Life begins at 50 for SME high-fliers
New research from the Business Growth Programme (BGP) at Cranfield School of Management shows that many of the owner-managers of the UK’s fastest growing businesses are 50 years old and older, shattering media perceptions of young entrepreneurs being the chief engineers of SME success stories.
The research sees the launch of the first Cranfield BGP Growth Barometer that takes the pulse of fast growing owner-managed-business on a quarterly basis. The results for the first quarter of this year comprise responses from 171 owner-managers who had attended Cranfield University’s BGP in recent years and whose companies are beyond the start-up phase. They have an average turnover of £5m.
Key findings from the research include:
– 54% of the owner-managers surveyed were 50-plus, while only 2% were 30 or younger
– The performances of these businesses are phenomenal with the average business growing revenues by 19% and employment creation by 21%
– These businesses have grown their revenues over three and a half times faster than GDP growth: 11.5% compared to 3.1%
– They have created jobs at a rate of over seven times faster than that of the UK economy
– The average forecast for revenue growth over the coming year is 22%, whilst that for profit growth is 29%, against predicted UK GDP growth of 3.6%
– Employment creation is expected to continue with pace at a rate of 10% growth and a 16% rise in exports is predicted
Interestingly, these predominantly older entrepreneurs also experienced a much higher 47% growth in profits over revenue over the 12 month period, indicating the success that these businesses are having in growing margins as well as revenues. This high margin growth also illustrates the robustness of the high performance manifested by these businesses.
The research was led by Professor Andrew Burke and Dr Stephanie Hussels of Cranfield University’s Business Growth Programme, the UK’s longest running programme for the development of owner-managers. The Business Growth Programme was set up 26 years ago and is the largest and longest running growth programme for entrepreneurs running small businesses. Over 1,500 owner managers have participated in BGP since its formation.
The results indicate that the entrepreneurial economy expects a big uplift in business performance and the economy over the next year. Interestingly, those surveyed said that the main drivers of this growth are not a boost from the economic recovery but a focus on core managerial and leadership activities. The top five drivers of business performance are senior management actions such as vision, strategy, senior leadership, innovation, operational efficiency, and sales and marketing.
Responding to the findings, Andrew said: “The findings of this survey fascinate us both as academics and as business experts. This first business barometer of owner managers form Cranfield’s BGP programme reveals a much more diverse high performance entrepreneurial base in the UK economy than previously imagined, with most entrepreneurs over 50 and running businesses right across the economy’s industrial base.
“The performance of these businesses over the last year has been exceptional and their expected performance over the next 12 months is expected to continue at this impressive level. The results indicate that Britain’s entrepreneurial economy will help ensure a broad based recovery across many industries. It will lead in job creation in the economy and make major gains in export growth which will help our balance of trade.
“The BGP enables owner-managers to successfully apply management and business theories to their own companies. The owner-managers surveyed here are telling us that their investment in knowledge has really paid off, and is driving the exceptional performances seen by their businesses. They do not feel reliant on the macro economy but are driving their businesses through managerial techniques, which enable self-determination.
“Overall, the results indicate that Britain’s ambitious entrepreneurial economy is in rude health.”
Former Business Growth Programme participants concurred. Michael Wright, of Riviera Travel ltd, commented: “In the past five years we have achieved revenue growth of 20% per annum and for the year 2014 we are currently 21% ahead, so good news. Profit will rise in line and staff recruitment growth by less, probably about 10%, thus maintaining efficiency of operation.
“What is driving this is improved distribution, more repeat purchase, additional product and even more attention to product quality. This is putting more pressure on our competitors. These achievements have occurred despite a flat year for travel.
“As UK GDP growth rate has been pretty modest, our business growth cannot be due to general economy improvement. It is more to do with getting things right within
the company and the demographic.”