Spot the difference: What makes a successful scale-up?
We need to learn from scale-ups if we’re to help grow their number, says Smith & Williamson’s John Morris
Scale-up businesses have the power to drive significant economic growth, creating jobs and wealth and delivering tangible benefits to local and national communities. They may also hold the key to addressing the UK’s productivity challenge.
It’s therefore crucial that we encourage as many businesses as possible to scale up. And to do this, we need to understand how our current crop of scale-up companies have got to where they are, so other businesses can learn from their example.
That’s why we created the largest ever study into the sentiment and mindset of the UK scale-up community.
The report, Dream bigger: The scale-up moment, has provided us with valuable insight into how a scale-up thinks, acts and behaves. From this we have identified significant differences between these companies and the rest of the business community, both in their mentality and their approach.
The power of positive thinking
Scale-ups are more optimistic, more bullish and consequently take more risks. Among the scale-up community, an overwhelming 72 per cent expect economic growth to gather pace in the coming 12 months, while three quarters (74 per cent) also see their business prospects improving over the same period.
When non-scale-up leaders were asked the same questions, just two in five (42 per cent) believed the economic climate would improve, while a similar proportion (43 per cent) saw their business prospects improving.
A digital advantage
Scale-ups embrace technology and innovation openly, using it to their advantage. Illustrating this point, half of the high-growth companies we spoke to claimed that advances in tech have been critical to their expansion — nearly three times the number (18 per cent) of non-scale-ups.
One explanation for the tech prowess among scale-ups is that a high proportion of their founders are young entrepreneurs, likely to be digital natives. More than two in five (42 per cent) scale-up founders are 34 and under whereas among slower-growth businesses, this drops to 18 per cent.
The competitive edge
From the outset, scale-ups have an appetite for growth. They foster a culture of learning and openness, while keeping a close eye on the competition. This competitive nature is visible in our findings. Scale-up founders are almost three times as likely to cite peer group pressure as a key motivation for building their business.
These traits need not be exclusive to high-growth businesses. Any business leader daring to dream bigger can use them as the building blocks for future growth.
That said, desire alone is not enough. Nine out of ten businesses in the UK are eager to grow, but this must be underpinned by a compelling and robust strategy which can offer sustainable success.
Ambitious businesses need to know how much funding they’re going to require and where they’re going to get it. They must understand where to find the best talent and how to recognise, develop and reward the leadership qualities in their own staff. They should be brave about crossing borders and venturing into new markets. Many businesses attempt to do some of these but scale-ups need to be doing them all.
Our findings should also inform those businesses already experiencing high growth. Often these companies are not aware of their scale-up status and, as a result, may not be laying the right foundations to deliver that growth sustainably.
To help higher growth companies understand how they compare against their competition across regions and sectors, Smith & Williamson has developed an online and interactive service to help benchmark these businesses. Dream bigger: The scale-up moment is a litmus test of the scale-up community.
We believe the UK should be the best place in the world to scale a business. By learning from the success stories, we can help develop the ecosystem to support it.
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