Member Article

From start-up to scale-up: The challenge

The UK’s entrepreneurial scene has undergone significant change in the past few years. Even the word ‘entrepreneur’ is a more familiar term within the professional landscape, as we see more and more start-ups emerge, particularly due to recent technological developments breaking down previous barriers to entry and giving business owners access to a global marketplace.

But while the start-up scene is thriving, are these businesses now struggling to grow their ventures to the next level?

Our sixth, and latest Barclays and BGF Entrepreneurs Index tracks the entrepreneurial lifecycle across different UK regions, using data to measure business growth and business exits. It reveals that in the North West there was a 4.8% rise in the number of enterprises in 2014, meaning the number of enterprises now stands at 217,000 – the highest rise of any region in the country outside London.

In addition to this, the number of entrepreneurs realising wealth from their businesses is also up in the North West, with the number of deals resulting in at least £200,000 of individual wealth creation increasing by 2.9%.

These figures should serve to inspire the young entrepreneurs of our future, and provide them with the confidence they need to form their own businesses. However, the report also showed that despite a recent turnaround in the UK economy, the proportion of companies achieving, and holding onto, high growth is beginning to fall.

In the North West, the proportion of high-growth companies within revenue bands of £2.5m and £100m stood at 21.8% in the year to March 2014, marking a fall of 11.2% on the previous year.

While there is no single solution as to how we drive a greater number of start-ups towards high growth, what is now needed is a shift in emphasis, with more measures aimed at helping and encouraging leaders of businesses to reach the next phase of the entrepreneurial lifecycle. Ideas such as the initiative between Liverpool City Region LEP and the North West Fund for Loans, which provides a reduction on the arrangement fees on loans to help fund SMEs’ growth, are a step in the right direction, but more needs to be done.

It is critical that we give successful organisations in the North West a platform for sharing their success stories, so fledgling entrepreneurs and smaller businesses can benefit from their expertise and experience.

We are becoming more dependent on the successful scale-up of start-ups, as they contribute to employment, skills and economic growth. Small and medium-sized businesses in the North West have a significant impact on the success of this region’s economy, with SMEs providing two thirds of all private sector jobs and contributing to around half of all GDP.

At Barclays we firmly believe that entrepreneurs and SMEs are the future of UK plc and play a vital role in innovation, therefore we must support the management of these businesses effectively. As a result it is now crucial that we provide these smaller companies in their earlier stages with the correct tools and best practice examples to help them achieve their full potential, and to increase the number of companies achieving high growth in the UK.

Steve Renfrew is Regional Director of Barclays Wealth and Investment Management in the North West. Find out more about the UK entrepreneurial landscape and how businesses can go from start-up to scale-up in the Entrepreneurs Index.

This was posted in Bdaily's Members' News section by Steve Renfrew .