BLOG: Why is scale-up support so important?

A recent article by founding editor of Real Business and the Business is Great campaign Stuart Rock and published by the Chartered Management Institute states that, “a new orthodoxy is emerging about Britain’s economic future, and it’s this: if you have lots of people starting companies, you can’t have lots of people growing companies.”

Although you could quibble about the semantics of this, the point it’s alluding to is that our attention ought to be focused primarily on either start-up or scale-up businesses and that it’s important we make the right choice. Indeed, the article actually goes further, arguing that we should, “stop encouraging start-ups and start thinking scale-ups.”

Its reason for this goes back to Sherry Coutu’s 2014 Scale-Up Report on UK Economic Growth, in which she states, “Competitive advantage doesn’t go to the nations that focus on creating companies; it goes to nations that focus on scaling companies.” In short, this means that scale-ups do more for a country’s economy that start-ups.

The recognition of this has, indeed, led to an increased focus on scale-up businesses, not least the creation of the £400-million Northern Powerhouse Investment Fund (NPIF) for boosting small and medium business (SME) growth in the North of England. There’s a host of other support available for UK scale-ups too.

Digging a little deeper, the Scale-Up Report on UK Economic Growth detailed four reasons why scale-ups are so important for the economy and why, therefore, providing support for them is so important:

  • Job creation: By definition, high-growth businesses create the most jobs. A 2009 report by Nesta stated that 6% of UK businesses with the highest growth rates generated half of the new jobs created by existing businesses between 2002 and 2008.
  • The quality of jobs: Scale-ups typically create higher quality jobs than other businesses with more satisfied employees. The report cites an Endeavour Programme statistic suggesting that 80% of surveyed employees at high-growth companies stated that they were ‘satisfied’ or ‘very satisfied’ with their current job compared to 46% when asked about their previous job.
  • National output: A small group of scale-up companies accounts for a significant proportion of growth in the UK’s national output, whereas most start-up companies have very little impact on it.
  • Productivity and company size: Higher (turnover) growth firms are said to be responsible for generating faster productivity growth and ultimately higher levels of productivity.

If you're a scale-up business in the Liverpool City Region contact your regaional Local Growth Hub broker to find out the support available for your business.