1) The presentation summarizes research from the Enterprise Research Centre (ERC) on high-growth firms in the UK. 2) It finds that while start-ups are important, most job growth occurs within the first 5 years as firms scale up. Established small and medium enterprises growing to the next size level also contribute significantly to job growth. 3) Regional differences exist in start-up rates and business dynamics across the UK. Tailored local support policies are needed to foster scaling across different stages of growth in each local economy. Developing leadership skills in small businesses is key to facilitating continued growth.

1. Professor Mark Hart
Deputy Director, ERC
Presentation to DL LEP Group Meeting in Saunderton
11th May 2017

2. Some Facts!
• Some ‘mechanics’ underlying
the OCED High-Growth Firm
definition:
– Take a longer time perspective
– less than half scaling for the
first time: some first scaled
long ago
– What happens next? – further
episodes of high-growth?
chance of another scaling
declines dramatically with time
since first scale-up
ERC Analysis of UK Firm Growth – OECD HGF
employment definition – updated to 2016

3. 3 Groups of ‘High Performance Firms’ –
what happened them over 15 years?
All the ‘action’ is in the first 5
years after start-up!
OECD HGFs:
1. do not create the most jobs
2. measured from birth: grow
more slowly
3. have a lower survival rate than
one or other of the two
comparator groups of high
performing firms.
Anyadike-Danes & Hart (2017) “High Performing Firms and Job Creation: a
longitudinal analysis (1998-2013)”, ERC Insight Paper, March 2017
SHGFs – Clayton Variance to OECD definition relaxing the 10 emp. threshold; HGFs – OECD definition; EEPJC
– extraordinarily prolific job creators – micro-firms with 1-4 employees at start-up.

4. Job Creation, Growth and Survival of
High Performing Firms: 1998-2013
SHGF HGF EEPJC
(1) (2) (3)
Number of firms 1181 330 470
Jobs 1998 4040 13576 967
2013 69649 74431 59070
2013-1998 65609 60855 58103
Jobs per firm 1998 3.42 41.14 2.06
2013 58.97 225.55 125.68
1998/2013 17.24 5.48 61.01
Annual average growth (%) 1998/2013 20.9 12.0 31.5
Age 15 survival rate (%) 2013/1998 39.5 42.4 47.4

5. ERC’s Local
Growth
Dashboard –
Focus on
Geography of
Growing Firms

6. Business Start-ups
• The number of start-ups in an
economy is often seen as the headline
metric of ‘enterprise’ and
‘entrepreneurial ability’.
• The South East, and especially London,
has the largest rate of start-ups and
there are generally smaller numbers of
start-ups as we move north and west.
• However, there are some notable
exceptions in England as Cheshire &
Warrington also exhibit high rates of
start-up on a par with the South East.

7. Firm Survival and Growth
7
Start-ups
achieving at least
£1m T/O after 3
years
Established
businesses
growing from £1-
2m to £3m+ T/O

8. High-Growth Firms and Small HGFs (2013-16)

9. Driving Business Support
Interventions
• Analysis does confirm the value of locally differentiated policies
reflecting the local realities of business dynamics – being reflected in
SEPs and funding deals??
• Something long recognised in Scotland, Wales and Northern Ireland
but constantly being re-worked in England!

10. Summary
• ‘Scaling’ is an important dynamic to nurture in the UK
economy.
• But, it needs to be deployed across each stage of the growth
pipeline:
– Nascent entrepreneurs or start-ups growing
– Accelerating the growth of businesses already showing signs of
ambition and growth
– Getting scaled businesses to scale again and more quickly
• Need to be careful about committing to any particular simple
formula for identifying them.

11. Agenda for Action
• Develop a private and public business support framework
based on robust evidence.
• Challenging owner-manager mindsets and
developing/deepening growth ambition – especially among
the ‘growth ambivalent’ & ‘growth inclined’ – the challenge is
‘early identification’ (data filters only go so far)
• Enhancing Leadership, Management and Entrepreneurial
Skills – creates the business context for the impact of on-
going reviews on finance (e.g., Patient Capital Review); skills
and growing domestic and international markets.

12. Why Leadership/Management/Entrepreneurial
Skills are crucial?
• GrowthAccelerator
clients in England
reported that the main
barriers to their growth
were Strategy and
Management (53%)
• Chartered Institute of
Personnel and
Development shows
that nearly three-
quarters of SMEs in
England report a deficit
in L&M Skills. Hayton, J (2015) “Leadership and Management Skills in SMEs:
Measuring Associations with Management Practices and
Performance” BIS Research Paper No. 211, March 2015

13. Goldman Sachs 10,000 Small Businesses
Programme http://www.aston.ac.uk/10ksb/
• A national small business growth programme – fully-
funded.
• The programme is proven to drive growth and job
creation
• 10KSB UK graduates are growing their staff at 31%
per year and increasing revenue at 81% per year.
• They are three times more likely to be creating jobs
and two times more likely to be growing revenue
than other UK small businesses.
• Independent analysis shows that participants create
17% more jobs and generate 19% higher revenues
than they would have without the programme.

14. Thank you!
Questions and comments?
More information at http://enterpriseresearch.ac.uk/
Contact us about this research: Mark Hart mark.hart@aston.ac.uk
This work reflects the joint effort by the research team of the ERC,
including Michael Anyadike-Danes, Karen Bonner and Mark Hart.
This work contains statistical data from ONS which is Crown Copyright. The use of these data does not imply the
endorsement of the data owner or the UK Data Service at the UK Data Archive in relation to the interpretation or analysis of
the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.