Four secrets of high-growth companies

OTTAWA—What do companies that are experiencing high growth invest their time, money and energy in?  EDC recently investigated some 300-plus companies—split almost equally between steady or lower growth firms and their high growth cousins—and asked what they are doing to grow, or not.  Here’s what the top growers, in particular, say is of utmost importance to their success.

1.   Have an international growth strategy. Some three-quarters of the top growth companies agree that having an export strategy, with multiple foreign buyers, is key to growth.  More than half say that selling to diverse export markets, being part of a global supply chain and having a presence in foreign markets are also important.

2.   Pay attention to your people and reputation:  All companies, no matter their stripe, largely say that management expertise and skilled labour are essential to success.  Other operational success factors, according to the majority of high flyers, are a strong corporate reputation and reliable infrastructure, including good access roads and ports, and a stable regulatory environment.

3.   Do your research and development: There is a strong correlation between the level of company growth and amount of R&D investment.  Close to 40 per cent of the consistently top-growing companies we talked to invest 10 to more than 20 per cent of their revenues in R&D.  Fewer than 20 per cent of the modest-growth enterprises invested that much in innovation.

4.   Get the right financial support: Companies at all levels say that consistent bank and supplier credit are the most important financial factors to support sales growth.  The high growth group also indicated that credit insurance and making use of government financial programs contribute to their sales growth too.

Where are the trouble spots?  Inadequate financing, say high-growth companies, is their main obstacle to growth.  Next, they are concerned about maintaining stable, long-term access to credit—in good times and bad; and to ensuring their balance sheet remains sufficient to support ongoing growth.

On the other hand, finding new buyers is the key challenge for the declining-growth set (some 10 per cent of our interview subjects), but much less an issue for the growing firms.  Good products, services and strategy often speak for themselves!

Denis L’Heureux is Regional Vice-President, Small Business Solutions, at Export Development Canada (EDC). Contact him at mailto:dlheureux@edc.ca
or visit www.edc.ca <http://www.edc.ca> for more small business solutions.