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In Search of High Growth Companies

September 6, 2018

In Search of High Growth Companies

‘High growth’ is probably today’s most well used business phrase to stimulate small business entrepreneurs and directors. However, the phrase means many things to many people.  Perhaps as a benchmark for you the UK Government has defined high growth businesses as “growing at 20% pa with the capability of maintaining that rate for 3 years”. This however has since been trimmed due to increasing sluggishness of the UK economy to “growing by 60% over 3 years”. This equates to 17% pa for 3 years, still sufficient to have what is often called ‘growing pains’ for the business. These are tensions that grow in a business on staff resources, workloads, communications and importantly working capital as sales volume growth puts pressure on the inherent flexibility and adaptability of the present organisation. If not addressed, service performance usually is the first to deteriorate.  So those that can withstand these day to day pressures will usually have a strong resilience and adaptability in their management outlook.

Why the interest in focusing support on ‘high growth’ businesses?  

Whilst high-growth businesses represent only about 5% of all businesses in the UK, they drive over 50% of employment growth. In the OCTOPUS High Growth Small Business Report of 2014 High Growth Businesses represented just 3.4% of the UK economy yet this group generated more than 2/3rds of all jobs created between 2012 and 2013.

How does Warwickshire perform?  For those interested in knowing more about growth companies in Warwickshire, see the following URL and download the booklet look at the following booklet.

http://www.bdo.co.uk/getmedia/9ca31f42-8033-4ef4-91cf-f157998742ee/cov_warks_barometer18.aspx

Interestingly the business statistics show:

  • The fastest growing sectors by turnover are Consumer, Leisure and hospitality at 64% followed by manufacturing at 37% and real estate and construction third at 30%.
  • Surprisingly technology and media are joint lowest sectors with healthcare and life sciences at 18%. Sectors that we hope will come under attention for investment support over the coming years.
  • The largest growth sector by employee however is energy and natural resources at 58% followed by real estate and construction at 24. Technology and media again appear near the lowest,

The Booklet lists 50 top companies in Warwickshire by turnover, but like all lists it comes with a qualifier. Whilst businesses are large, not all appear hi-growth and the reader should understand the basis for the rankings and operating context for each business, rather than assume all are high growth accelerators and thereby a model for growth management.

In conclusion there is perhaps a simple analogy – rowing a small boat through the shore waves is a different experience than from the calmer seas further out. Growth brings turbulence in demand and operations as the business secures but then fails to see beyond the larger and larger contracts. Businesses that survive on traditional experience and informal communication to deliver products and services will bring stress on the team as the waves take effect and inevitably lead to deteriorating quality and customer service and reactive calls for support from banks. High growth businesses can be seen to weather better through developing a more resilient, flexible organisation, robust systems and have secured ready access to finance linked to budgets and working capital projections.