A laissez-faire approach to expansion and a lack of growth funding are preventing small British firms from scaling up, according to new research published by Barclays and carried out by academics at the universities of Oxford and Cambridge.
The study – which contains a foreword from Sherry Coutu, chair of the Scale-Up Institute and one of our Small Business Decision Makers 2016 – looked at the challenges owners face growing their firms organically and trying to access external growth funding.
“The needs on talent and skills are ever greater and we must continue to work with our schools, universities and local authorities to ensure students are attaining the right education for the jobs of tomorrow. It is also very critical that larger companies seek to help these growth businesses secure contracts both at home and abroad – support is vital to a business seeking to scale,” said Coutu.
One of the key factors holding back growth in small British companies, the report’s authors argued, is a lack of ambition. “To grow, management must make a commitment to ambitious growth targets, and then develop plans and actions to find ways to achieve them,” they wrote.
Academics at the Cambridge Judge Business School also identified a lack of resources, and a relatively low likelihood of owners putting sophisticated management systems in place, as the key impediments to the growth of small British businesses.
Their recommendations for businesses looking to scale up included committing to growth, expanding the founding team to broaden the range of skills in the firm, and focusing on standardising processes.
The researchers who put together the contribution from Oxford’s Said Business School highlighted the challenges in the financing landscape for small firm owners who do possess the desire to grow – with the equity investment available for growing businesses growing more slowly than the money available for new companies.
Despite the challenges of funding growth, they also pointed to UK unicorns including Shazam, Skyscanner and Transferwise as evidence that success can be achieved – and highlighted the higher levels of capital raised by young companies in the UK compared to those on the Continent.
“Compared to the US, the UK is evidently behind in terms of large scale-up successes, but compared to the rest of Europe, the UK is showing a relative strength,” they wrote.
The academics also called for an increase in the number of UK venture capital funds with large enough pots of money to fund scale ups as well as young companies.
For more inspiring examples of successful British scale-ups, check out these high-growth firms.
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