TOPIC OF THE WEEK - TWEEK
Fast or Sustainable?
Which path is best for your company?
WES NEWS DESK 1st October 2011
Starting a business can be daunting but what can be more unpredictable is the growth of a company, this due to the on-going financial crisis. So, should an entrepreneur focus on fast or sustainable growth? A look at the data indicates that close to fifty percent of the UK Fast Track 100 list of fast –growing small and medium –sized businesses featured over the ten years survived. The analysis by SAP UK & Ireland and Delta Economics, focuses on Fast Track 100 companies published each December in the Sunday Times. The research took the top 20 performing businesses for each of the past ten years of the Fast Track 100 and benchmarked key attributes present in each business year. The analysis indicates a case of simply too soon to quick can potentially land a business in hot water! The fast growth trends also provide a cautionary warning to overambitious entrepreneurs. Read More….
SHORT TERM GROWTH VERSUS LONG TERM SUCCESS
Dr Rebecca Harding, CEO of Delta Economics, who analysed the data of fast track companies revealed that short term growth does not always link to long term success, as one in five businesses that have featured over the past ten years in the Fast Track rankings no longer trade. She said, about half of these have been liquidated and a third have been acquired. In 2000-2001 of Fast Track companies, only 47% are in existence, with high growth companies growing slower over time. The average growth rate of businesses that featured from 2001-2005 is 29.2 per cent as compared to the average growth rate of businesses from 2006-2010 which is 25.5 per cent. Harding also provides analysis of growth in various sectors: “Manufacturing is gradually disappearing. While seven manufacturing businesses were in the 2000-2001 Fast Track, 2008 saw only two, with zero the following year. IT has never recovered from the dotcom boom heyday while retail has endured throughout – 22 IT/telco businesses featured in the 2000-2001 entries; the highest presence since 2005 has been only four entries. The retail sector peaked in 2005 with 26 (more than one in four) entries. There were 13 retailers in 2000/2001 and 21 retailers in 2009/2010”. Is the United Kingdom (UK) a nation of recruiters? “In 2009/10, one in five of the Fast Track 100 were recruitment businesses, significantly skewing this sector's contribution to national GDP, and suggesting that there is still a dynamic jobs market,” said Harding. So, why are high growth rate companies keen on expansion taking a knock? In various sectors such as financial services, engineering, building and property the uphill struggle is due to the financial crisis and recession. Harding’s comments also indicate that a company cannot expect high growth rates every year.
THE OVERAMBITIOUS ENTREPRENEUR- WOMEN VERSUS MEN
Harding also compared data (see Delta Economics -COGS reports) of who is likely to succeed as an entrepreneur, women or men. “The goal was to find out what made a business survive” stated Harding. Delta Economics started with 1,800 founders of growth oriented businesses in the UK in 2008 and has currently analysed 2,100 in twelve European countries. The companies are younger than ten years with turnovers above £250k after first two years of trading. Harding argues that when it came “down to survivor companies, 13.5% of the companies in 2008 were women owned and founded. In 2010 the figure was 16% suggesting higher survival rates. These are the companies that have toughed it out! Of those looking for finance, 73% of men and 67% of women are looking for growth finance. 61% of men and 43% of women are looking for bank loans or overdrafts. However, only 18% of women as compared 32% of men had set up a business before”. The analysis indicates that, women in the UK invest as much in their businesses as men. This is more than their European counterparts but their turnovers are lower and they are finding it more difficult to access finance. Harding said the actual growth of women businesses is as strong as men’s. Have your say……