Given the focus of the ScaleUp Institute on use of data, coupled with the progress made in local scaleup schemes as a result of its Driving Economic Growth education programme, it was pleasing and exciting to commence a series of trial data pilots with HMRC at the outset of 2018.

Under these trials, HMRC analysed their data sets to identify ‘invisible’ scaling businesses, and then deployed bespoke HMRC messages to introduce these businesses to their local scaleup initiatives.

The businesses identified by HMRC had to meet the scaleup criteria agreed with the ScaleUp Institute: companies had to be more than five years old, have reported increases in turnover of at least 20 per cent over a three-year period, and employ a minimum of ten employees. The local area pilots took place with locations that had been trained on the Driving Economic Growth programme and had consequently developed a bespoke scaleup service with dedicated online presence.

The messages issued via email and letter by HMRC drew learnings from those which had been tested by the ScaleUp Institute, Sage and the Behavioural Insights Team in a short trial with the Sage customer base to assess messaging techniques and take-up.

The Thames Valley Berkshire Local Enterprise Partnership (LEP) Pilot 

Thames Valley Berkshire LEP ran one of the pilot schemes on the back of progress it had made following its attendance at the September 2016 Driving Economic Growth course. This had led to the establishment of a scaleup advisory group and the launch of the Scaleup Berkshire Programme in October 2018.

Scaleup Berkshire is delivered through the LEP-led Berkshire Business Growth Hub and provides one-to-one account management to scaleup businesses – which must have turnover in excess of £1m – and fosters local peer-to-peer connections.

Communication via email and hard copy letters was sent directly from HMRC in October 2018. A landing page was created on the Growth Hub’s website so that contact from local scaleups could be tracked, recorded and reported back to HMRC.

One scaleup – Insight Technology – has been a direct beneficiary of the pilot.

Several lessons have been learned from the process.

• Not every scaleup is immediately visible, even to a LEP. HMRC data can therefore spot scaleups early and mobilise resources to them quickly and efficiently. “Identifying scaleups can be difficult,” says Frances Campbell, Business Environment Lead at the LEP. “Maintaining a list of ‘live’ scaleups and engaging with them is a challenge so the HMRC pilot was a good opportunity to use new data to see if that could reach companies with growth potential that we had not been able to identify.”

Although rules meant none of the HMRC data about individual businesses could be shared with the LEP (meaning, for example, that it could not compare its own list with the HMRC data) it was apparent that there were businesses with whom the LEP did not have any connection. The contact from HMRC could therefore prompt such connections.

• Businesses do take notice of HMRC communications. A letter from HMRC, particularly when it is directed to the finance department, does carry formal connotations.
• Tailoring of scaleup services is vital. Scaleups want a designated service and will engage if it is tailored and meets their needs.
• The style of communication messaging is key. It needs to focus on growth and hit the right buttons. HMRC were supportive in ensuring that the message was one of growth while at the same time meeting their house style. “It’s fair to say it is difficult to write a punchy and compelling proposition in a letter from HMRC,” says the Growth Hub’s Director Jane Galsworthy, while noting that HMRC were “always helpful, patient and thorough” in their assistance.
• Timing is vital. The communications had to fit certain dates in the HMRC calendar so as not to clash with pre-existing campaigns and timetables. All parties had to learn about the processes, systems and constraints and it took time to gain a common understanding of what was possible.

It is still early days for Scaleup Berkshire so “participation on the HMRC pilot was a good way to get the message out that we were there,” says Frances Campbell. But as the Scaleup Berkshire programme develops, “we have a stronger message to tell and we have a clear idea of what our local scaleups value.”

Frances Campbell is certain that the priority audience for any further targeted campaigns that deploy HMRC data will be scaleups and companies with scaling potential. “Startups and early-stage businesses will actively seek out business support so they are quite good at finding us. However, awareness of Growth Hubs among scaleups is not high.

“We are putting the spotlight on scaleups, as they make a huge contribution to jobs and productivity in our local economy. We want to celebrate them and inspire them to grow. Yet many of them do not recognise themselves as scaleups and they are also very busy – so reaching them at the right time is important.”

CASE STUDY: INSIGHT TECHNOLOGY 

“I never like to open letters from HMRC so my initial response was ‘oh dear, now what?’,” says John Avery. But opening this letter turned out to be a pivotal and positive moment which has led to his business moving forward in a dramatic fashion.

The managing director of a long-running creative design agency in Bracknell, John had been joined in the business by his son Michael back in 2008. As part of a strategy to create stronger recurring revenues for the company, Michael launched a software venture – Insight Technology – to provide a one-stop solution for commercial property agents, centralising property databases, marketing, enquiries and deals into a single cloud-based system.

Over the past decade Insight Technology had accelerated. Initially winning local licenses for its software, it then gained a valuable foot in the door at Jones Lang LaSalle (JLL). This contract provided the launchpad – but the father and son team had to seize the opportunity fast.

“We needed to expand rapidly as we knew we were in a land-grab situation,” says John. “But expanding a software business is a very different business model from gradually building up a design agency. We had self-funded the research and development, but we had to scale up quickly. We needed additional staff and office space – and for that we needed funds, but we were not sure about all the options and what would be the best route for us.” (He had already turned down an offer to buy Insight Technology – “we thought it was too early to sell.”)

It was at this point that the letter from HMRC arrived. “It was a complete surprise as it put us in touch with the right people to help us,” says John, who had previously been unaware of the Berkshire Business Growth Hub.

He contacted them the following day. The company first completed Berkshire Growth Hub’s High Growth Programme and then joined the ScaleUp Berkshire Programme.

With a dedicated business adviser working with them on their growth strategy, the directors evaluated debt and equity finance options. The Growth Hub introduced them to the FSE Group, which manages the Thames Valley Berkshire Funding Escalator – a £11.3m initiative funded by Thames Valley Berkshire LEP providing loans and equity to support job creation and economic prosperity in Berkshire. “The one-to-one sessions we have had with our advisers have been brilliant,” he says.

Within four months of opening the buff manila envelope from HMRC, Insight Technology had successfully secured £300,000 of investment to expand into new office space and further grow its team. It was only the second company to receive maximum funding from the Funding Escalator.

Change and growth have become the order of the day since the finance raise. The company has won national contracts from other international commercial property consultancies. It has moved into more modern premises which provide the bright and open workspace preferred by talented developers and support staff. Since the company engaged with the Growth Hub, Insight Technology has doubled its headcount. A second product – The Agents Society, which connects commercial property agents across the UK to each other – has been launched.

“We are stepping up to the plate,” says John. “And I’m surrounded by a lot of young people achieving incredible things. It’s given me a new lease of life.” Now that isn’t something you usually get from a letter from HMRC.