During a week when enterprise zones where finally announced in Wales and the Welsh Government found three more sectors to add to their list of favourite industries, the Western Mail published the annual list of the fastest growing firms in Wales.
Since the Wales Fast Growth 50 was established in 1999, 418 firms have appeared on the thirteen lists and it is estimated that all of these companies have created around 20,000 jobs and generate over £10 billion of turnover into the Welsh economy every year, much of which is spent on local goods and services.
This year’s list was unusual in that it included one of Wales’ most successful businesses, the Admiral Group PLC. That is great news for the economy i.e. that one of our largest firms can generate growth normally found in younger and smaller businesses. Of course, with a turnover of £1.6 billion in 2010 and over 3500 employees, Admiral dominates the data for the fifty firms.
Yet, even if it is excluded, the performance of the other forty nine is an incredible achievement, generating a £600 million in sales in 2010 at an average growth rate of 108% and putting an additional £314 million for the economy during the period 2008-2010 – a record for the Fast Growth 50 even without Admiral. These firms also created a thousand additional jobs for Wales at a time of uncertain economic conditions
Whilst Admiral PLC is the largest company on the list, this year seems to be one where mid-sized companies are also beginning to grow within the economy, with a further twenty one firms generating a turnover of more than £5 million in 2010. This is a substantial group of companies that could become major players within their sectors over the next few years and hopefully follow in Admiral’s footsteps. What is now critical is that support, from both the private and public sector, is focused on developing the further impact of these firms, whose challenges are very different from the majority of the business population.
The Fast Growth 50 also has a number of new businesses, featuring fourteen fast growth start-ups that are five years old or less. However, none of these are in a technology-based sector, which should worry those who advocate focusing the majority of support on backing such companies. Indeed, one of the major policy decisions of the Welsh Government has to been to focus its support on six key sectors (now extended to nine) and yet, as the last thirteen years of the Fast Growth 50 has shown, growth companies can be found in any sector. The 2011 list is no exception.
Of course, as this column has pointed out on various occasions, the results of the Fast Growth 50 should not be a shock to anyone. The real surprise will be when policymakers stop ignoring the overwhelming evidence and finally realise that by focusing on developing these companies there could be enormous rewards for the economy.
This was emphasised by yet another recent study, this time from Endeavor and the Global Entrepreneurship Monitor (GEM), which verified that the answer to job creation lies in high-impact entrepreneurship. In fact, high-growth entrepreneurs are rare yet actually employ significantly more people than low-growth entrepreneurs.
For example, their research found that whilst high-growth entrepreneurs represent only four per cent of the total number of entrepreneurs, the businesses they founded created close to 40 per cent of the total jobs. In addition, high-growth entrepreneurs are planning to add up to fifteen times more jobs than low-growth entrepreneurs over the next five years.
Finally, and most importantly, it found that once high-growth entrepreneurs become successful, they are the most likely to start funding other ventures as angel investors, thus creating a strong entrepreneurial ecosystem within their local business community.
But perhaps the main lesson for policymakers who seek to pick winning sectors comes from Afonwen Laundry, the fastest growing firm in Wales.
Initially established in 1935, it is now one of the UK’s largest privately owned laundry and linen hire companies in the UK, supplying over 40,000 hotel bedrooms throughout the UK. The company’s growth has exploded in the last couple of years and it now supplies over 1.6 million items of linen across a wide range of hotels across the country.
It opened a new business in Cardiff some three years ago and has delivered over 150 jobs in that period, growing from nothing to a £10m a year business in its initial three years. It now employs close to 400 staff across four sites in Cardiff, Leeds, London and North Wales.
When I was younger, the blue vans with white lettering were a regular feature on the roads of North Wales and I never thought that they would one day feature in a list of the fastest growing firms in Wales. Indeed, to have a family business in a traditional industry from a small market town on the Llyn Peninsula is an incredible achievement, especially as it looks set to become the largest player in its sector across the UK. They are worthy winners of this year’s list and demonstrate, like the rest of the Fast Growth 50 firms, that success is not limited to certain types of businesses based in a few key sectors.