Mention the productivity puzzle and the worldwide hunt for economic growth and discussion soon turns to the factors that help foster a business-friendly environment.
In the UK, the ScaleUp Institute conducts a large annual survey of high-performing businesses – businesses that grow their sales revenues or number of employees by 20% year on year over a three-year period. There are more than 31,000 businesses in the UK that have achieved one or other of these growth measures – and more than 6,000 of them who grew on both these counts.
In 2017, the institute looked at a sample of 343 of these scale-ups. Between them, they generate more than £6bn of revenue – an average £240k turnover per employee. These are highly productive companies. 77% of them expected to generate 20%+ revenue growth this year and two-thirds are already engaged in international trade.
These businesses are to be found across the UK and in all sectors of industry. They are not just tech-focused start-ups; they are in engineering and construction, retail and logistics, recruitment, financial services, food and drink. And they are not all start-ups. The majority of these high-growth companies are more than 20 years old.
The factors that will enable them to continue their growth fall into five key areas:
We can only effectively support fast-growth companies if we know who they are, where they are, and what they are doing right now – not after the time lag of waiting for them to file their accounts. We cannot rely on historic data to support present growth.
Identifying, verifying and making available the current scale-up status of a business is one of the most important tools for boosting productivity, so access to better, faster data about scale-ups is crucial.
In the UK, the ScaleUp Institute is working closely with government departments such as HMRC on how it can most effectively use the data it already holds. The goal is to make fast-growing businesses immediately aware of (and be introduced to) trade missions, innovation challenges and proven private sector programmes that can help them.
At a local level, which is where scale-up businesses want support delivered to them, new ecosystems are emerging. Business schools and universities, local authorities and Local Enterprise Partnerships, are beginning to coalesce around the scale-up agenda. Leadership programmes developed in conjunction with local business schools are emerging across the UK and new peer group networks are being formed, specifically for the leaders of high-growth businesses.
This developing cadre of high-growth companies, with all their potential for boosting productivity and the economy, is hugely important not just in the UK, but for economies worldwide. Seeing high-potential businesses reach scale and quantum will drive job creation, productivity and economic prosperity.
Stuart Rock is editor at the ScaleUp Institute. This article is taken from his speech at The Treasurer’s Deals of the Year Awards Dinner