Beyond the SME Hype

There’s a great piece of research just released by NESTA. In essence, it has four messages:

1. Most startups were not particularly special from an economic point of view.

2. Many good companies go out of business.

3. Existing businesses were by far the biggest contributors to economic growth.

4. The British economy became significantly worse at allocating resources to the best businesses over the period.

This ties in with other data. Including the fact that the best “high growth” businesses are not start ups – they are, on average, 18 years old.

I think it suggests a message; if you’re going to start a business doing what is already done, it’s a high risk. In the end, scale wins. You may have a better offer, a better service, even be better looking – in the end though, the slower, more boring, uglier businesses at scale are likely to get you.

If you’re going to start a business, launch something new, then make it NEW. The attrition rates may still be high – but if that worries, you probably shouldn’t b…