The differences between high-growth companies, scaleups and scaleup potentials
The quest to find and support the next unicorn business has never been greater!
Accelerating growth, particularly of scaleup companies, is on the agenda of every Local Enterprise Partnership in the UK at present. It is suggested that scaleups account for 2-4 per cent of SMEs but are responsible for the majority of SME growth in the UK (Fintech Times 2016).
However, the boundaries often get blurred when discussing growth and scaleup businesses. It is important to distinguish between high-growth entrepreneurial enterprises, scale-up potential businesses and scaleup businesses.
According to the Organisation for Economic Co-operation and Development (OECD),
“Scale-ups are enterprises with average annualised growth in employees (or in turnover) greater than 20 per cent a year over a three-year period and with 10 or more employees at the beginning of the observation period.”
High growth firms are companies that have successfully brought a new product and or service to market by creating and seizing an opportunity. They are typically owner-manager led, generally maintain careful control over business operations and often put in place lean and flexible organisational structures, with one or a few individuals in top management.
In the early stages of businesses growth, this enables these types of organisation to rapidly grow through swift decision-making and elimination of bureaucratic structures.
We have found, working with SMEs in our Productivity and Innovation Centre, that at five years plus, there is a pivot point where they start to recognise the need to transition from tacit to explicit business knowledge.
This phenomenon emerges when a business’s key knowledge becomes locked in small number of individuals, which then starts to restrict their growth potential. It is then they often start to look to evolve their leadership and management skills in order to become a scale-up potential organisation.
I am constantly asked how we recognise scaleup and scaleup potential businesses. There is a strong argument to be made regarding the link between highly productive organisations and scale-up business capabilities.
We therefore look to see whether an organisation can either:
This is not an exhaustive test and there are always exceptions to the rules. But it has proven highly effective in helping us to understand the differences between high growth entrepreneurial enterprises, scale-up potential and scale-up businesses.
Please spend some time to ask yourself, whether or not you exhibit all or some of the following characteristics of a highly productive organisation:
By asking yourself these questions, you will start to get a better understanding of where your business is in its growth journey.
Professor Simon Bolton is associate dean of enterprise and employability and professor of innovation at Edge Hill University. Simon is also director of the acclaimed Productivity and Innovation Centre which supports regional SME growth in Lancashire.
The website uses cookies.
Some are used for statistical purposes and others are set up by third party services. By clicking 'Accept all & close', you accept the use of cookies. For more information on how we use and manage cookies, please read our Cookie Policy.
