Pam Voisey: Case Study, Techsol UK Ltd
The creation of new and sustainable businesses is an important part of local, regional and national economic strategy. Figures from the Office for National Statistics show that in the UK only 0.4% of businesses are large enterprises (>250 employees). As of March 2010 there were 2.1 million enterprises registered for VAT and/or PAYE; 28% were under four years old and 98% had fewer than 50 employees, with 88% having fewer than 10 employees.
The University of Glamorgan’s business incubation unit ‘GTi’ has been assisting and supporting pre and early start-up businesses since 2001, and while a lot is written about the process of incubation, the experience and progress of individual businesses coming through incubation is less well documented. This is the story of one such business.
The Company: Techsol UK Ltd was established in January 2009 by colleagues Richard Barnes and Alex Pullman, from the University of Wales Institute, Cardiff (UWIC). As precision engineers with extensive experience of advising manufacturers on all aspects of product design and development, tooling and project management, they saw an opportunity to bring their skills to the market and establish an engineering consultancy. The business portfolio ranges from soft aluminum, manually operated tooling for low volume manufacture to high volume fully automated cells manufactured to world class specifications. Other services include tooling, vacuum casting and rapid prototyping.
Growth: At the outset, Techsol UK registered for business support from Venture Wales, a leading business support agency in Wales. Venture Wales referred them to the University of Glamorgan’s business incubator, which provided immediate access to a credible business address, meeting rooms and the hotdesking office facility. As the business grew, external circumstances meant that a very early second business unit was established in North Wales, principally the operations and sales unit, with the technical and designs unit located in South Wales. The incubation network in Wales provided valuable links to similar facilities near Wrexham, and the business continued to expand as a result of contacts made in the north. This challenge, so early in the life of the business, was unexpected and could have negatively impacted on Techsol’s development, but by using the power of a good network, the outcome was very positive.
In the course of its three years of operation, the company has expanded the initial business proposition and now provides a quality control facility (to receive, inspect and validate product prior to supply) to complement the instrument design service. Clients span most sectors including automobile, medical and agriculture. The drive to diversify springs from a focus on client needs, looking at problems and finding profitable solutions.
In 2009, the company won the RCT Business Club Award for Best New Start-Up, and has continued to grow, in time outgrowing hotdesking and moving onto the dedicated desk service in the incubator. The GoWales programme provided a graduate employee with an initial subsidy, and the new member of staff was then taken on permanently. Staff numbers have further increased, from the original two partners, reaching a peak of five in the current year. With the company’s current level of performance and opportunities already identified, there are plans to increase staff numbers to a minimum of ten across North and South Wales in the next three years. The cumulative turnover from inception to date is around £500k.
The incubation experience: The company utilised a number of value added services within the incubator, with three key features rated as most effective: the credible business address; access to high quality, low cost meeting and conference rooms, and a ‘place to go to work’. In the early start-up period, using a home address seemed like the only option, but the partners realised that a domestic address reflects the newness of a business, lacks credibility and is ultimately seen as unprofessional. The business address, on a well-known, established business park, allowed them to reflect the professionalism and skill inherent in the business, and made a measurable difference to client perception, helping to secure initial contracts. In the opinion of one of the partners, the very first two customers would not have materialised without the support of the incubator infrastructure which gave the new company the stability and gravitas of an established business. Access to meeting rooms provided a professional space in which to meet and present to potential clients.
The availability of a ‘place to go to work’ (without the legal and financial commitments of a lease) meant more than simple access to physical premises. Belonging to a community of entrepreneurs, namely the incubation management team and the other incubating businesses, meant benefiting from a diverse, multi-sectoral ‘knowledge bank’, with space and timely opportunities to discuss options, ideas and problems.
The “warm-desk” (a dedicated desk in a shared environment/not quite hot-desking) service available at the time was an important stage for Techsol. This low cost ‘premises’ option allowed them to use the available funds to take on their first employee, a route to faster growth.
Reflection: The incubation process did not change the business idea, but helped to remove some of the barriers to early success, by providing a cost effective and professional base from which to operate. Techsol UK says that in all likelihood there would have been insufficient capital to start the business with a ‘normal’ overhead, and circumstances might have dictated securing a loan to fund the initial expenses. The absence of commercial rent and rates assisted the creation and growth of the business, specifically earlier job creation. This is a good outcome for the business and the incubator, as well as the economy of Wales.
Future prospects: Techsol UK has officially ‘graduated’ from the incubator, and is independently located on the same business park, with a second move to larger office accommodation imminent. The progressive development of complementary services is underpinned by a strategic approach to business growth. This business is a good example of the judicious use of publicly-funded business support in starting and growing a sustainable enterprise, creating jobs and a demonstration of incubation in action.
Pam Voisey, Business Incubation Manager, University of Glamorgan, pvoisey@glam.ac.uk