Posted on Friday 16 November 2012 by Ulster Business

John Simpson

In early 2011, Invest NI tried to re-launch a contract with an external organisation which would take responsibility for encouraging and facilitating new business start-ups, for small firms, across Northern Ireland.

That contract decision was legally challenged and stalled. A new competition was advertised and completed in September 2012.

For about a year there was no external delivery mechanism in place to help people with ideas for a new business. As Invest NI has made clear, the gap was filled (or partially filled) from within Invest NI.

From early October 2012, Enterprise Northern Ireland (ENI) has won a two year contract, worth nearly £2m, to offer business start-up advice through contact points across Northern Ireland. The winning bid emerged after consideration of five different proposals. The Regional Start Initiative has now been launched.

The experience of Invest NI in coping with these challenges serves two purposes. First, there are lessons to be learned about designing procurement contracts and then following through the administration. Second, there are lessons to be learned about the nature of the market place where ideas for new businesses emerge. The latter poses many practical questions.

Encouraging the setting up of new small businesses is an important economic policy ambition and carries a wider social responsibility.

Long lasting successful business start-ups by a single enterprising individual are neither easy nor commonplace. One of the slightly contradictory pieces of advice to an aspiring business developer is to ask whether the idea, or the proposal, is potentially viable. Will the business generate enough funds, after meeting costs, to give the developer an income? Will that income be attractive when compared to the alternative, possibly of being an employee of someone else?

The Regional Start Initiative has ambitious targets. The objective is to encourage and facilitate 6,500 business enquiries over the two year period. Drawing on past experience, Invest NI hopes that 6,500 enquiries might be followed by about 4,000 jobs.

The Initiative may be seen as a successor of the former 'Go for it' campaign but the institutional framework and working mechanisms have been radically reshaped.

Critically, the arrangements for the Initiative have anticipated the reform of local government structures. ENI will work in a partnership, through Invest NI, with local councils. That ambition suggests that the many Local Enterprise Agencies located around Northern Ireland, and frequently operating with local government support, will also become critical players in a wider network of support.

The links with local government are to be strengthened through the decision to operate the initiative through five specific sub-contracts aligned with the regional organisation of Invest NI. Specific points of contact will function in the Eastern, North Eastern, North Western, Southern and Western Contract areas.

A second feature of the new Initiative is that it is not 'money led'. The operational mechanisms are based on giving support and advice so that realistic business proposals can be developed and articulated. The Initiative focuses on assessment and signposting.

There are also, separately, forms of financial support to which aspiring business operators can be referred depending on the type of business, its location and the characteristics of the initiators.

The expectation is that people who work with the Regional Start Initiative can best be assisted by converting business ambitions into well-grounded proposals. Boring as it may seem, the educational and experiential value of the Initiative will lead to realistic business plans.

The tension in the delivery of a business start campaign is that there is a conflict between encouraging more business starts and a responsibility to introduce caution and awareness that starting a business can be a ladder to success but it can also be an expensive mistake.

Some new business start-ups will succeed even when the odds are heavily against them. These will be the high achievers who can beat the odds. They are a rare phenomenon.

With an appreciation of the risks, the advisers in the RSI have a challenging role: to council against excessive (or unjustifiable) risk taking but to encourage entrepreneurial risk taking. The advisers in the RSI must develop a multi-dimensional matrix to guide their advice and the counselling of prospective clients.

The most promising business start-up is likely to have the ability (or skill) to supply a product or service in an expanding market place, whether local or international. The ability to 'supply' may be a result of advanced personal training or skills, access to specialised equipment, funding resources, or contact with a supportive business network (which may mean family links).

In the attempt to categorise factors influencing possible success, an important caveat is needed. Many educational high achievers are not likely to be successful business entrepreneurs. Academic success is a commendable characteristic but is not synonymous with entrepreneurial skill.

Some of the most successful developers of new enterprises will start with a very marketable set of skills, often misleadingly described as 'blue collar'. There are no hard and fast rules to identify potentially successful business start-ups.

Two further factors will be of significance.

First, age is not a determinant. There is sometimes an assumption that a budding entrepreneur should be young. This can be distorted to overlook the advantages that an older person brings to the challenge if they have worked for another organisation. The skilled tradesperson or skilled professional who starts with a business network of contacts can build a broad business orientated agenda. Of course, that skills base must not be such a narrow specialism that it fails to appreciate the diversity of a whole business plan.

Second, marketability of products or service alone is not enough to be successful. One of the constraints that advisers for the RSI will emphasise is that a new business which depends essentially on the displacement of other similar firms in the market place is very vulnerable to competition.

The usual example quoted, unkindly, is that a new window cleaning business can usually find work. However, the only security lies in satisfactory performance backed by competitive earnings. Success is possible but not guaranteed.

Also, critically, even when some funding is available from official sources, there will be a caution about encouraging displacement activities since the net gain to the economy will be either small or nil.

The new Regional Start Initiative represents a much improved delivery service to aspiring business developers. Alongside the efforts of local enterprise agencies, neighbourhood renewal measures and social security support for young people with initiatives, this is an important concept.

The Initiative must deliver advice and projects from diverse origins. Successful start-ups may be found in a range of locations ranging from workshops in Enterprise Agencies, spin out laboratories in (or attached to) higher and further education institutes, or in the environment of a science park.

This is a critical initiative which merits careful mentoring support.

Fact File
In September 2011, Invest NI re-tendered the contract to run its Go for It programme for start-up businesses. It was awarded to a partnership made up of business advisers KPMG and the Scottish-based Go Group. Enterprise NI, which has run schemes through the various enterprise agencies here, put in a legal challenge to losing the contract, meaning Go For It was put on hold. A compromise was reached by Invest NI re-opening the tendering process in April, without admitting that they had been at fault the first time round. Enterprise NI put in a new bid and won the contract back.

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