Jul

162015

Scale Up Britain: One third of British SMBs have grown since 2013

Almost 1.7 million British SMBs have grown since 2013 More than double the number of high growth businesses in Britain compared to 2013

16 July 2015, London: A new study by Citrix and YouGov highlights the strong growth achieved within the SMB sector over the last 24 months and, more specifically, in the number of high growth SMBs within Great Britain. A third of British SMBs we surveyed (33percent) have added employees since 2013, approximately 1.675 million businesses1, while approximately 426,0002 businesses (8percent) have grown by 50 percent or more over the period.

These research findings indicate that Britain is closing the scale up gap, as identified in a 2014 industry report by Sherry Coutu3, with more start-ups scaling into large companies. The same report defined a ‘Scale up’ business as having 10 or more employees and recording average annual growth in revenue or employees of at least 20 percent over three consecutive years4. According to the Citrix research, one tenth (10 percent) of all British businesses of this size have recorded average annual growth of more than 20 percent over the last two years two years (5 percent more than the 2014 report found).

Citrix define these as ‘high growth’ businesses and estimates that of the 220,345 SMBs in Britain with 10 or more employees, 23,000 are high growth companies5. These high growth businesses drive economic growth at faster rates, create more jobs, and ensure longer term productivity.

Technology investment and SMB growth closely aligned

Looking at all SMBs, regardless of size, Citrix identified a clear link between investment in technology and growth. Those SMBs that grew by 50 percent or more over the last two years were four times more likely to have spent “much more” on technology in 2014 than they did in 2013 (27 percent) than those that stayed the same size or decreased (6 percent).

The findings reveal a stronger correlation between company growth and technology investment and high growth businesses – those companies identified for the scale up comparison. Of the respondents[2] working in businesses with 10 to 249 employees and recording average annual growth of at least 20 percent over the last 2 years, 35 percent said that their business invested “much more” in technology in 2014 compared to 2013, compared to just 7 percent of respondents from business with 10 to 249 employees which either remained the same size or decreased in number of employees compared to 2 years ago.

The study also highlights how technology is helping British SMBs to overcome potential barriers to scaling up a business. These barriers include finding the right talent, sourcing suitable business locations and expanding into new markets.6

Technology enabling companies to reach new markets

The extent to which British SMBs, as a whole, are focused on international markets was demonstrated by 2014 research by Citrix and YouGov, which found that six out of ten (60 percent) of SMBs surveyed expected to be doing business internationally (either selling or buying) in mid-2016. The same research found 28 percent expect revenue from international sales to increase and nearly three quarters (72 percent) of those trading internationally say international business partners (i.e. customers or suppliers) will be important to their business – all by mid-2016.

The role that technology is playing in supporting international business ambitions is highlighted by the fact that 44 percent of the 7 high growth businesses have invested in a website and 41 percent in a social network presence.

Technology and the talent gap

Access to the right talent was outlined as another potential barrier to growing a business8. The research has revealed that high growth businesses are increasingly seeking out new pools of talent with over a third (938 percent) of respondents from high growth businesses having recruited employees from other regions of the UK or abroad. Many of these employees have relocated, however, one in five (21 percent) said their business has employed people from outside of their local region who work remotely. Again, digital appears to be enabling this approach to sourcing the best talent, regardless of where located, with more than half (54 percent) of the respondents from high growth business saying technology has been useful in growing their business by allowing them to implement flexible or remote working policies.

Technology enabling new business models and new ways of working with clients

Digital offers all businesses the opportunity to disrupt traditional markets through the development of new business models and almost three in ten of those from high growth businesses said technology has been useful in growing their business in this way (27 percent), three times more than their peers from the same sized businesses that stayed the same size or decreased (9 percent). Further almost a half (47 percent) of the respondents from high growth businesses said technology had helped to grow their business by enabling staff to collaborate effectively with customers without having to travel.

