According to new research shared with City AM today, just 175, or around 0.0007% of all UK businesses, have managed to increase their revenue by 20% or more in each of the last five years.
The results show the difficulties in producing fast-growing companies capable of maintaining significant growth rates in the medium and long term.
Some commentators have said that the UK, unlike the US, does not produce enough companies like Amazon or Google that have been able to generate rapid and sustainable growth year after year.
Research by accountancy and consultancy firm Hazlewoods shows that of the 240,000 UK private sector companies in the study, only around 1,000, or 0.004%, achieved revenue growth of 10% or more in each of the past five years.
“Being able to continue growing year after year is a major challenge for any company. Only a very few are able to achieve this consistently,” said Ryan Hancock, manager at Hazlewoods.
“Perhaps the government needs to focus even more deliberately on helping UK businesses scale up and continue their growth trajectory,” he told City AM.
“The UK has a lot of success stories, but the UK economy would benefit if we had even more.”
As the government tries to manage its pandemic debt, some tax relief that is vital for businesses and entrepreneurs, such as the popular Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) could be at risk if the CGT rate drops from 20% .
Hancock said this could discourage entrepreneurs from continuing to invest in and grow their business, as they would have to pay higher tax on the eventual sale of their business.
He added that the widespread difficulty for UK companies to maintain rapid growth rates shows how difficult it is to maintain a growth trajectory without long-term strategic planning and equity investment.
Many of the companies that maintained 20% growth for five or more years were private equity and venture capital firms.
Challenges UK businesses may face include a smaller talent pool, particularly for SMEs in science and technology sectors, compared to the US.