Are we losing the ''Scale Up'' Challenge?
ARE WE LOSING THE “SCALE-UP” CHALLENGE? CHAMBER’S “SUMMIT” SAYS NOT SO FAST!
So exactly what is scaling up and why does it matter? The most accepted definition of scale-ups, according to the Organization for Economic Co-operation and Development (OECD), are defined as “all enterprises with average annualized growth greater than 20 per cent per annum, over a three-year period, and with 10 or more employees at the beginning of the observation period.”
Great, now we know, why should we care? Simply put, these scale-ups account for less than 5 per cent of all Canadian firms, but create more than 50 per cent of all new jobs. That’s why we should care and we should care a lot.
Canada needs to foster a lot more high-growth firms. According to the Impact Centre at the University of Toronto, Canada “dramatically” underperforms the United States in scaling private companies.
The Ontario Chamber of Commerce reports that Canadians now create new firms at a higher per capita rate than Americans. But, despite being a global leader in entrepreneurship, the next generation of large and globally competitive Canadian firms just hasn’t materialized. And there is a growing consensus that Canada faces a critical gap in its business growth strategy: businesses simply are not “scaling up” into large, world-leading organizations. Enabling more scale-ups is essential to enhancing Canadian prosperity.
So why aren’t we scaling up like we should? According to a Lazaridis Institute survey of Canadian start-up ecosystem stakeholders, “the primary inhibitor to scaling up is the shortage of experienced management and/or executive talent.
Consequently, fast growing businesses face more significant challenges recruiting for business people in areas like sales, marketing and human resources than say engineering positions. Training and developing more business/management talent adept at building scale-ups is paramount to catalyzing Canada’s economic potential.
The Ontario Chamber reports businesses are facing a number of barriers that are preventing them from “scaling up”. These include a labour pool that lacks scaling experience, insufficient access to financing, and misaligned public supports and incentives.
In the economy of the future, Ontario’s continued prosperity depends on our capacity to innovate and translate new ideas into real economic gains. To do so, we need to create an environment that lets our most promising firms thrive. That means bold action to address scale-ups’ pressing talent challenges. High-growth firms contribute disproportionately to Canadian economic growth and are in urgent need of the right talent to scale.
What can be done? Actually a number of things like; working with the federal government to create a scale-up visa to accelerate access to qualified international candidates; improve access to financing; ensure public programs are aligned to encourage businesses to scale up by focusing supports on high-growth firms and those with high-growth potential; delaying taxation on corporate income growth and increasing support for businesses seeking to engage in international trade are just a few examples.
Here in London we are fortunate that a growing number of businesses have ignored the scaling-up problem and have forged ahead to create their own globally competitive organizations. To celebrate them and in the process encourage other London businesses to scale up, the London Chamber designed a new event called SUMMIT two years ago to shine a light on these global success stories.
The hope was that by having these world-beating entrepreneurs share their journey of success, we would catalyze others to repeat the process. Companies like StarTech.com, Jones Packaging, CarProof, Phoenix Interactive, Digital Extremes and Versabank have all told their stories and provided ample motivation for attendees to mimic their triumphs.
This year’s SUMMIT takes place on April 9th again at the Grand Theatre and our scaling-up story tellers include Stephanie Ciccarelli of Voices.com, Ali Soufan of York Developments, Teresa Van Raay of The Whole Pig and David Patchell Evans of GoodLife Fitness fame. If you are interested in attending this year's Summit, you may register here.