Connectivity and digital skills critical to future growth

The 2014 scale up report identified access to suitable infrastructure – in terms of suitable premises, planning rules and broadband10 - as an obstacle to growth. While all SMBs (55 percent) value broadband access, whether growing or not, 60 percent of the respondents from high growth businesses see access to fast and reliable Internet connection as important for the growth of their business. High growth businesses more clearly value an overall digital competence within the business. 58 percent of the high growth respondents cited employees with digital competence as important to growth compared to 28 percent of peers that stayed the same size or reduced in size.

Research Methodology

All figures, unless otherwise stated, are from YouGov Plc.
2015 survey: Total sample size was 1,060 senior decision makers from small and medium businesses (i.e. less than 250 employees). Fieldwork was undertaken between 30th March - 7th April 2015.
2014 survey: Total sample size was 2,019 senior decision makers from small and medium businesses (i.e. less than 250 employees). Fieldwork was undertaken between 18th - 27th August 2014.
Both surveys were carried out online. The figures have been weighted and are representative of British business size.

SMBs are a critical engine of growth for the UK economy and this study illustrates the vibrancy within the sector over the last two years. Technology is clearly playing an important role in SMBs overcoming some of the traditional barriers to growth and digital competency is becoming the new currency of growth. We hear on a daily basis how our customers are using technology to reinvent not only the way they work but the markets that they operate in.
- Andrew Millard

Senior Director, International Marketing

Citrix

The gazelle-like pace and momentum we're experiencing in the small business world is not abating, rather it's increasing as more and more people seize the day and set about starting up a business of their own, taking control of their own destiny. This report shows more than ever are now taking their companies to the next level and entering the fast lane and high growth. It's great news for the British economy - and for all those millions of small and micro businesses that are just starting out or growing a company to fit in with their own lifestyle and aspirations.
- Emma Jones

Founder of fast-growth small business network Enterprise Nation

Since starting Eyeful Presentations eleven years ago we have grown organically by using technology as much as we can. It allows us to punch above our weight and rapidly expand our business. Now that we use Citrix GoToMeeting we’ve reduced our travel dramatically even though we serve more customers than ever. Technology is also a key enabler to build awareness in a new market, bang the drum locally and recruit the right people for the business – no matter where they’re based. By using robust collaboration tools our team can easily stay in touch with colleagues and customers across the globe.
- Simon Morton

Founder of Eyeful Presentations

 

1 Citrix estimate based on 2014 UK business population estimates from BIS: Citrix has calculated there were 5,119,012 businesses with less than 250 employees in Britain in 2014. Based on YouGov data 32.77 percent SMB decision makers said their business had increased the number of employees in their business compared to 2 years ago - 5,119,012 x 0.3277 = 1,677,500 businesses in Britain
2 Citrix has calculated based on YouGov data 8.32 percent of SMB decision makers said their business had increased the number of employees in their business by 50 percent or more compared to 2 years ago - 5,119,012 x 0.0832 = 425,902 businesses in Britain
3 The Scale Up Report on Economic UK Growth by Sherry Coutu (2014)
4 The Scale Up Report on Economic UK Growth by Sherry Coutu (2014) – page 6
5 Citrix has calculated there were 220,345 businesses with 10 to 249 employees in Britain in 2014. Based on YouGov data, 10.25 percent of the decision makers surveyed from businesses with 10 to 249 employees said the number of employees in their business had increased by 50 percent or more compared to 2 years ago – 220,345 x 0.1025 = 23,136.
[2] Of the 1,061 decision makers YouGov surveyed,  49 businesses with 10-249 employees grew by 50 percent  or more
6 The Scale Up Report on Economic UK Growth by Sherry Coutu (2014) – page 7
7 Of the 1,061 decision makers YouGov surveyed,  49 businesses with 10-249 employees grew by 50 percent or more
8 The Scale Up Report on Economic UK Growth by Sherry Coutu (2014) – page 7
9 The Scale Up Report on Economic UK Growth by Sherry Coutu (2014) – page 11
10 The Scale Up Report on Economic UK Growth by Sherry Coutu (2014) – page 12

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