Number of UK growth firms falls, despite wealth creation increasing

Findings from the sixth Barclays and BGF Entrepreneurs Index suggests that Britain is experiencing slight ?growing pains? when it comes to firms achieving high-growth status. The proportion of businesses with revenue bands between ?2.5m and ?100 fell from 23.2 per cent to 21 per cent in the year to March 2014.

On a more positive note, the amount of active companies in the UK grew by 3.7 per cent in the second half of 2014, the second highest rate in the last three years. It is also the sixth consecutive uplift since the survey began.

Furthermore, the telecoms and food sectors were found to be particularly active in the deal space. Telecoms registered growth of 117 per cent, with food at 48 per cent, property at 35 per cent and pharmaceuticals at 31 per cent following after. The internet sector registered a 23 per cent dip, while the other space dropping away was energy (41 per cent fall).

Richard Phelps, managing director at Barclays, said: Since we started our Entrepreneurs Index in 2012 the UK has seen a net gain of nearly half a million companies, which signifies that that for many individuals running their own business is now becoming an aspirational career choice.

?As technology breaks barriers to entry and connects businesses with customers across the globe, and the number of successful entrepreneurial role models and mentors rises, a favourable climate is being created, encouraging more entrepreneurs.?

On a regional basis, the research concluded wealth creation is still being found in the south on a more regular basis. Regions in the south posted an 8.5 per cent increase in the number of business deals during 2014, while the north registered a dip of 0.2 per cent.

Phelps believes there is more to be done when it comes to ?fostering high-growth companies?, creating a framework which helps entrepreneurs realise ambitions and benefit the economy.

Stephen Welton, chief executive of the Business Growth Fund (BGF), stated that not enough is being done to turn startups into high-growth companies.

?Going from startup to scale-up takes a combination of targeted policy effort, supporting the management of these businesses, and also improving access to growth financing,? he added.

?There is clearly still plenty to do in this regard but the options and environment for company growth are clearly there for business owners to capitalise on. We just need to support them on this journey.?

Duncan Cheatle, founder of The Prelude Group and The Supper Club, was an expert contributor to the report and gave his thoughts to Real Business.

?Despite the small reduction in high-growth firms, we should be encouraged by the fact that we have still got a healthy proportion of businesses that are scaling, at the same time as we are seeing the number of startups rise. What we need to do now is focus on how to ensure the numbers of ambitious, high-growth businesses increases,? he said.

“We need to encourage business leaders to invest in themselves and their management teams. Our members in The Supper Club, who are all within this cohort of ?high-growth businesses?, on average saw growth of 34 per cent in 2014 ? which is impressive. These are all people that are taking action to invest in their own development through peer-learning. Combine this with government incentives such as Entrepreneur?s Relief and Enterprise Investment Scheme, and we should continue to see our scaling businesses succeed.?

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