Scale-up businesses: what are they and where did they come from?
Although the concept isn’t new, scale-up businesses have become something of a hot topic in recent years. Indeed, Google Trends appears to show a spike in interest in the commutable term “scaleup” followed by a steady rise in interest since the Global Scale Up Declaration petition in November 2014, which sought to “accelerate and highlight” the conversation around scale-up businesses.
If you’re not clear on what a scale-up business is, they are perhaps best explained by a definition in the November 2014 Scale-Up Report on UK Economic Growth:
“Scale-ups are enterprises with average annualised growth in employees (or in turnover) greater than 20 per cent a year over a three-year period, and with 10 or more employees at the beginning of the observation period.”
The report was written by entrepreneur and investor Sherry Coutu CBE, who was one of those behind the Global Scale Up Declaration and subsequently partnered with LinkedIn founder Reid Hoffman to establish the Scale Up Institute. In its own words, the institute is “a private sector, not-for-profit company focused on making the UK the best place in the world to scale up a business” and keeps “scaleups and their issues at the top of the UK political and business agenda.”
Why all this fuss about scale-ups, though? Although, as Coutu outlined in her report, producing a greater number of scale-ups is more ambitious and challenging than producing a greater number of start-ups or celebrating entrepreneurs, doing so also has significant benefits. Increasing the number of scale-up businesses in a country boosts job creation and the economy as a whole to a greater extent than increasing the number of start-ups.
Lending its thoughts on the matter also, notably, in November 2014, Deloitte’s published its own report, titled: “The Scale-up Challenge.” The report sought to give some idea of what outcomes could be expected if a holistic programme of support for scale-ups were to be rolled out – and the figures weren’t insignificant:
“The 'Scale-up' programme could generate between £70bn and £225bn for the UK economy in cumulative GDP terms between 2015 and 2034. This level of activity is consistent with an additional 45,000 to 150,000 jobs in the UK in 2034.”
So, what has been achieved since 2014? Well, according to the Scaleup Institute's newly released Annual Scaleup Review 2017, the number of scale-up businesses in the UK rose from 26,985 in 2013 to 31,440 in 2015, doubling the target set in 2014. What's more, on a local level, the report shows that the Liverpool City Region is now home to 550 scale-up businesses and holds the LEP up as showing strong leadership to accelerate the growth of scale-up businesses in the area. With a further 100 businesses due to be selected for intense scale-up support, the future of the scale-up landscape in the Liverpool City Region looks very exciting.