A Report from Octopus Venture Capital high-lights their value, explores their drivers and makes recommendations for their growth
Just 30,000 out of the 7 million businesses in the UK are high growth small businesses*. Yet this tiny universe of companies created two out of every three new jobs (68%) between 2012 and 2013, and 36% of UK economic growth last year; and is growing fast. And more than one third of these small businesses are located in London and the South East.
What will be of greatest interest to the managers of small businesses and to their advisers and directors are the factors that they should be concentrating on – for future growth, of great relevance to Incubators, Science Parks and Innovation and cluster initiatives.
The report explored the factors that had influenced their growth. Of those that were within their own control, the leading five factors identified were:
Better customer services
Having local knowledge
Innovation of new products
Interestingly, when asked what is holding them back, none of the above factors are mentioned – nor any others in the list of factors that have influenced their growth! They mention instead external factors, particularly taxes, and skills shortages.
Regional and local business organisations should help enable emerging hi-growth small businesses to learn from one another’s experience – for which this Report should be a valuable catalyst.
* Defined as having an annual turnover of £1-20mn and with average annual growth greater than 20% over a 3 year period.