The Scale-up Perspective

Given the importance of scale-up businesses to the region's economy, new insights into how they can be best supported are very important; especially to an organisation like the Entrepreneurs' Forum!

A recent report from the ScaleUp Institute provides a wealth of valuable new research into what owners of high-growth companies think about their businesses, the help available and the current state of the market. The report brings together analysis from the independent SME Finance Monitor, providing a demographic insight into this vital segment of UK business. It also considers information from more than 32,000 businesses, including 2,202 scale-ups (companies with at least 20% annualised growth over the past three years) and over 550 high-growth companies (those on-track to become scale-ups). Compared to the average SME, scale-up businesses are not only more likely to trade internationally, both in terms of export and import, but to also have a dedicated finance person, to make use of management accounts and business plans, and to have made innovations in new products and services and business processes. Finance After growth, finance is perhaps the big differentiator between scale-ups and other SMEs. The fact that scale-ups are almost twice as likely to expect to grow in the coming year – and more than four times as likely to be planning to grow by more than 20% – means it makes sense that they are more interested in funding. Knowledge of the British Business Bank and programmes like the Enterprise Finance Guarantee Scheme and the Business Growth Fund is understandably higher among scale-up companies. Not only are scale-ups more likely to use external finance, they are happier to do so to fund their growth ambitions, and almost twice as likely to apply for finance in the future. Entrepreneurial Mind-Set Regional variations in the attitudes of people running scale-ups were apparent from the results, with just 9% nationally considering the economic climate a barrier to growth, while in the North East this was as high as 16%. Given our region’s historical economic issues this may not come as a shock, but we can be encouraged by the fact that we have the same proportion of scale-ups versus SMEs as the rest of the UK. On the whole, scale-up businesses are less likely to be concerned about the impact of the economic climate than other businesses, tending to be far more concerned about issues such as attracting and retaining skills, access to finance, and the availability of relevant advice. Demographics Statistically the owners of scale-ups tend to be younger than the average business owner, and when it comes to the gender divide, scale-ups led by women are more likely to plan and innovate, less likely to be permanent borrowers, and more likely to see staff recruitment and retention as an issue. Women-led SMEs in general are less likely to use finance, apply for it, and to plan to apply for it. Large Scale-ups vs SMEs A number of significant, if unsurprising differences between large scale-ups and their SME counterparts showed that companies with between 10 and 249 employees were far less likely to undertake the activities more associated with scale-ups. 85% of larger scale-ups use a business plan, compared to just 69% of those with fewer employees, while 37% of those larger firms trade internationally, compared to 28% of the smaller ones. Perhaps unsurprisingly, both large and smaller scaleups tended to give very similar responses on a number of issues. The vast majority, 94% and 89% respectively, are making a profit, with the bulk happy to use finance to grow, and significant minorities of both, 14% and 13%, consider staff retention and recruitment as a future barrier to growth. In their report, the ScaleUp Institute has shown that the North East is holding its own when it comes to business growth. It now falls on entrepreneurs to take advantage of the funding and support available, and do what’s best for their businesses and the region as a whole.