December 15, 2014
The report, authored by Angel Investor Sherry Coutu, details how many more businesses can achieve scale-up growth status in the UK, and was published after it was found that “95 percent of new businesses fail in the first five years” in the country.
Six factors that need improving for the growth and success rates of new businesses to rise are highlighted by the report, including “targeting, supporting, promoting and reporting on scale-up gap closure”. This means that “freeing data makes it possible for stakeholders in the economy to identify scale-ups, and collaborating with and promoting others who help scale-ups fulfil their potential is the second most important thing government can do”.
Having access to talent is another factor, with many leaders having problems finding a skilled supply of people who they can hire, which can prevent them from being able to accept customer orders. In turn, developing scale-up leadership is also a factor in being able to accept customer orders, as many businesses have a lack of experience and capacity in their senior leadership team; with the report noting that “it is hard to grow a company hundreds of times faster than is ‘normal’ without the right training and support”.
A further problem for many businesses looking to scale-up is being able to create new products and services for domestic markets and selling successful products to other countries, and so the report highlights the need to increase customer sales at home and abroad by eradicating the barriers that prevent this.
Another factor to improve on is the financing of scale-ups, with the report noting that “fast growing companies often turn to the US or Asia for their financing”, but “if the company floats or is sold and the shareholders are not based in the UK, the gains do not flow into the economy”. In addition, “the pressure on a company to re-domicile is greater if the majority of its funding is based abroad”, exacerbating the scale-up skills shortage.
Finally, the report highlights accessibility of infrastructure as a factor needing improvement, with entrepreneurs finding that a lack of access to infrastructure “makes it more difficult to scale their companies in the UK than elsewhere”. The report suggests sharing physical infrastructure with large established corporates as one way to alleviate this problem.
In response to the Scale-Up Report being published, a meeting was held on 26 November attended by over 100 business people from a variety of hyper growth start-ups, business support organisations, and B2B corporate firms; with the aim being to find out more about the report and how its findings can impact growth for their businesses.
The event was co-organised by Daryl Woodhouse, CEO of Advantage Business Partnerships Limited (ABP), which is an ambassador in raising awareness of the Scale-Up Britain campaign. He said: “Britain has so many high potential and interesting start-ups now, although many have not run a successful business before and so 95 percent don’t survive the challenges of more than five years in trade. When I heard about the report, I just had to ensure we were closely aligned with the whole upcoming Scale-Up Britain movement.”
Scale-Up Britain was created in collaboration with Paulina Sygulska Tenner, co-founder of Grant Tree, with the campaign aiming to “widen the growth debate and provide practical solutions to dynamic business owners by those – and only those – who are in the best position to give it”.
Woodhouse said: “The potential impact of the Scale-Up Report is huge and could really help take many ambitious British businesses to the next level. We wanted to help businesses understand the report and learn from other successful fast-growth businesses on how they can scale-up faster too.”
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