The scaleup gap refers to the difference between the large number of small businesses and the smaller group of companies that manage to grow into high-growth enterprises. In the UK, there are approximately 5.6 million small and medium-sized enterprises (SMEs), but only a small fraction become scale-ups—businesses that sustain high levels of growth over multiple years. This gap presents both a challenge and an opportunity for the UK economy.

The significance of scale-ups

Scale-ups play a vital role in economic growth. Defined as businesses that have grown by 20% or more annually in turnover or headcount over three consecutive years, these companies make a disproportionately large contribution to job creation, innovation, and productivity. While they represent a small portion of the UK's SMEs, their economic impact is substantial:

• Job creation: Scale-ups are responsible for 50% of all new jobs created by SMEs, according to the ScaleUp Institute.

• Innovation: Scale-ups are often leaders in adopting and developing new technologies, driving progress across multiple industries.

• Regional impact: Scale-ups stimulate local economies, creating demand for services, suppliers, and skilled workers, particularly in regions outside of London.

Barriers to scaling up

Many small businesses have the ambition to scale, but various challenges prevent them from achieving sustained growth. These barriers include:

• Access to finance: One of the most significant hurdles for SMEs is securing the funding needed for growth. Traditional loans can be difficult to access, especially for businesses lacking a strong credit history or assets. Alternative funding, such as venture capital, angel investment, and crowdfunding, offers solutions but can be difficult to navigate.

• Access to talent: As businesses grow, finding and retaining skilled employees becomes critical. However, many SMEs struggle to compete with larger organisations for top talent. Recruitment, training, and workforce development are essential to scaling successfully.

• Access to markets: Expanding into new markets, both domestic and international, presents logistical, regulatory, and financial challenges. Many SMEs lack the infrastructure or expertise needed to scale into new regions.

• Operational efficiency: Scaling up also requires businesses to streamline their processes and manage growing operational complexity. Implementing the right systems and technology to support this growth is a common challenge for SMEs.

Why closing the scale-up gap matters

Closing the scaleup gap could significantly benefit the UK economy. If more small businesses can overcome the barriers to growth, the economic potential is vast:

• Economic growth: Increasing the number of scaleup businesses would directly boost productivity, helping to grow the UK's gross domestic product (GDP). Scaleups are more productive than other businesses due to their efficient operations and innovative approaches.

• Job creation: Encouraging more businesses to scale will lead to a significant increase in new jobs, contributing to lower unemployment and developing the workforce. Each scaleup requires a growing workforce, providing opportunities across a wide range of sectors.

• Innovation and competitiveness: Scaleups are at the forefront of innovation. By driving technology adoption and development, scaleups help increase the UK's global competitiveness. Supporting businesses in scaling encourages greater investment in research and development, as well as the adoption of new technologies.

The role of events in addressing the scale-up gap

Events like the Festival of Entrepreneurs are crucial in helping businesses bridge the scaleup gap. By bringing together entrepreneurs, industry leaders, and stakeholders, these events provide essential resources, knowledge, and networking opportunities to help businesses grow. Key benefits include:

• Networking opportunities: Entrepreneurs can connect with investors, advisors, and partners, giving them access to the funding, talent, and resources they need to scale.

• Educational content: Panels, workshops, and keynote sessions offer practical advice on how to overcome barriers to scaling, adopt best practices, and apply innovative strategies to business growth.

• Access to support systems: These events create an ecosystem of support, linking businesses with mentors, funding opportunities, and collaborative partnerships to help them succeed in scaling their operations.