BUSINESS SUCCESS CAN BE OFF THE SCALE

What is a scale-up business?

The Organisation of Economic Co-Operation and Development (OECD), describes a scale-up as an enterprise with average annual growth in employees or turnover greater than 20 per cent over a three-year period, and with more than 10 employees at the beginning of the period. It excludes charities and social enterprises.

Definition:

This feature uses a wider definition now used by a number of organisations, including Beauhurst, a leading source of information on ambitious British companies. Our definition is: companies that have shown a 10 per cent growth in employee count or annual turnover over a three-year period, as well as those that have grown turnover by 20 per cent.

This allows us to introduce you to some of the region’s most exciting scale-ups which haven’t yet had their share of the limelight.

Why does an established business suddenly accelerate? Perhaps one of its products suddenly gains traction, or the market catches up with the company’s vision. Maybe a new management team spots an opportunity. Or it can be just luck.

Henry Whorwood, Head of Research and Consultancy at Beauhurst, a leading source of information on ambitious British companies, thinks what unites scaleups is that the people running them, young or old, experienced or not, have that entrepreneurial mindset.

“High-tech scale-ups are generally run by younger people, but not all. Perhaps someone senior in an established business has seen an opportunity and is willing to take the financial risk.” For those without deep pockets, investors are willing to back scale-ups in some sectors more than others. Beauhurst highlights investor interest in ambitious university spin-outs. “Science and technology spin-out businesses, and the intellectual property usually associated with them, are of real interest to venture capital and private equity investment companies,” added Henry.

“And given the current macroeconomic climate, this makes sense. The companies with solid IP have the best chance of weathering the storm.”

Over the last couple of years, there has been an increasing amount of money available to scale-up companies.

“Just a few years ago a company wanting to raise £50 million had no one to talk to,” said Henry. “Now there are a number of avenues they can explore – and it’s not all about private equity or venture capital. Bank debt has more of a role than before.”