All businesses have the potential to scale-up

Scale-ups come from all regions, sectors and are both young and old – an ambitious mindset is what unites them

Success stories of medium sized business scaling-up are found across the country and in a wide range of industries. While London leads the way with over 13% of medium sized business scaling-up [1] , crucially 70% mid-market scale-ups are located outside of the capital [2] . This underlines the ability for scale-up companies to stimulate growth across the country and support a balanced recovery.

"Setting up Synapse in the Innovation Birmingham Campus was a great decision. We have the space to expand, proximity to big potential customers and access to top talent. Don't believe for a second that you have to be in London to scale-up."

1 Brian Donnelly, CEO and Co-Founder, Synapse

Rate of MSBs scaling up by region

Figure and caption

From tech companies in Shoreditch and Cambridge, to manufacturers in the Midlands and the gaming industry in Dundee, scale-ups are driving economic growth across the country.

Different sectors that MSBs scaled-up in between 2010-13

640

MSBs scaled-up in the manufacturing sector

231

MSBs scaled-up in the construction sector

801

MSBs scaled-up in the business services sector

234

MSBs scaled-up in the financial services sector

646

MSBs scaled-up in the wholesale and retail sector

Mid-market firms across all sectors have the ability to scale-up. There is sometimes the tendency to associate scaling-up with only tech sector firms, but the evidence is clear that MSBs across industries can grow quickly.

Businesses in the service sector are more likely to scale-up by creating new jobs, while businesses that operate in the manufacturing industry are more likely to scale-up by becoming more productive and rapidly increasing their turnover.

Scaling-up is not restricted by when the business was set up. While younger medium sized businesses are more likely to grow quickly, a significant proportion of businesses incorporated in the 20th century are reaping the benefits of scaling-up. One of the core reasons why businesses from all demographics can scale is because of the diversity of routes available. Some companies are growing their workforce (“expanding scale-ups”), others increase their turnover (“productive scale-ups”) while some business are increasing both sales and employment (“balanced scale-ups”).

Never too old! 11% of MSBs incorporated between 1990-94 are scale-ups

Scale-ups are united by an ambitious mindset

From the many stories that fast growth leaders shared, the overwhelming common strand that united them was an ambitious mindset. Scaling-up is fundamentally a way of thinking. MSBs who are just starting out on the scale-up journey to those that have successfully navigated fast growth commonly cite their high aspirations, their clear sense of purpose and concrete sales targets as important.

Scale-up leaders on the importance of ambition

"I've talked to countless aspiring entrepreneurs and what distinguishes the ones that scale-up is the hunger to “double the size of the business". Following through on ambition and hunting for business multipliers - actions that have the potential to multiply revenues - are key traits of companies that experience rapid growth. If you want to scale-up your business, look for the multipliers."

1 Simon Devonshire, Investor and Serial Entrepreneur


"Our values of aspiration, accountability and ambition have been instrumental in our success. Now it's my job as CEO to set ambitious targets and convince staff we can be even more successful."

1 Gareth Rogers, CEO, Southampton FC


"We want to enable everyone in the world to learn a foreign language."

1 Bernhard Niesner, CEO and Co-Founder, busuu


"The market for online lending has massive potential and we have a clear target of 100% growth every year."

1 Giles Andrews, Co-Founder and Executive Chairman, Zopa


"Over the years we found ourselves having to navigate three notable recessions, each a challenge. Coming out of each was marked by a moment of success, a big win that propelled us forwards. What was then key was recognising the fickleness of such moments and immediately searching for the next big opportunity."

1 Colin Smithers, Chairman, Plextek


"The 2008 recession taught us, as founders, how we're all susceptible to global events, not least adverse economic events. As a result, now we're in more benign trading conditions, we're going full steam ahead, and the word consolidation does not enter our vocabulary."

1 Alan Beresford, CEO, Omega Resource Group


"The market is huge for car finance and we have a clear ambition to triple the size of our business in the next five years."

1 Mark Smith, CEO and Co-Founder, Car Finance Company


"Aim high, we want to be a 500m business."

1 Sean Taylor, Managing Director and Co-Founder, Redwood Technologies

The evidence is clear - age, size and sector are not barriers to fast growth. What is required is the ambition and the ability to follow through on the action plan to scale-up.

Actions for government

An ambitious mindset is necessary to start, invest in and grow successful businesses. Government should continue to review the tax system to ensure it incentivises entrepreneurialism and investment in medium sized businesses

  • Schemes like the Enterprise Investment Scheme, Annual Investment Allowance and Entrepreneurs’ Relief are big advantages cited by growing companies and should be built on.
  • As part of the government’s Business Tax Roadmap, set to be published in 2016, there must be a focus on overall attractiveness of long term investment in and by medium sized businesses.
  • In particular, it should consider incentives for owners of MSBs and their investors including the effect of the dividends adjustment announced in the June Budget.

References

[1] Experian, Scale-Up Analysis, 2015

[2] Experian, Scale-Up Analysis, 2015

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