Recession kick-starts enterprises across the N.E

The economic slump has cost thousands of people their jobs in the North East and many of them are now setting up their own companies.

LOSING a job or the threat of redundancy appears to be a key factor in the recent increase in the number of people considering starting up their own businesses in the North East.

Financial Inclusion Newcastle (FIN), a one-stop-shop to help potential entrepreneurs formulate their ideas and then get them off the ground, has seen a noticeable rise in enquiries from the underprivileged areas of the city's East and West ends where it works.

Jonathan Dowden, start-up manager at the Entrust-backed FIN, said: "We're definitely seeing a noticeable increase, certainly people are considering starting a business.

"There's always been that underlying demand for working for yourself, but since the economy went into recession the number of enquiries has increased."

Although recessions are tough on everyone, he believes that those which start in a difficult economic climate are not really at a disadvantage to those firms set up in better times.

"It's very difficult to take this view, but actually there has never been a better time to start a business," says Dowden.

"You are far more cautious, you are likely to do a lot more work on the background and you are very cautious of taking on extra unnecessary overheads."

FIN is able to work with people from the moment they start to think about becoming self-employed and often finds itself helping clients come to terms with redundancy.

"We find when we're speaking to clients, we have to support them to overcome the initial shock," he said.

"Once they come to terms with that, people start to think, ‘Can I continue what I was doing on a self-employed basis? Have I got a hobby, skill or interest, or do I go completely the other way and do what I want to do?'"

A number of new entrepreneurs, especially those employed in the public sector who are facing the spectre of losing their jobs as funding is slashed, are now considering turning their hobby into an enterprise to serve as a safety net.

This type of niche business also stands a better chance of survival these days because of the interconnected nature of society since the advent of mass social networking.

"These days we are so much more connected," explains Dowden.

"We can take these niche businesses with social media like Facebook and Twitter and find people we can do business with - ideas that might not have been particularly viable previously because there were not enough customers.

"That's not an insignificant element to this."

Reflecting the trend to transform a hobby or interest into a business, FIN is now dealing with a hugely diverse range of ideas.

That was very much in evidence at a recent celebration at the Mansion House in Jesmond, where 32 start-ups gathered to show off their goods and services to key figures in the region's business community.

"They're quite diverse. At the event we had everything from cup cake business Cake, a guy who designs the best hi-fi speakers you've ever seen, there was web design, pottery, crafts for school kids and animation to engage children at school," says Dowden. "It's a massive range."

All of those represented at the event got in touch with FIN because they had faced redundancy from long-term employment or had a dream of becoming their own boss.

Scott Neve, who attended the evening, turned his interest in gardening into the business Dream Scapes, which supplies landscaping services to businesses and individuals across Newcastle.

He said: "I treat gardening as a hobby. I am very passionate about it, hence the reason for wanting to make it a full-time endeavour."

Mercy Akaru, who catered for the event with her African food firm My Kitchen Friends, worked with FIN to turn a long-term ambition into a reality.

"The hardest part for me was actually starting up the business as I have had this idea running in my head for about six years," she said.

"I have achieved my goal with the help and belief of my advisor from FIN, who offered me invaluable business advice and support."

Dickinson Dees partner Neil Warwick, who is the chairman of FIN, says the region is becoming a lot more entrepreneurial than it was in the past.

"I'm absolutely convinced of it," he says. "We were back on the curve because we had a much larger dependence on larger employers in previous recessions. When you've got that kind of dependent culture and it drops off, the pick-up to an entirely different culture takes time."

People in the North East, he believes, did not have the same historical and cultural grasp of starting a business as other parts of the UK.

Enterprise agencies were started to kick start the economy and help promote an entrepreneurial mindset during the recessions of the 1970s.

However, during this particular economic downturn, Warwick thinks the North East does have some advantages over areas. "Going into the recession, our growth was higher than in other parts of the country. The recession, and coming out of it, we were better placed to take advantage," he says.

"But the stumbling block is the public sector comprehensive spending review. As a region, that's going to be more severe than in other areas."

And because so many of the North East's small firms are so young, the end of the boom times has been a major blow and a steep learning curve to cope with.

"The vast majority of businesses in this region that are less than 10 years old probably didn't suffer in the dot com recession," adds Warwick.

"The vast number of people had never seen a recession before. This is probably a bit of a shock."

He believes events such as FIN's Mansion House evening provide a strong psychological boost to those that have already taken the plunge and those considering doing so.

The position many people have found themselves in because of the economy, either losing their job or facing the threat of doing so has, he believes, "liberated people's minds".

"A lot of people we talked to were unhappy in employment but wouldn't have moved because they felt safe."

For further information about Financial Inclusion Newcastle, call 0191 278 1855 or visit www.finewcastle.co.uk

Clients:

CAKE

CATHERINE Denton decided to turn her love of baking into a business after 13-year career working in marketing for large companies across the region.

Two years ago, she took a cake decorating course and realised there was a huge market for cup cakes in the region. Initially working from home, she baked for parties for family and friends before deciding to open up a bakery. Cake, on Grainger Street, opened its doors in January this year as Newcastle's first specialist cupcake bakery.

Catherine said: "I very much felt it was the right time - why not do it this year and make a fresh start?

"I'd looked all over the North East but figured why not do it in town, where there are all the office workers."

She received funding towards specialist equipment after working with FIN and admits her marketing background was a "bonus" because she understood the importance of getting her branding right.

Cake currently employs three people in addition to Catherine and she has ambitions for further expansion in the future.

STUDIO3 DESIGN

FORMER public sector worker Nigel Easter's experience in technical and quality assurance gave him the impetus to start a firm producing specialist loudspeakers.

But before taking the plunge with his business Studio3 design, he sharpened his skills further by studying for an MA in design at Northumbria University.

He said: "I have always been an ideas person but turning those ideas into products that people want to buy is the real challenge for me.

"Today's consumer is much more switched on than ever before, they know what they want in a product and how it should look, and they are looking for products which are more personal and intimate."

Nigel is also aiming to take advantage of consumers' desire for bespoke products rather than mass- produced, one size fits all designs.

"It's not just a loudspeaker; it's a whole new approach to audiophile loudspeakers, disposing with the old idea of a rectangular box," he said.

"The whole package is designed from the ground up with the customer, who has the opportunity to influence the core design aesthetics, whether that be a focus on pure sound quality, physical appearance or sustainable materials or all three - make no mistake, this is handmade, bespoke, boutique high quality hi-fi."

The speakers are hand-built to the customer's requirements.

"After all a loudspeaker isn't just a box with some wires coming out of it; it's furniture, it's a musical instrument, it's cutting edge technology and it's interior design all in one," said Nigel.

He worked with FIN to secure start-up finance and learn the nitty-gritty of getting his idea off the ground, and now hopes success will breed success.

"If I can just create five or six full time jobs, I'd be happy and if I can then encourage those employees to start their own businesses and take on their own staff, then that's an even better result," he said.

Source: Karen Dent, The Journal, 13th May 2011