UK lacking SME 'stars' |
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| Economy | |
| Written by Roberta Murray | |
| Monday, 23 November 2009 | |
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Analysis shows a lack of high growth SMEs capable of reinvigorating the country’s ailing economy. The UK has a critical dearth of high growth businesses capable of reinvigorating the country’s ailing economy, according to new research from enterprise growth specialist, Winning Pitch plc. The Plus-quoted company’s HiQ Index, a metric designed to map the percentage of high growth businesses within each of the UK’s local authority areas, has revealed that high growth SMEs account for just 5.4 per cent (22,262) of the country’s 409,773 SMEs.High growth SMEs are identified as either those businesses that have over ten employees, and have grown to a turnover of £1 million within their first three years, or that already turn over £0.5 million and are predicted to grow by 20 per cent year-on-year for the next three years. These SMEs are thought to contribute dramatically to regional economic wealth, and create 70 per cent of jobs in any given geographical area. The research comes after the Office of National Statistics (ONS) reported that Britain’s economic output shrank a further 0.4 per cent between July and September, completing 18 months of uninterrupted negative growth totalling almost six per cent of the economy. However, Winning Pitch’s research also identified 88,220 potential High Growth SMEs (22 per cent of SMEs), which, through funding and business support, could become high growth businesses, increasing turnover exponentially and creating jobs at accelerated rates. Dave Thomas, head of Winning Pitch’s research arm, The Observatory, said: “Following the recent ONS figures, a number of economic commentators are expecting the UK to bounce around the zero growth mark for some time yet, while unemployment is a problem that will remain long after the economy has recovered. As a result, the low number of established high-growth SMEs – the businesses that drive wider economic growth and prop up the job market – is a problem that local authorities must address. At present, many authorities are focusing their support on lost cause companies with little or no growth potential, such as inexperienced start-up enterprises or larger businesses teetering on insolvency that risk mass redundancies. “By identifying and supporting potential High Growth SMEs through specialist advice, training and grants, local authorities can allow these companies, many of which are in a raw state, to realise their commercial aptitude and boost the wider economy.” Winning Pitch’s research found that London had the highest percentage of High Growth SMEs (seven per cent) and potential gazelles (15.2 per cent) when compared to other UK regions, while Yorkshire and Humber, Scotland and the East Midlands, each had the second highest percentage of gazelles (5.5 per cent). The South East was third in the UK for number of gazelles, but second in terms of potential high growth companies (13.7 per cent). Wales had the lowest percentage of both gazelles (4.3 per cent) and potential gazelles (three per cent).
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