Businesses reveal the factors behind their rapid growth
At this time, many businesses may be finding the key to growth elusive. Spectacular growth, even more so. But despite the economic pressures of a glacial recovery from recession, some are achieving this goal – and a smaller number at a rapid pace. What’s their secret?
“The ability to spot opportunities, to add value, to make a difference in our sector but most importantly to access growth funding and capital,” says Tony Banks, chairman of the Balhousie Care Group, based in Perth, which provides care for the elderly.
With a £15.89m turnover, the company has enjoyed four-year compound growth of 47 per cent. Balhousie is one of nine Scottish companies that featured in a list of the UK’s 100 fastest growing, privately owned, midsized companies. They represent 14 different sectors; 16 in IT, software and telecoms, and a further 16 in the financial and professional services industries, 13 in the outsourcing and care services and ten in energy, gold and commodities.
The list, compiled from data filed at Companies House, showed that these companies had collectively achieved an average compound growth rate of 44 per cent over the past four years, and an average turnover of £150m in their last financial year. The fastest-growing company – at 130 per cent – was Alternergy, one of the principal wholesale/distribution companies in the solar power industry.
The nine Scots companies are characterised both by their variety and their unglamorous nature; the expected categories, such as life sciences and renewables, are not represented. Instead, there are Scottish traditions – financial services, for example – and true grit, in the form of a company that provides salt to clear roads of ice.
Banks is a former member of the Parachute Regiment who fought in the Falklands War. The loss of friends and witnessing the psychological damage caused to some of those who survived was a life-changing experience.
In 1991, he founded the care group with one home in rural Kirriemuir; today there are 24, with another three under construction, employing more than 800. Banks says the secret is that “we really do care”. He interviews all managers and staff to make sure they are right for the business.
How would he describe the culture of the company and in what way does that contribute to its success? “The culture is about delivering the highest standards and that continuing desire to raise the bar fuels our ambition.” And the ambition? “To continue our growth trajectory, whilst embracing a changing market place, and to continually strive to be a leading care provider within Scotland.”
JC Peacock & Co has been supplying salt since 1874. Back then, founder John Craig Peacock sent his ships as far as Brazil and North America with salt for curing bringing back timber and fish packed in ice. Today, it sells salt for roads, table salt, water softening salt and industrial salts.
Now run by Harley Marshall, the founder’s great-grandson, the firm is based in Ayr. It has experienced a 63 per cent four-year compound growth with sales rising to £48.3m. Perhaps acknowledging the role of our unpredictable weather and the public’s demand that the traffic keeps moving, Marshall cites “careful preparation combined with good luck” as the reasons for the rise. Company culture is important, too: “Inclusive,” he says. “Everyone has to enjoy the work they do and the people they work with.”
Ed Cottrell, of Investec, the specialist private bank, which compiled the data, and Matthew Rock, founding editor of Real Business magazine, which published the list, identified three factors playing a part in the success of many of the 100: Operate in a defensive sector – discount retailing and bridging loans work when cash is tight and gold is good business when the price is high. However, they say, this still requires “great execution”;
Work that big companies and the public sector can’t, won’t, or shouldn’t do anymore – the outsourcing revolution is in full flow. “From procurement to elderly care services, from IT to laundry, SMEs are taking up work formerly done by government and the big corporate sector. You can see the beginning of the restructuring of the economy around outsourced solutions. As government cuts go on, you would expect this to continue, yielding great opportunities for entrepreneurs, and better services for customers and the public”;
International focus built around proprietary and/or disruptive technology – “We’re seeing the gradual emergence of world-beating UK companies. These are the hero firms that the UK so urgently needs.”
Cottrell and Rock agree that there does not appear to be a “silver bullet”; in their survey of companies the qualities most frequently quoted were “delivering exceptional customer service”, and “innovation”, quoted by 21 per cent, closely followed by “focus”, “investment systems” and “team”, which were quoted by 17 per cent.
There is no consensus over what would help them grow even faster. The most common factors quoted are “access to better skilled staff”, and “access to further funding”, both raised by 25 per cent. This was closely followed by “more capable managers” and “assistance to enter new overseas markets”, quoted by 21 per cent.
But they added: “The Investec Hot 100 reveals the gradual emergence of a new generation of world-class UK businesses which, with proprietary technology and an appetite for international markets, will be the global players of the future. What is clear is that the entrepreneurial spirit is still very strong in the UK.”
Scottish companies in the Hot 100
5 Ria Capital Markets, independent securities broker
Latest turnover (£,000): 11,343
Four-year compound sales growth: 80 per cent
9 JC Peacock & Co, supplier of salt
Latest turnover (£,000): 48,336
Four-year compound sales growth: 63 per cent
25 Parkburn Precision Handling Systems, marine
Latest turnover (£,000): 24,271
Four-year compound sales growth: 49 per cent
29 Balhousie Holdings, elderly care facilities
Latest turnover (£,000): 15,897
Four-year compound sales growth: 47 per cent
32 Forelle Estates Holdings, property developer and
petrol station operator
Latest turnover (£,000): 10,439
Four-year compound sales growth: 46 per cent
54 First Oil, exploration and production
Latest turnover (£,000): 71,190
Four-year compound sales growth: 38 per cent
58 Edinburgh Partners, investment management
Latest turnover (£,000): 40,528
Four-year compound sales growth: 37 per cent
60 Treetop Forestry, timber contractors
Latest turnover (£,000): 10,369
Four-year compound sales growth: 36 per cent
82 Bertram Nursery Group, children’s nurseries
Latest turnover (£,000): 12,823
Four-year compound sales growth: 31 per cent
Full list: http://realbusiness.co.uk/news/the-hot-100-2012