By Daniel Hunter
Less than five per cent of all small businesses play the biggest role in boosting the UK economy and account for two-thirds of all private-sector employment, according to a new report by Santander Corporate Banking.
These fast growth, or Growth Champion, businesses have a significantly higher economic impact than the rest of the UK small and medium-sized business (SME) population.
Additionally, these companies proved to be exceptionally resilient during the recent recession creating almost 173,000 jobs at a time when similarly sized non-growth champions shed more than 400,000.
The Breakthrough Growth Champions Report, which examined growth patterns among businesses with turnovers between £500,000 and £10,000,000, revealed Growth Champions are found across a wide range of industry sectors. The highest concentrations were found in sectors such as Social Work (14.7 per cent), Complementary Medicine, such as homeopathy and physiotherapy, (11.4 per cent), and Architectural and Engineering activities (7.7 per cent).
In addition, the UK regions contain an almost equal proportion of Growth Champion businesses. The North West recorded the highest concentration with 5.3 per cent; Yorkshire, Scotland and the North East all recorded 5.2 per cent; and the South West and Thames Valley followed with 5.1%.
Deeper analysis identified a number of characteristics commonly held by Growth Champions. These include strong teamwork and relationships; youthful leadership; high levels of ambition; directors with a history of entrepreneurial success; and a proactive approach to cash and credit management.
While success and failure depends on a number of external factors, comparing these characteristics among other existing businesses can indicate possible Future Stars — businesses with a higher probability of achieving significant and sustained growth in net worth, sales and employment.
“This research shows a small group of businesses make an extraordinary contribution to the UK economy," John Williams, Head of Santander’s Breakthrough programme, said.
"These Growth Champions demonstrate a fantastic ability to excel against the backdrop of difficult trading circumstances, delivering significant growth in both employment and net worth.
“Contrary to popular thinking, these champion businesses operate across a wide range of industry sectors and are spread evenly across the UK, proving that fast growth is not confined to the technology industry or the South East.
“Banks have a responsibility to support businesses to accelerate growth at all stages of their lifecycle. Using the common characteristics exhibited by Growth Champions, we can identify the fast-growth businesses of the future and provide the support they need to help them fulfil their potential.”
The Breakthrough Growth Champions Report — understanding the engines of economic growth was commissioned by Santander to explore how the credit crunch and resulting recession impacted small and medium sized businesses in the SME sector. Using this research, Santander designed its Breakthrough programme to specifically support these companies in the early stages of their growth cycle and help accelerate their growth trajectory.
Join us on