THE IMPACT OF THE WALES FAST GROWTH 50
During the last week, the Western Mail and Wales Online has been celebrating the achievements of the fastest growing Welsh firms.
Since it was started twenty one years ago, the Wales Fast Growth 50 has grown to be the business awards that Welsh entrepreneurs aspire to more than any other. In fact, the motivations for creating this project was driven by a desire to celebrate the achievements of home grown entrepreneurs across a range of sectors and the whole of Wales.
It all started after several visits to the USA in the early 1990s where I found myself buying a business magazine called INC. One of its regular features included a list of the 500 fastest growing firms in the USA and when I was appointed as Professor of Entrepreneurship at the University of Glamorgan in 1996, I set out to do something similar here in Wales, albeit on a smaller scale.
This was driven largely by my continuous incredulity at the lack of support for indigenous Welsh firms. Instead, the economic approach by quangos such as the Welsh Development Agency was focused on the attraction of large foreign inward investors rather than the growth of our own successful firms.
So after conversations with the Western Mail as to how we could change the narrative towards Welsh entrepreneurship, the Wales Fast Growth 50 was launched in 1999.
One of the first challenges was determining how to measure growth as it can be done in a number of ways e.g. increase in employees or assets. However, the Wales Fast Growth 50 decided to follow the methodology of the Inc 500 in adopting sales growth as the main indicator of growth, mainly because it shows the impact that businesses are having on their markets.
This has led naturally some suggest that “turnover is vanity whilst profit is sanity” although in the overwhelming number of Fast Growth 50 firms, profitability growth usually outstrips turnover growth when they are on the list.
Of course, the focus on high growth firms through initiatives such as the Fast Growth 50 has been challenged by academics, politicians and policymakers but the evidence continues to show the positive impact they have.
For example, the American economist David Birch identified fast growing businesses (which he termed gazelles) as making a higher than expected contribution to job creation in the USA back in the 1970s. Since then, a range of academic studies have shown that those firms that grow quickly make up a small proportion of the business population but account for a high proportion of jobs created.
More recently, the innovation charity NESTA showed that whilst high-growth firms are rare, they generate a majority of jobs i.e. they represent only 6 per cent of all UK firms but generate 54 per cent of all new jobs. In Wales, we have estimated that the 628 firms that have appeared on the 21 lists over the period 1999-2018 lists have created 42,000 jobs and generated £24 billion of additional turnover, much of which is spent in their local area.
But it is not only all about the overall impact on the Welsh economy as the listing also has had a direct effect on individual firms. Many founders have said that having the accolade has helped them enormously with potential investors, suppliers and other key stakeholders such as the Welsh and UK Governments. Also, and without exception, founders have said that being on the list galvanises their teams as it is a recognition of all the hard work they have all put into growing the firm.
In fact, at this year’s awards dinner, the founder of a £100 million winner told me that the support of the Fast Growth 50 at the start of their business had made a significant and important difference to their early expansion.
The Fast Growth 50 also continues to destroy the myths many continue to have about scale-up businesses. For example, high growth is not only about start-ups as the average age of a Fast Growth 50 firm is twelve years old with the oldest business to appear on the list (Watkin Jones PLC) being established back in 1791.
High-growth firms are only to be found in ‘sexy’ knowledge-based sectors and whilst the number of technology and creative firms has been steadily growing, the so-called “grounded” sectors such as business to business services, consumer and retail services, and construction continue to dominate the lists every year.
Whilst Cardiff has been the centre for growth firms in Wales with 30 per cent of all fast growth businesses since 1999 being based in the capital city, the list has also shown that nearly half of the firms are located in the fifteen Welsh counties that make up one of the poorest parts of Europe, showing that growth is not limited to prosperous urban areas and can be found in any location in Wales.
Finally, and most important of all, the Fast Growth 50 demonstrates that we have some incredible businesses in Wales that are as good, if not better, than their peers elsewhere in the UK.
Indeed, for those who continue to suggest that we, as a nation, are not entrepreneurial should take time to read about those fast growing firms that, since 1999, have made a real difference in their industries and continue to create wealth and employment in their local communities across Wales.