A new report titled The Scale-Up Report on UK Economic Growth has identified the impact of scale-up companies on the country’s economy and highlighted the importance of supporting high-impact, high-growth firms. Authored by entrepreneurship influencer Sherry Coutu, the report utilizes Endeavor’s research and work to underscore the need for policies and programs that support businesses through the critical scale-up phase.
The report defines scale-ups similar to the way that Endeavor Insight and other organizations like the OECD and Nesta do. According to its analysis, a scaleup is “an enterprise with average annualised growth in employees or turnover greater than 20 per cent per annum over a three year period, and with more than 10 employees at the beginning of the observation period.”
The report found that scaleups are quite rare. There are more than two million businesses in the U.K., but only 8,923 of these companies are scaleups. However, these businesses accounted for a huge share of the country’s job and wealth creation. A study cited in the report noted that the fastest-growing 6 percent of U.K. firms created over half of its new jobs. The analysis included in the scaleup report also estimates that if the U.K. can increase the number of scaleups in its economy, it will generate an additional 238,000 jobs and £38 billion in value within three years.
If scaleups are so critical, it is important to understand what they need in order to continue to grow. A survey of over 300 founders of scaleup firms in the U.K. revealed that attracting talent, securing customers, and attracting financing are the the most pressing issues faced by these fast-growing companies.
Accessing critical talent was the most important issue cited by scaleup founders in the U.K. For example, over 85 percent of the scaleup companies reported that they would grow faster if it were easier to develop their leaders, and 87 percent of scaleups said that they would be able to grow faster if university graduates had the skills needed to meet customer demand. Eighty percent of scaleup founders also reported that they could greatly benefit from accessing more talent from overseas.
Interestingly, according to additional data shared at the public release of the report accessing finance was primarily an issue for smaller, fast-growing firms. Larger fast-growing firms reported much greater access to funding.
The report concludes with a number of recommendations that the U.K. government can take to support the growth of scaleup firms. It focuses on six areas:
– Targeting, supporting, promoting and reporting on scale-up gap closure. This includes targeting, supporting, promoting and reporting on the number of scaleup companies and their performance.
– Accessing talent. As the report notes, “For leaders of scale-ups, the number one problem that prevents them from being able to accept customer orders is access to talent, namely a skilled supply of people who they can hire.”
– Developing scaleup leadership. Developing internal leaders and managers inside their companies was the second most important factor cited by scaleup founders as stopping them from growing their revenues.
– Increasing customer sales at home and abroad. According to the report, “Barriers exist that prevent companies creating new products and services for domestic markets, and selling successful products in other countries.”
– Financing scaleups. Analysis suggests that scaleup companies often turn to the US or Asia to raise financing.
– Accessing infrastructure. Entrepreneurs at scaleup businesses also reported that lack of access to infrastructure makes it more challenging to grow their companies in the U.K.
To read the full report and its analysis, please click here.