, September 2012; * UK Exports by Category of Goods and Services, ITC Trade Database
In top 5 export categories* in 2010

18. 18
Growth of existing mid-sized businesses
would contribute to regional rebalancing
Source:Futurechampions:UnlockinggrowthintheUK’smedium-sizedbusinesses,
CBI,October2011

19. 19
5.2%
1.4%
8.3%
3.2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Innovation active
firms
Not innovation
active firms
Other graduates
Science graduates
Employing graduates is correlated with
innovation and firm growth
Graduates as a proportion of all employees
in innovation active and not innovation active firms 2008
Source: UK Innovation Survey 2009
13.5%
4.6%

20. 20
Unleashing the potential of mid-sized
businesses: today’s discussion
• Mid-sized businesses are an important part of the UK
economy, with many attractive characteristics
• However, mid-sized businesses face specific challenges
that limit their current potential
• Addressing these challenges is fundamental to achieving
strong, sustainable and balanced growth
• The government has put in place a number of
programmes to help unleash this potential

21. Support investment and exports
Competitive tax system
The Plan for Growth sets out the
government’s strategy under 4 ambitions
£££
Educated and flexible workforce
Best place to start and grow a
business
21

22. 22
A number of initiatives are driving our
support to mid-sized businesses
Spring 2011 Autumn 2011 Spring 2012 Autumn 2012
Plan for
Growth
Mid-sized
businesses
growth review
Industrial
strategy
Lord Heseltine
review and
response
Implementation
Examples:
• New equity for
MSBs: Business
Growth Fund
• Red Tape
Challenge
• Presumption in
favour - planning
• Reducing main
corporation tax
rate from 28% in
2011 to 22% by
2014.
Examples:
• Export support for
MSBs across
English regions,
eg IP advice and
‘mini-MBA’
• 8 LEPs agree
pathfinders to
raise MSB profile
• Business School
Task Force –
report 22 Nov
Examples:
• Advanced
Manufacturing
Supply Chain
Initiative: £125m
• Breedon review,
development of
£1bn Business
Bank
Examples:
• Strengthened
role for
Chambers, esp.
in exports
• Stronger LEP
capability and
influence

23. 23
Good progress is being made on growth
measures and commitments
Status of Plan for Growth
Phase 1 and 2 deliverables
100% = 250+ measures
39%
61%
Complete
Progress Made
Examples of impact
Apprenticeships
• Over 500,000 took up apprenticeships in
2011/12, in over 200,000 workplaces
• Extending ‘Higher Apprenticeships’
• 2/3 better paid on completion
Investment and exports
• 23,000 companies supported by UKTI in
2011/12; on target for 32,000 in 2012/13
• Over £1.5bn High Value Opportunity
wins since launch in 2010
• Securing over 1,400 investments from 58
countries in 2011/12

24. 24
These and other actions can boost mid-
sized businesses’ contribution further
95%
31%
20%
10%
15%
15%
9%
13%
14%
18%
41%
51%
63%
0%
20%
40%
60%
80%
100%
Enterprises Employment Turnover Exports
Micro (0-9 employees) Small (10-49) Medium (50-249) Large (250+)
Source: BIS Business Population Estim ates 2011; * DTI Econom ics Paper 18 2006 & OECD Statistics Brief Feb 2011
4.5m 23.4m £3,100bn £391bn*100%=
UK economic statistics by size of firm 2011*
Key
source of
growth
potential

25. Unleashing the potential
of mid-sized businesses
26 November 2012
Tera Allas
Deputy Head – Government Economic Service
Director General – Strategy, Analysis and Better Regulation, BIS