Scale up businesses rely on more than just talent
New research for Barclaycard shows businesses in the UK are scaling up as a result of some key external factors – and catching the bus is one of them
Scale ups – defined by the Organization for Economic Cooperation and Development (OECD) as businesses with at least ten employees and an average annual growth of 20% or more over three years – are key to the UK economy. The ScaleUp Institute reported that between 2017 to 2018 the number of scaling businesses in the UK grew 3.7%. It therefore comes as no surprise to learn that that scale ups are contributing some serious growth to the UK economy – in fact, the 37,000 scale ups in the UK generate more than £1.3 trillion in combined turnover annually. So, what are the not-so-secret factors contributing to scale ups’ success?
A recent study carried out for Barclaycard by the Centre for Economics and Business Research (Cebr) revealed four key external factors that are impacting the number of scale up companies in the UK.
1. Ditching the car and catching the bus
Barclaycard’s analysis found that public transport infrastructure has the biggest impact on scale up growth. Even an increase of just one percent in public transport use is associated with 1,400 more scale up businesses over a 12-month period. The link is that talented employees can commute from further away and additional features such as on-board Wi-Fi enables more effective on-the-go working. Nina Skero, Director at Cebr, says: “Public transport emerges from the study as a really important factor that makes a substantial difference to the number of companies achieving high growth rates.” With major improvements to public transport throughout the UK, such as the Elizabeth Line in London due to open by 2021, we may well see that new scale up number increase.
2. Bringing the outside in…
Access to global markets measured in terms of imports also plays a significant role in the success of scale up growth. Additional research from Barclaycard found that 61% of business leaders believe the UK is a good place to be a scale up business – however, there are still many core challenges. The Cebr analysis identified a strong relationship between scale up numbers and access to global markets which is echoed in the research findings, with the majority of scale up business leaders looking to expand overseas. 62% of leaders believe scale up companies need to trade with markets outside the UK to secure business success, and 63% say companies in this phase of the business lifecycle need to expand their operations to markets outside the UK in order to grow.
Rob Cameron, CEO of Barclaycard Payment Solutions, says: “Scale up businesses are critically important to the UK economy, but in today’s uncertain climate, more than ever they face a range of challenges such as access to talent, financing and infrastructure.” To help tackle some of these challenges faced by UK scale ups, Barclays has joined forces with the Cambridge Judge Business School to set up the Barclays Scale Up UK programme – a training programme to help the management teams of high growth businesses scale up. Barclays also works in partnership with the ScaleUp Institute, helping to tackle the key challenges that the UK’s scale ups face, which include access to talent and markets, building leadership capacity through local support, finance, and infrastructure.
3. Having more money to spend
Just 1% more in gross household disposable income is associated with a 1.8% growth in the number of UK scale ups over a 12-month period. What does that mean? According to estimates from tradingeconomics.com, disposable personal income in the UK is expected to hit more than £345,000 million this year and Barclaycard’s analysis shows that “when consumers have more money to spend, there is an associated increase in the number of high-growth businesses,” explains Cebr’s Nina Skero.
4. Taking the inside out
Another vital factor for success is access to international markets. A one per cent increase in exports is associated with 0.5 per cent increase in scale ups over the past year. With many businesses looking to expand their operations outside of the UK, having the right payment systems in place is crucial, and Barclaycard Payment Solutions is on hand to help on the payment acceptance front. “As the payments partner to many successful businesses, we see that when companies move from start up to scale up and beyond, their needs and priorities change,” says Rob Cameron. “For example, those looking to expand through overseas trade may find they need to comply with different regulations or accept international payments, and for those with growing transaction volumes, it may be time to upgrade to a more reliable, secure and customer-friendly payments system.”
Into the future
These external factors set to have a positive impact on scale up growth but of course, scale up success relies on more than just external factors and must also come from within. Earlier in the year, Barclaycard client and self-made businesswoman, Bianca Miller-Cole, collaborated to create a top-ten list of must dos for businesses looking to scale up. Find out more about Bianca, her company The Be Group and what internal actions businesses can weave into their daily operations for long term success, here.