In an article first published in New Design Magazine, Tanya Weaver talks to David Prais of Pembridge Partners regarding a scheme that aims to boost design consultancies commercially as well as accelerate and sustain company growth
The UK’s creative industrs, ranging from advertising and architecture to software houses and perlorming arts companies, are increasingly important for ihe UK economy in terms of jobs, wealth and exports. According to the Department for Culture, Media and Sport they account for about eight per cent of our economy. Speaking at an Institute for Public Policy Research event held during June the new Creative Industries Minister James Purnell said, "I want to set an ambitious but achievable goal today - to make Britain the world’s creative hub.”
However, many creative businesses remain under—developed, their potential for growth unrealised. As an investor based in the public sector, the National Endowment for Science, Technology and the
Arts (NESTA) has taken a direct stake in creative enterprises through its programmes and initiatives. One of these initiatives that the organisation hopes will have a positive impact on the climate for creativity in the UK is Small/Medium/Large (S/M/L) - a pioneering initiative to accelerate business growth in design businesses. This six month pilot scheme is currently underway and due to complete in September.
Mark Fenwick, business support manager at NESTA, explains that creative businesses need strategic advice and training in order to grow. Research carried out by the organisation shows that the UK design industry comprises a large number of fragmented and small design agencies who are typically started by people at the early stages of their careers. Growth of these companies reaches a certain level then stops - design consultancies with over 40 individuals are still the exception.
This new initiative, a collaboration between the Design Business Association (DBA), the trade association for the UK design industry Pembridge Partners LLP, a business accelerator for the creative industries offering a combination of consultancy and investment, and NESTA, will offer ten entrepreneurial firms up to £5,000 worth of bespoke consultancy and training over the six month period. “S/M/L is an extension of NESTA’s commitment to developing new models for growth and investment in the creative industries,” explains Fenwick. “We hope that the ten companies can become role models and help build up an understanding of how micros and small design businesses can grow.”
Pembridge has collaborated on this initiative as it feels that it has something valuable to contribute to the ten selected companies. “I think what sets us apart from straight business consultants are two factors. Firstly, we are all people who have been there and done it before, not just a bunch of people who know the theory,” explains David Prais, managing partner at Pembridge. “Around the team one of us has met just about every situation - good and bad - that a growing creative firm meets so, we know the pitfalls as well as the opportunities. Secondly, we put our money where our mouths are. The fact that we have raised or invested over £10 million in the last two years is really significant - when your own cash is on the line you think twice before you open your mouth!”
According to Prais, many people starting up a business do it because they are good at something - like design - and that rather than the idea of a business is what initially drives them. However, as their business grows, there’s a critical moment when the business itself needs to start getting a life of its own that is separate to the peopie who set it up. “Some people don’t let that happen and many people don’t know how to make it happen. We find we can help people realise that it MUST happen if they want to succeed in commercial terms and then show them examples from other parts of the creative industries that point the way regarding HOW to do it,” he says.
S/M/L is a two year pilot scheme that was initiated towards the end of last year and interested companies were given a deadline of mid January to submit applications. The criteria for eligibility was any design-based micro or small business of less than 21 people limited by guarantee or structured as a partnership and resident in the UK for tax purposes. As it is only funded to work with ten companies the selection process focussed on those that already had most of the basics in place and whose financial performance showed they could walk the walk as well as talk the talk. Alloy Total Product Design decided to apply for the scheme. “We are at a key transition point, the systems that have taken us up to our current size will not be sufficient to support the next phase of our growth,” explains Gus Desbarats, the company’s chairman. “We have already reorganised to address this challenge, we wanted a second opinion on what we have done, and what we might have missed.”
The interview stage to select the final ten was conducted by Pembridge and took place during February. “We were delighted that around 45 firms applied for the scheme,” says Prais. “We would have liked to work with them all and, if future funding allows, perhaps that might be possible. But for now our recommendation to colleagues at NESTA and the DBA was that the most important thing was to demonstrate that the approach we’re taking on S/M/L can work to deliver really visible impact on a wide range of design companies, across design disciplines and across the country and across the size range.”
The research carried out by Pembridge before selecting the final ten for the scheme threw up a number of interesting issues. For example, 92 per cent - almost every firm - admitted that they have problems setting strategy “That’s understandable because when you’re in a forest it’s very hard to see the wood for the trees,” explains Prais. Almost three-quarters of firms also have problems around the core business model they are using - they can’t see new ways to generate money from their existing customers, for example. Twenty five per cent did not use management accounts to run their companies and the majority of directors in the group (60 per cent) had no business training.
Prais was also not surprised to discover that more than half of the firms had no business plan. “The template of investor-style business plans you see on the Internet, for example, are hugely daunting to compile on your own and actually not that useful for running a business - they are designed to raise money,” he explains. “What we do is help people put together roadmaps they can actually use along with simple measures of success so they can check they are on track.” Additionally, it was also discovered from the research that almost a third of the firms appeared to have no structured marketing process by which they let the world know about their company and services. this shows that the industry could benefit from training on the basics of selling and marketing themselves.
However, on a slightly more positive note, 75 per cent of firms had thought about their commercial goals and could start to put financial targets on their ambitions. Prais stresses the importance of commercial goals: “If you don’t aim for commercial success, you won’t achieve it. We can help people to work out what they really want and to express that in clear, practical terms. It’s then much easier for them to start going for it.”
The eventual ten companies that were selected for the scheme are a mixture of interiors, graphic and product design consultancies including: 442 Design, Alloy Total Product Design, Black I, Elfen, Mode, Northbank Design, Reach, Rodd Industrial Design, Seachange Creative Partners and Vivado. The programme officially began in March and during the six months that follow the chosen ten will receive training workshops organised by the DBA as well as consultancy meetings with Pembridge.
Ultimately, S/M/L is a scheme to give these companies a boost and the three collaborating organisations realise how important creative businesses are to the UK economy and they want to do their share in accelerating growth and profits in these smaller businesses.
“In terms of economics, design is far and away the most important sector in the creative industries,” explains Prais. “That means it has to be at the core of what Pembridge is about - putting the creative industries of the UK on the map so that investors, the city government and creative people themselves start taking these companies seriously. We want the UK’s creative industries to be as successful commercially as they are creatively and Small/Medium/Large is about helping companies to break the barriers that separate those words.”
As the scheme is still running no conclusive evaluation has been made on its progress as yet. However, all parties involved feel that it has been beneficial and will prove to be a success. Positive feedback has also been received from the ten participating companies. Nicky Clark of Seachange Creative felt that they had already benefited from the initial session and appreciated receiving professional, objective input. David Dunn of 442 Design says, “The process helped the four company directors agree a clear development path which enabled us to maximise our creative output whilst growing the business commercially. It was important for us to establish a business model that allowed us to do both.” Gus Desbarats of Alloy comments, “It nudged us towards accelerating a key recruitment decision and to finally get around to documenting our brand values. It also strengthened internal confidence in some of our earlier decisions.”
Fenwick explains that NESTA is committed to doing this scheme for two years however, he does feel that this could be extended as there is a real appetite for such schemes because regional development agencies, for example, are keen to get involved in accelerating creative businesses. Prais also feels that such schemes are worthwhile and he has found the experience of working with the ten companies greatly rewarding. “What I have personally found rewarding is just how open people are to ideas about different ways of running their businesses,” he says. “We don’t meet that in every creative industries sector - some have a real ‘this is the only way it can be done’ attitude and designers don’t seem to be hamstrung by that. It makes the firms a pleasure to work with and gives me real confidence that S/M/L will follow through to make a real impact.”
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