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Exchange Of Views Needs Role Models

Starting a business is not the challenge but growing it certainly is. 

John Anderson is in characteristically upbeat mode, despite the ebbs and flows of recession and the bitter battles over quantitative easing and the eurozone that rage around him.

One reason is that the 2012 Global Entrepreneurship Monitor (GEM) for Scotland has just reported that plans for new-start businesses are at their highest level in a decade and up 6% on 2010. Professor Jonathan Levie, GEM author and knowledge director of the Hunter Centre for Excellence at the University of Strathclyde, which publishes the report, said: "We have to wait to see and see whether the increase in people expecting to start a business gets translated into real business on the ground. This is what you would expect to see at this stage in the economic cycle."

Anderson has, of course, a proprietary interest in being sanguine about the news. As chief executive of the Entrepreneurial Exchange, with more than 400 members and a combined turnover of more than £16 billion, he heads an organisation that claims to be "Scotland's leading members' organisation for ambitious, growth-orientated entrepreneurs - created for entrepreneurs by entrepreneurs."

He has been involved with the Exchange since its inception in 1994, when it was launched as part of the Scottish Enterprise Business Birth Rate Strategy and has occupied his current post for a decade after he left the world of accountancy, where he had worked in various capacities for Ernst & Young, PwC, KPMG and Grant Thornton.

Always an enthusiast, Anderson describes being with these various firms as "believing that this is the team I've always wanted to play for." When the tech bubble burst in the early 2000s, he describes there being a "peering over the cliff moment" for the Exchange. "I was on the board and I felt that at that stage the Exchange had lost its focus." If it had, it was in the company of many Scottish companies at the time and Government-led initiatives alone were not going to solve the problem.

What was perhaps needed, and indeed Anderson believes has happened, was a step back from high-risk technology and a realisation that what underpinned Scotland's success for decades was its existing - often family-owned - companies. Not as sexy perhaps, but a more reliable foundation for growth.

But surely the whole idea of entrepreneurship is about taking the plunge, being prepared to bet the farm on an inspired hunch, create a groundbreaking new venture?

Only last month Sir Tom Hunter, past chairman of the Exchange, said at a Business in Parliament conference that Scotland was at risk of becoming a third world nation if it didn't raise its game, and that marginal growth was just not good enough. He noted that in 2003 Scotland had 36 new business registrations per 10,000 adults a year - "and it's still the same now."

So, with the start-up rate static, what has the Exchange actually achieved in the past nine years? Anderson laughs: "It's a good question. We've being talking about the low start-up rate for a long time. When the Exchange was set up in 1994 it was the heart of the Year of the Entrepreneur, which was Scottish Enterprise's campaign supporting the Business Birth Rate strategy.

"There was a huge emphasis on start-ups in the mid 1990s and there still is and it's certainly part of the solution but I think it's a relatively small part because the evidence suggests that it's very difficult to start a business and then grow it.

"Everyone's now looking to Germany and the Mittelstand companies (Germany's SME family owned firms) and for generations they have been able to keep that mid-sized business base without selling it off."

He points to family business entrepreneurship as being one of the most dynamic areas in terms of growth potential. "I don't think we care when you actually started the business, whether you bought it or inherited it - these are robust businesses that are important to local communities all over Scotland, tightly controlled by a family and if we could persuade them to achieve 25% more next year that would unlock considerable potential."

In the same speech, Hunter had challenged academia to stop "turning their nose up at vocational education" and train people to fill skills gaps rather than just pass exams." Anderson agrees that the traditional model of universities "spinning out" businesses is not necessarily sufficient for success. Academics are, he believes, well - academics at the end of the day.

He chairs wave energy company AWS Ocean Energy, which has received backing from Scottish Enterprise's Scottish Co-Investment Fund, Shell Technology Ventures Fund and Alstom and says: "There are some people who you realise remain most comfortable in a research environment - whereas the people who have been brought in for their commercial experience are hungry and move at a pace that the cerebral researcher finds something of a challenge.

"They want to run another test when what is needed is for us to say: 'Ok, we've got this far, let's get it in the water and go go go! And that absolutely encapsulates all my experience in the world of spin-outs. The academics themselves don't understand the need for speed; how to talk to a customer and find out exactly what they want."

As a governor of Morrison's Academy in Crieff, Anderson is also keenly aware of instilling business values at school level. "I am involved with schools and education because we have always agreed that this is going to be a generation of change. We worked with the original schools enterprise programme then what became Determined to Succeed and is now the Curriculum for Excellence, that aims to provide a coherent and more flexible curriculum from ages three to 18.

"The voluntary organisations are involved and so is the Social Enterprise Academy and these form important links. Just wind back ten years and think if you had said: 'You know what, we're going to have the enterprise education idea actually embedded in the curriculum of every young person in Scotland' you would have been laughed out of court - but it's there."

The Exchange faces its challenges of course - not least that of the eagle-eyed financial director who questions the value of a paying a membership fee in a dispensation of austerity. Anderson argues that the members can't afford not to stay in the organisation, pointing out that there is a huge repository of experience and advice in those who have weathered up to four economic downturns in their careers.

"There are role models here - and I can give you example after example of people who are not the Tom Hunters, the Jim McColls, the Willie Haugheys. Look at our archives and the speakers at our events.

"Most people will not recognise them and we are actually not great at shouting about these role models, whether it's a volunteer who goes into a school for Youth Business Scotland or Young Enterprise or someone like Lucinda Bruce-Gardyne who founded Genius Foods and can help with generic operations such as growing your brand. We need lots of examples: young people, women, from different ethnic and geographic backgrounds, to educate Scotland and tell us that we're not doomed."

For all these reasons, and returning to the recent GEM report, Anderson says that he is optimistic about the future of entrepreneurship here. "When things are difficult, GEM shows that there is much more activity in the younger generation so maybe the education is working and something positive is coming out.

"If young people can't get a job then they are going to use their skills and we will find that the business birth rate will go up - but what we absolutely must do is ensure that this core of existing businesses see growth."

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