At a time when politicians and policymakers are looking increasingly to the private sector to grow the UK economy, the fifty companies featured in today’s supplement demonstrate the enormous potential within the Welsh business community.
During the period when nearly 90,000 jobs were lost across the private sector in Wales and markets were drying up, these companies have created 1400 new jobs and increased their sales by an incredible £305 million.
Is the job creating potential of a small number of firms surprising? It shouldn’t be, as recent research has demonstrated.
A detailed economic analysis of employment change amongst SMEs showed that whilst fast growth companies represented only 6 per cent of all UK firms employing ten or more people, they accounted for more than half the job growth in the UK. Similar results have been found for other countries - fast growth firms in the United States represented only 3 per cent of all firms but were responsible for 70 per cent of gross job growth.
Given such facts, you have to wonder why policymakers are not doing more to support these companies. Indeed,why has the Welsh Assembly Government not adopted a policy of backing such winners rather the age old, and largely failed, approach of ‘picking winners’?
In its Economic Renewal Programme, the Welsh Assembly Government is focusing its efforts on six keys sectors and yet all the evidence shows that growth companies are not limited to any particular industry. In fact, business services and the wholesale/retail sector - two industries that have been excluded by WAG - provide almost half the high-growth firms in the UK and the diverse range of companies featured in this supplement backs up those findings.
Since the first publication twelve years ago, the Fast Growth 50 supplement has championed the cause of indigenous Welsh businesses by profiling those who have expanded their businesses successfully and have been tested in the most crucible of all, the marketplace.
Yet again, the impact of a small group of companies should not be underestimated. Since the first publication in 1999, 372 firms have appeared on the twelve lists published in the Western Mail and it is estimated that all of these fast growth companies have created around 18,000 jobs and have generated over £5 billion of additional turnover into the Welsh economy, much of which is spent on local goods and services.
To be recognised as one of the fifty fastest growing firms out of a Welsh business population of 200,000 is something which every entrepreneur who started and grew these businesses from nothing should be extremely proud of.
Last Friday, we had the annual Fast Growth 50 award ceremony at the Mercure Holland House Hotel in Cardiff, an event which has become one of the most prestigious in the Welsh business calendar. Hosted by Sian Lloyd, the BBC Presenter, and with a record 442 guests looking on, awards were presented to firms to highlight their individual successes across the fifty fast growth businesses on this year’s list.
Wales, like the rest of the UK, faces some serious economic challenges over the next few years. It will need to harness the entrepreneurial and innovative energies within our business community to make the most of every opportunity available.
So which are the fastest growing firms in Wales and what impact have they had on the Welsh economy?
The period 2007-2009 saw the worst recession since the 1920s. In such circumstances, the importance of the Wales Fast Growth 50 companies to the Welsh economy and their local business communities cannot be overemphasised.
So what has been the performance of this year’s winners?
In 2009, the total turnover of all fifty firms was £546 million as compared to £241 million in 2007.
Therefore, the companies have collectively generated £305 million of additional sales in two years at an average growth rate of 127 per cent.
Some commentators have noted that one of the reasons that Wales does not do as well as other parts of the UK in business is that we do not have enough indigenous businesses that have grown into substantial players in their markets.
Certainly, this year’s Fast Growth 50 suggests that there remains enormous potential amongst this group for a number of ‘breakthrough’ companies that can, with the right professional support from financial, legal and accountancy companies, make the leap towards becoming market leaders in their sectors not only in Wales, but across the UK and, in time, internationally.
More than quarter of the companies have achieved a turnover of greater than £10 million in 2009, which a remarkable achievement given that many similar sized companies across Wales have been not only losing their share of the market, but shedding thousands of jobs at the same time.
However, we mustn’t forget that there remains a vast potential within the other Fast Growth 50 companies, many of which are poised to take the next step on the growth trajectory and break the £10 million sales barrier this year. These firms have achieved their penetration of their local markets and the next stage is to expand their business into another region, or possibly overseas, whilst focusing on improving their profitability and ensuring that they have the right management and systems in place to deal with growth.
With the withdrawal of publicly funded business support, there is now a role for the right type of professional support that could, and should, maximise the potential that these companies have to grow further and support the Welsh economy.
In terms of employment within the private sector in Wales, government statistics show that 88,000 jobs were lost during period 2007-2009. In contrast to the declining jobs situation across the rest of the business community, the Fast Growth 50 firms created around 1400 new jobs over the same period which demonstrates the critical job creating capabilities of indigenous Welsh firms, especially during an economic downturn.
