Achieving continuous business growth is hard for most companies
It is difficult for fast-growing companies to achieve continuous growth. 66% of the scale-ups experience problems after the first growth spurt and experience a decline in growth. This and more statistics from the scale-up study of the Erasmus Centre for Entrepreneurship (ECE) provide insight into the scale-up climate in the Netherlands. We share with you the most important insights.
Every year, the ECE investigates the scale-up climate in the Netherlands. A scale-up is defined by the ECE as a company with a minimum of 10 FTEs and an average growth of at least 20% per year in FTEs or turnover, over a period of three years. This research was created to focus policy and support on facilitating scale-ups, as they play an important role in our economy.
The research shows that in recent years it has been difficult for fast-growing companies to keep their heads above water and sustain their rapid growth on an ongoing basis. Companies struggle especially with attracting the right people, cash, and the increasing complexity of a growing organization. These issues strongly relate to the method used in Verne Harnish's book Scaling Up, in which people and cash are among the 4 pillars that shape the book, and advice is given on how to deal with the growing complexity of a scale-up. This is an indispensable book for companies that want achieve accelerated growth.
Increase in number of scale-ups more than halved
It also appears that the growth in the number of fast-growing companies has halved compared to 2018. In other words, only 5.6% of Dutch companies with at least 10 FTEs are fast-growing companies, while this group is responsible for 30% of the job creation in the period 2015-2018.
In addition to the problems mentioned above, scale-ups also struggle with identifying new growth opportunities in time. The consequence is that these opportunities often remain unexploited. Also, threats are often underestimated. As a result, an increasing number of start-ups does not grow to scale-up, which has a negative impact on the number of new scale-ups in the Netherlands.
Growing vs. shrinking businesses
Despite the reduced growth compared to previous years, the majority of Dutch companies still achieved business growth (56.6%). However, almost 40% of companies is shrinking and falling further and further behind. Among other things, they find it difficult to implement new technologies within their business processes.
Accelerated growth is not self-evident, but it is feasible
Even for companies that can call themselves scale-up, growth is not self-evident. It is a good thing that more than half of the Dutch companies achieve some form of growth, but companies that really want to experience a growth spurt have to take many factors into account and understand that today's growth does not guarantee future growth.
Do you want to know how we help our customers to grow faster? Complete our growth test and find out where your organization stands and how you can optimize to get a grip on business growth. Of course you can contact one of our experts directly through our contact form below!