Defining scale up companies in the West of England
As Scale-up Enabler for the West of England, I explore the challenges faced by scaling companies and endeavour to highlight existing support, and help make it more relevant and accessible to scale up founders. My priority is to work openly, minimise duplication of effort and maximise collaboration wherever I can. Core to this work is an understanding and articulation of what a scale up company is - hence this blog.
What is a scale-up business?
A scale-up business is technically defined by the OECD as:
"an enterprise with average annualised growth in employees or turnover greater than 20 per cent per annum over a three year period, and with more than 10 employees at the beginning of the observation period."
However, this definition is broadly considered a proxy for growth and pretty much everyone working with the scale up community applies their own interpretation, whether based on turnover, employee numbers, percentage growth or simply ambition and potential to scale. The goal here is not to label scale up companies as such, but rather to inspire and support new growth in more and more organisations.
Consequently, whilst my work is targetted towards the challenges faced by traditional scale up companies, I am interested in making my events, information and support available to those aspiring scale ups too where one might suggest the impact could be greater.
Finding scale up companies in the wild
The definition is complicated in its application becuase the detailed information about staff numbers and turnover growth is only reliably captured by Companies, House, and Companies House only captures (and publishes) that data in full when the company has a turnover greater than £10M or more than 50 employees. So our scale up list includes companies that hit that threshold 3 years ago and have grown 20% year on year since then.
So, we have introduced some further granularity to the definition - visible and invisible scale up companies.
Visible scale up companies are relatively easy to find via the Scale up Institute website. This dataset, powered by DueDil, lists those scale up companies that complete full returns to Companies House that meet the criteria described.
So far the official Companies House data tells us that there are c.180 scale-up businesses in the West of England region, but once you remove duplicates and holding companies, there are really only about 90 - but we know there are more. The limitations of the data mean that we initially only have a list of those businesses that are required to, or opt to submit full company returns. If you would like to access this list, the easiest place to do so is on the Scale up Institute's website powered by DueDil: http://www.scaleupinstitute.org.uk/scale-up-businesses/
This leaves a second category of ‘invisible’ scale up companies –
- Those that are growing quickly and don’t yet complete full returns (i.e. are below the threshold to do so)
- Those who haven’t yet seen three years consistent growth (according to the definition)
- Those who have been identified through another definition.
I believe that it is important to consider those aspiring (invisible) scale up companies, not just those who’ve already met the (rather difficult to apply) bar as they will likely benefit even more from the support available and have potential for significant growth.
Some alternative definitions
I thought it might be useful to share a few alternative definitions that I have come across on my travels:
- Some corporate organisations set the bar high - expecting a technical scale-up business to have a turnover of £10Million minimum
- A serial entrepreneur described a scale-up as a business which has 'reach and product market fit' - he went on to say that he looks for businesses that have a product which clearly fits the market that they have chosen and that as a result they have to grow to meet demand.
- A scale-up supporter looks for scale-ups to have both the ambition and potential to grow.
There is also a discussion to be had regarding the difference between a scale-up and a fast growth business, and a high-growth business too. It seems to depend who you speak to as to whether these are synonyms or not!
One last thing - West of England - where do you mean exactly?
This blog series tells the story of the Scale-up Enabler, Briony Phillips. Briony has joined the Engine Shed team on a 1 year contract funded by Business West, Engine Shed, The University of Bristol and the West of England Growth Hub. This group have a shared ambition – first, to identify scale-up businesses in the West of England region and to better understand their challenges and second, to design, facilitate and support initiatives that will make it easier for businesses to scale-up more effectively.
Briony - Scale-up Enabler firstname.lastname@example.org @BrionyPhi1