As in every Fast Growth 50 list since 1999, Cardiff is the centre of entrepreneurial activity for growing firms, with twenty companies emerging from the capital city. Yet again, the two other growth hotspots for Welsh companies are Bridgend (five firms) and Swansea (four firms), although the small North Wales market town of Pwllheli can boast two Fast Growth 50 firms this year.
The majority of the firms are again to be found outside of the poorest areas of Wales with twenty-two firms located within the so-called European Structural Funds Convergence area. Six firms are to be found in North Wales with only two - Dulas and the Harbourmaster Hotel - located in Mid-Wales. However, a record seven counties - Anglesey, Carmarthenshire, Conwy, Denbighshire, Neath Port Talbot, Torfaen and Wrexham - have no fast growth businesses in 2010.
The average age of the growth company in Wales is twelve years old, suggesting that it takes time for the business to access finance, grow its management and penetrate its market. That is not to say that there aren’t any fast growth start-ups in this year’s list as a fifth of the companies are less than five years old with an average growth rate of 278 per cent although, surprisingly, only one of these ‘stars’ is based in a high technology sector.
This year, the oldest company is Afonwen Laundry of Pwllheli, which is 75 years old, although the real changes to the development of the company have only happened in the last few years, demonstrating that with the right management approach, mature businesses in traditional sectors can grow rapidly.
One of the major policy decisions of the Welsh Assembly Government has to been to focus its support on six key sectors. However, as the last twelve years of the Fast Growth 50 has unequivocally demonstrated, growth can be found in any sector and the 2010 list is no exception.
Whilst smaller than in previous years, mainly because of the collapse in the building industry during the recession, there are still five companies in the construction sector operating as building services contractors, electrical engineering, and various construction services.
One of the sectors that is constantly overlooked by government, but which has always shown a particular strength in the annual listings is the business to business services sector. This year, the companies recognised are in sectors as diverse as linen hire and laundry, sales of excess inventory, railway equipment services, facilities management, hydration services, industrial cleaning and mechanical services.
The recruitment industry, despite the economic downturn, has made a remarkable recovery this year with four companies from this sector within the financial and business services category. The others are in legal services, data applications, and specialised car leasing. In consumer and retail services five companies are featured, namely a hotel and restaurant, a specialist travel agent, a youth expedition company, a wholesale distributor and a provider of luxury serviced apartment accommodation in Cardiff.
Remarkably, and despite predictions of its demise in an increasingly globalised world, the manufacturing and engineering sector continues to perform well on the Fast Growth 50 lists. This year, eight firms have qualified as some of the fastest growing firms in Wales, operating in areas such as heavy engineering, electrical equipment refurbishment, toy manufacturing, aircraft support equipment, food manufacturing, catalytic converters, renewable energy engineering and marine engineering.
The largest group in this year’s list is the creative and knowledge-based sector and includes independent television production firms, information technology businesses, software and broadband service providers, pharmaceutical services, energy management and a developer of pulsed light systems
The new award category in this year’s competition is for training and education companies, which is growing sector of the professional services industry in Wales. The companies featured operate in a diverse range of areas, including driver education, vocational training, expert consultancy, work based learning provision and business consultancy.
As in 2009, twenty one of the companies are completely new entrants to the Fast Growth 50 listings. However, there is greater sustainability amongst the firms this year, suggesting that continuous development is becoming more ingrained into those companies that grow quickly within the Welsh economy.
Eight companies - CMB Electrical Ltd, CMC Partnership (UK) Ltd, Epitiro, Freshbaked, Intapeople, MSS Group, Sinclair Finance and Leasing, Total Trade Group and Unit Engineers and Constructers Ltd - return to the list for a third time whilst T.B. Davies appears for the fourth year in succession.
However, the business that has demonstrated the longest sustainable growth in Wales in 2010 is Boomerang + PLC, which first appeared on the list in 2006. Appearing on five successive lists, the turnover of one of Wales’ leading creative industries companies has increased from a turnover of £1.37 million in 2001 to just over £20 million in 2009, an annual growth rate of nearly 100% every year.
Finally, congratulations to Nathan Bowles and all the team at Smart Solutions Recruitment in achieving the accolade of becoming the fastest growing firm in Wales in 2010. Since starting only four years ago, this Newport-based company has grown to a turnover of over £9.2 million in 2009. In an industry that is known for its high turnover of companies, Smart Solutions seems to have hit on a winning formula by doing things very differently to its rivals. It has invested heavily in IT infrastructure created a people focused business in a sector that is known for its high level of employee churn and works closely with clients rather than using a ‘one size fits all’ approach. More exciting is its plans to continue spreading this winning formula outside of Wales.
Smart Solutions Recruitment is an exemplar of the best of Welsh business and we all hope that they continue their impressive growth in years to come.
