When I was recruited as the Business Director, for BGF, earlier this year, part of my remit was to communicate to the UK's fast growing medium sized businesses that could benefit from the combination of growth capital and business support that we can offer. Top of my list is the manufacturing sector. With over 30 years' experience in Industry, primarily as the Managing Director/CEO of a number of manufacturing businesses, I feel passionately about this sector.
Those of us who work in manufacturing also know just how important mid-sized businesses are. These firms represent over 30% of the UK's manufacturing employment base. They rank among them some of the fastest growing and most innovative companies in Britain today, producing world-leading products for aerospace, motorsport, oil and gas, and healthcare. And whilst mid-sized firms in general may represent less than 1% of the total firms in the UK, they account for 22% of all economic revenue.
In the search for economic growth and the new jobs it provides, Britain's mid-sized manufacturing firms have a critical role to play. They deserve all the funding and support we can give them.
The national media may be all full of doom and gloom, but as I travel across the UK and spend more time with business owners and entrepreneurs I see genuine cause for hope. There is a strong story of renewal and regeneration. The UK's reputation for innovative and world class, high quality manufacturing is alive and well.
It is not surprising then that key industry bodies are helping to drive manufacturing growth. Just last week a new nationally operated Manufacturing Advisory Service (MAS) was launched to focus on helping small and medium sized manufacturers to grow. The new service will be delivered by the Manufacturing Advisory Consortium (MAC) and will help create £1.5bn in economic growth, 23,000 jobs and safeguard 50,000 jobs.
So what is stopping these good manufacturing businesses becoming great national and international companies?
Access to finance provides some of the answers, but it isn't the whole story. I believe there are a series of additional reasons.
The first is that there are too many good excuses for deferring investment. The state of the global economy, another Euro-zone crisis or domestic inflation, can all provide a seemingly good excuse to wait another year. But history shows that many great companies were created in downturns; this can be a good time to invest. Secondly many business owners simply don't like the idea of increasing debt. Why would they risk it? Which leads to my third reason: stalled ambition. Too many British manufacturers are happy to settle for 'good' and don't see the need to push on and grow to become 'great' and reach their full potential.
But just as we shouldn't solely blame the banks, we shouldn't lay all the responsibility at the feet of the entrepreneurs. Taking a company to the next stage can be daunting. At the very least running a bigger company requires more resources, more support and more advice. Knowing where to turn and who to trust is critical.
Business Growth Fund seeks to answer these concerns. We can help a business focus on what is in its control and find the most appropriate way to fund future growth. Securing investment from BGF is about more than just money. In addition to long-term capital investment, we offer companies the opportunity to meet and be guided by some of the most experienced businessmen and women and investment experts in the UK. Our partnership approach and sharing of expertise, guidance and contacts will be almost as valuable as the capital we inject into businesses.
We will invest between £2m to £10m in businesses with a turnover between £5m and £100m that can demonstrate their ability and desire to grow their companies rapidly. We will only take a minority stake; we are building not buying businesses. These businesses will have a proper business plan and a clear idea of how they might use BGF's investment to grow their business over the long term.
In turn we will help our investee companies develop their long-term growth plans, and develop the right financing structures for their needs. We believe that having the right balance sheet can help businesses unlock additional bank finance for working capital. BGF investment could be complemented by loans and additional finance offered by banks and other investors to deliver a more rounded capital solution for growth. Other financial backers will also feel more confident and more willing to back businesses that have BGF as a shareholder.
So with a great team in place, my task now is to find and engage with the UK's fast growing manufacturers and talented management teams who can become the star manufacturers of tomorrow. Now is the time to ensure export opportunities are realised and not lost to overseas competitors. We look forward to working together with the whole business community to give these companies the support and confidence, financial backing and managerial support that they need to fulfil their potential.
By Mark Bryant, Business Director, Business Growth Fund