In tough economic times, where do you go for growth? Look no further than the entrepreneurs of this world. Our survey of 2,200 Growth Oriented Entrepreneurs (GOEs), across 13 countries, suggests that confidence is undented by flat markets or even uncertainty in the Eurozone. Rather, these entrepreneurs, who largely set up their businesses just as the downturn was starting, have seen their business grow and are expecting their businesses to continue growing.
What is it that is driving this growth? Some of it comes from the fact that they are international and therefore not simply dependent on their domestic markets. Three fifths of the businesses in the study had some form of international exposure – through foreign exchange, overseas employees, overseas partners and joint ventures and, of course, overseas sales. What is important here, though, is that this internationalisation is not just about exports. For a small business, exporting is highly risky: the costs are high and the uncertainties of operating in unfamiliar territories manifest. But learning how to operate abroad successfully involves learning about cultural differences and building reputation. This is best done through a gentle familiarisation and those business that do this from a strong domestic base, then build gradually through partnerships have higher turnovers, on average, and expect faster growth.
But the growth is also coming from the motivations of the entrepreneurs themselves. We found that the desire to make lots of money is not the only motivation that drives entrepreneurs. Pursuing a market opportunity and following dreams are equally as important (and in some countries more important) than the desire to make money. There is a highly significant correlation between these three motivational factors and the combination of the three does make a difference to growth.
In the current climate it would be a mistake to ignore the issue of finance. While entrepreneurs did not see access to finance as the only issue that was a challenge as they set up their business, there is evidence from the study that in every country in the world entrepreneurs fund their businesses themselves at start-up and that this is a pre-condition for success and growth in the future. Success becomes non-negotiable because personal resources are tied up in the business.
These commonalities between entrepreneurs across the world are in some senses more interesting the differences. However, in China, India and Brazil in particular, entrepreneurs were expecting faster growth in turnover and had bigger turnover businesses. This suggests that these markets are less affected by the downturn than their European counterparts. It stands to reason, then, that European businesses, and particularly UK ones, need to operate outside of Europe if they are to continue on the growth paths that they have witnessed so far. The extent to which these companies are international already, in the broadest sense of the word, suggests that while it may take some time, this is very much on the agenda.
Dr. Rebecca Harding