Business support wasted on low growth companies, says advisor

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10:39 am, November 17, 2009
Business support wasted on low growth companies, says advisor

Local authorities need to focus business support on so-called “gazelle” companies capable of fast growth, according to Manchester-based business advisors Winning Pitch Plc (PLUS:WINP).

The company said its HiQ Index, a metric designed to map the percentage of high growth businesses in an area, had found that gazelle companies make up 6 per cent of Cheshire's SMEs, the highest proportion in the region.

Greater Manchester had the second highest HiQ rating at 5.6 per cent, followed by Lancashire on 4.8 per cent. Merseyside has 4.4 per cent, while Cumbria had the lowest HiQ rating of North West counties at 4.1 per cent.

Gazelles are identified as either those businesses that have more than ten employees and have grown to a turnover of £1m within their first three years, or which already turn over £500,000 and are predicted to grow by 20 per cent year-on-year for the next three years.

Winning Pitch said such firms contribute create 70 per cent of jobs in any given geographical area.

The North West region had an overall HiQ rating of 5.1 per cent, trailing the East of England (5.2 per cent), the West Midlands (5.3 per cent), the East Midlands (5.4 per cent), Scotland (5.5 per cent), Yorkshire (5.5 per cent) and London, which has the highest concentration of gazelle businesses in the UK with a HiQ rating of 7.0 per cent.

Winning Pitch's research also identified 9,592 potential gazelles (21 per cent of North West SMEs), which, through funding and business support, could become high growth businesses.

Dave Thomas, head of Plus-quoted Winning Pitch's research arm, said: “Cheshire has a strong concentration of high growth companies, but it also has a significantly smaller sample of SMEs than Greater Manchester, whose performance is also highly respectable.

“However, the lack of established gazelles in the North West – the businesses that drive wider economic growth and prop up the job market – is a problem that local authorities must address.

"At present, many authorities are focusing their support on companies with little or no growth potential, such as inexperienced start-up enterprises or larger businesses teetering on insolvency that risk mass redundancies.

“By identifying and supporting potential gazelles through specialist advice, training and grants, the North West's local authorities can allow these companies, many of which are in a raw state, to realise their commercial aptitude and boost the wider economy.”

Winning Pitch's research found that Warrington had the highest HiQ rating of the North West's local authority areas at 7.9 per cent (16th nationally), while Blackpool had the fourth-lowest rating for the whole of the UK at 2 per cent.

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