Recent Barclaycard research revealed some important and surprising factors in determining scale up success. Rebecca Burn-Callander, journalist and author, takes us through them.
The scale up challenge
It’s no secret that building a successful venture is challenging. The barriers to growth range from securing talent and financing, to moving into a bigger office, or deciding on expanding internationally. The journey from a startup to scale up is even more daunting. Not all businesses will ever reach “scale up” status. It is defined as a high-growth company that has seen average annualised growth of at least 20% a year over the last three years.
For those driven entrepreneurs that do manage to get their firms to the coveted scale up phase, the rewards can be financially significant for both them and, more widely, the country. In fact, a pool of fewer than 37,000 UK scale ups across the country contribute a significant amount to the UK economy, estimated to be a staggering £1.3 trillion. Scale ups represent just 0.6% of the UK’s small business community, so imagine the boost to our economy if more companies made it to this high-growth stage of the business lifecycle?
This is why it is so crucial to explore some of the key success factors for companies looking to grow and understand how incremental improvements in the business landscape could have a significant, positive impact on business growth.
Why public transport is critical for staying on track
When thinking about the most important factors for success, many entrepreneurs will immediately think about access to talent and being able to recruit the best staff to drive their business forward. They may, however, be overlooking an even more fundamental requirement: access to public transport.
A recent Barclaycard study conducted by the Centre for Economics and Business Research (Cebr) found that public transport is one of the most important factors affecting the numbers of businesses reaching the scale up phase – in fact, a one percentage point increase in public transport use is associated with 1,400 more businesses being able to scale up over a 12-month period.
Why might this infrastructure be so important? Well, a good public transport system means scale ups can access talent based further away from their company’s offices, so they have a broader pool of people to choose from and can pick the very best candidates available for every role. When it comes to working patterns themselves, if there’s good WiFi on the train, staff can use that time to be more productive and flexible in the way they approach their workload.
Imports have a stronger impact than exports
Another vital factor for success is access to international markets – especially when it comes to imports. Barclaycard’s analysis found that a 1% growth in imports is associated with a 2.4% annual increase in the number of scale ups.
Exports are important, too: a 1% increase in exports is associated with a 0.5% increase in scale ups over 12 months. It is perhaps surprising to see that an increase in exports doesn’t have the same impact on high-growth businesses as imports. This is an important consideration as we look to forge new, post-Brexit trade deals.
The leaders of scale up businesses have corroborated these findings. Additional research from Barclaycard revealed that six in 10 (62%) business leaders believe scale up companies need to trade with markets outside the UK to secure business success, while a similar proportion (63%) say companies in this phase of the business lifecycle need to expand their operations to markets outside the UK in order to grow.
Looking to partners
Despite the current economic and political challenges, the UK still remains a positive place to do business: Barclaycard’s research highlighted that six in 10 (61%) business leaders believe the UK is a good place to be a scale up.
For any entrepreneur just starting out, the road to becoming a scale up may seem like a journey to the unknown. This research provides useful insight into some of the factors start ups should consider when mapping out their path to the high-growth phase.
Every entrepreneur needs help to reach scale. Whether it’s seeking advice from your local chambers of commerce or speaking to your payment provider about how you can accept international payments to support overseas trade, a range of partners and experts can provide you with the support you need to grow. Building a business is never straightforward but leveraging the data that can drive success, and getting support from the right partners, can help you reach your growth goals faster.
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