East Midlands’ businesses are set to leave over £3.5 billion GVA (Gross Value Added) of untapped growth on the table in 2018, according to new figures and research from Grant Thornton UK LLP.
Grant Thornton’s research, Planning for Growth – don’t let uncertainty hold you back, finds that if the region’s firms follow the growth strategies characterised by the UK’s ‘Growth Generators’ that are achieving significant and sustained growth, then they could inject as much as £8 billion GVA into the regional economy by the end of 2019.
The study analysed the country’s Growth Generators – businesses that have grown by 20% or more in the last year and achieved sustainable growth for the last three years – and reveals these firms are almost five times more likely to achieve one-to-two year growth targets than the rest of the market, and almost ten times more likely to realise their growth ambitions than low to no growth companies.
“Latest ONS figures show that the East Midlands generated £101.5 billion GVA to the UK economy in 2016, an increase of over 20% from the £83.2 billion generated in 2010,” explains Chris Frostwick, practice leader of Grant Thornton’s East Midlands office in Leicester. “This made the East Midlands the ninth highest contributor of the 12 UK regions in 2016.
“However, despite the East Midlands contributing the equivalent of 6% of the UK’s GVA in 2016, our research identified that just 4% of Growth Generators are based in the East Midlands, meaning the proportion of Growth Generators in the region is falling well behind neighbouring regions such as the West Midlands (7%) the South West (5%) and Wales (8%); though is ahead of the East of England (2%).
“Given the strengths of the East Midlands, as well as its economic contribution and increasing performance, there are clear opportunities to grow,” he says. “Private sector businesses can take a leading role in realising the region’s huge growth potential
and therefore, a high-performing private sector will be a significant driver of growth in the East Midlands.
“In fact, our latest East Midlands Top 200 Report (2017)* shows a similar picture, finding a relatively small proportion of East Midlands companies are consistently experiencing sustained levels of growth.
“Growth Generators are almost five times more likely to be achieving their one-to-two year growth targets compared to average UK businesses, and by learning what it is that these high-growth firms are doing differently and adopting their growth performance and operational strategies, East Midlands’ private businesses can lead the way in unlocking the region’s huge economic potential.”
Chris adds: “Growth of the UK economy, will to a large degree, depend on the prosperity of the private sector and its collaboration with the public and not-for-profit sectors to share ideas on what will help shape a vibrant economy.
“There is clearly room for additional private sector growth in the East Midlands. If the region’s businesses adopt the strategies of the high-growth firms, they could not only achieve significant individual progress, but also inject well over £8 billion GVA into the regional economy by the end of 2019.
“We believe if more UK businesses adopt a Growth Generator mindset, we can unlock the UK’s full growth potential and the private sector can lead the way in shaping a vibrant economy.”
Based on the findings of Grant Thornton’s research, significant barriers to growth for East Midlands businesses are:
- Technology (e.g. cloud, data, workplace productivity tools, cyber, mobile, AI, IoT etc.) – 61%
- Partnerships (e.g. supply chain, networks, international connections, etc.) – 45%
- Increasing the size of your market share for your product/service – 42%
- Systems, processes and operating model – 39%
- Brand, marketing and sales capability – 37%
- Financial (e.g. cash flow, liquidity, access to capital, etc.) – 37%.
Growth Generators share four key characteristics that distinguish them from the rest of the business pack and give them a growth mindset:
- Purpose-driven – have an ambitious and confident mindset fuelled by a purpose-driven approach
- Invested in growth – they are not afraid to take on external investment and have bold M&A strategies
- Tech confident – they build their foundations on agile technologies that grow with them
- Networked – they look beyond their own sector and domestic market for growth opportunities.
According to Grant Thornton’s research, £72.5 billion GVA (Gross Value Added) of untapped growth could be left on the table in the UK this year alone – that’s the equivalent to creating a new economy the size of Greater Manchester, or 1.4 million jobs.
