High growth, fast-track firms that end on the scrapheap

A fascinating piece of research here which provides some great counter-arguments for students who want to evaluate the risks facing fast-growth businesses.

You may be familiar with the annual Sunday Times feature on high growth firms - the Fast Track 100. This highlights the fastest-growing businesses in the UK across a range of industrial sectors. You can view and download the full details of the most recent Fast Track firms (2010) from here.

Many of the businesses featured in Fast Track have achieved significant revenue growth over a sustained period and have also generated thousands of new jobs. They are precisely the kind of businesses that might help the UK drag itself out of the economic downturn. But, having featured in Fast Track, do they all go on to sustain their high growth success? Apparently not.

Researchers have examined all businesses noted in the Fast Track 100 from 2000 – 2009 using publicly available financial information from 2010/11 to evaluate their growth history. Some 750 records have been tracked.

So, where are these businesses now? The results might surprise you. In summary:

- 1 in 4 of the business from the past 10 years Fast Track 100 no longer exists

- Of those, 35% have been acquired and 44% have been liquidated or are in administration

- Only 47% of the 100 businesses in the 2000-2001 Fast Track are still in existence

- Overall, 1 in 5 businesses fail over ten years

- Manufacturing has provided relatively few high growth stars. Whilst seven manufacturing businesses were in the 2000-2001 Fast Track, 2008 saw only two, with zero the following year

- The dot.com boom which provided 22 IT / Telco businesses featured in the 2000-2001 entries is well and truly over; the highest presence of IT & Telco firms since 2005 has been only four entries

- The retail sector continues to provide high growth firms, particularly those that have embraced ebusiness. There were 13 retailers featured in 2000/2001 and 21 retailers in 2009/2010

Why might such a large proportion of firms featured in Fast Track have failed or changed ownership? A question for your students to discuss.