Infographic: Fast growth kills businesses
Posted by Dan Martin in Finances, Business trends on Mon, 01/08/2011 - 15:54
Less than half of the companies featured in a high profile list of the UK's fastest growing enterprises over the last decade remain in business today, new research reveals.
According to analysis by SAP and Delta Economics of the Sunday Times Fast Track 100, which focuses on SMEs that have excelled in their first phase of commercial growth, only 47% are still trading. Almost half (44%) of firms featured since 2001 have been liquidated while a third have been acquired.
Other findings included:
- High growth companies are growing slower over time: Average growth rate of businesses that featured from 2001-2005 was 29.2% compared to 25.5% from 2006-2010.
- Manufacturing gradually disappearing: Whilst seven manufacturing businesses were in the 2000-2001 Fast Track, 2008 saw only two, with zero the following year.
- IT has never recovered from dot com boom heyday while retail has endured throughout: 22 IT or telecoms businesses featured in the 2000-2001 entries, whilst the highest presence since 2005 has been only four entries. In contrast, there were 13 retailers in 2000/2001 compared to 21 in 2009/2010. Retail peaked in 2005 with 26 (over one in four) entries.
- A nation of recruiters?: In 2009/10 one in five of the Fast Track 100 were recruitment businesses, significantly skewing this sectors contribution to national GDP and suggesting that there is still a dynamic jobs market
"We wanted to answer two questions," said Dr. Rebecca Harding, CEO of Delta Economics, who was commissioned to analyse the data. "What happens to really successful early stage businesses in the UK over time, and what makes already successful businesses exceptional?
"The first thing to note is that high growth is not a trend that’s easy to replicate year on year, as shown by the business failure figures from the sample. But from the benchmark analysis, the key ingredients for longer term success in this and wider studies seem to be innovation and the capacity to be flexible and nimble to change as well as sound financials and investment."
See below for an infographic and a link to the full report:
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