Results from High Growth SME Pilot Survey

29 February 2012

“Gazelles” are Different

John Hemphill and Hugo LeMessurier

Sustainable High Growth SMEs (often known as “Gazelles”) have growth rates of ≥ 20%pa. These are the companies which contribute most of the new jobs to the economy and undertake much of the innovation. Critically, they have some distinct differences from their slower growth cousins.

This is the key finding from our recently completed Pilot Axxos High Growth SME Survey. Reviewing the results of this survey was deeply thought provoking. It led us to specific areas where gazelles were different:

  1. Revenue: Gazelles focus more on developing innovative new products and quickly marketing them to generate revenues achieving high growth rates (> 20%).

  2. Funding: Gazelles re-invest more of their cash flow (> 20%) into development of innovative products/services plus sales and marketing activities.

  3. Sources of funding: Gazelles typically use founders’ funds and grants early (where revenues < $250k); have much higher success of securing further funding from Angels (where revenues $250k – $500k), and use Venture Capital/Private Equity and ongoing grant funding where (revenues >$500k).

  4. Skills and Governance: Gazelles are early utilisers of formal boards and external advisors to fill skills gaps, typically choosing those with relevant experience who have been identified through trusted networks.

  5. Business Challenges: Gazelles focus more on Market Validation (understanding/entering markets), Market Engagement (sales, marketing and promotion) and New Products (R&D and product development) to be their biggest challenges.

The picture shown above is of companies which are outwards focused with high priorities on innovation, opportunity development, market entry.

These companies also have a strong focus on the early development of their capabilities in order to capture their opportunities - including the early use of external advice, and external funding.

So it’s possible to state that gazelles are different from ordinary companies. To reply “Yes, they grow faster” is to miss the point.

The real answer is that gazelles are outwardly looking companies which are well connected with their market places, are prepared to invest in developing their opportunities and capabilities, and to access expertise to fill skills gaps needed to achieve their goals.

Download Axxos High Growth SME Survey