Inside Business: Spot tomorrow's winners today

Roger Trapp lists the attributes that make private firms successful

Successful businesses are mainly run by people under 40 who are educated to degree level, says a survey carried out ahead of next week's publication of the Independent 100 league table of Britain's fastest-growing private companies.

The survey, carried out by Price Waterhouse, the accountancy firm that compiles the listing in association with the Independent on Sunday, also reveals that building a strong management team and retaining key staff are important priorities for these companies, while motivational and selling skills are seen as key leadership qualities.

Since the survey was launched in 1990 it has become an established predicter of the stars of tomorrow. Among the companies that have featured strongly in the listing and gone on to float on the stock market are Stagecoach, the bus operator that is now operating train services, and Groupe Chez Gerard, the restaurants business, while others, such as Value Added Medical Products and Merlin Publishing, the maker of football stickers, have been acquired by international companies.

Though many of the companies featured in the listings over the past six years have grown quickly, their owners stress that it has required hard work and often personal sacrifice.

Two-thirds of the businesses in this list originated from a start-up, with most growing organically rather than through acquisitions. Most founders say they decided to set up on their own because of their frustration with the culture of larger companies in which they were usually originally working.

Perhaps in response to the corporate collapses of the late 1980s and early 1990s, there is widespread financial conservatism - 90 per cent are financed from retained profits and, unsurprisingly therefore, 89 per cent describe their banking relationships as good or excellent.

Moreover, they seem to have acknowledged the necessity of having strong management with 50 per cent having non-executive directors and rating their contribution highly.

A quarter of the companies appearing in last year's Independent 100 and Middle Market listings were unsure as to the effect of a single European currency and there was an ambivalent attitude to UK and European Union legislation.

Many feared that an increase in either might stifle the growth of successful businesses, with 60 per cent of companies against the introduction of a statutory minimum wage, for instance. But on the other hand, 76 per cent favoured the introduction of interest on late payment.

However, the overriding theme is that management issues provide the most important key to success, cited by 79 per cent of respondents. Among the matters regarded as important are the retention of key staff (cited by 87 per cent), building a management team (84 per cent), effective leadership (83 per cent), delegation (77 per cent) and training (65 per cent).

However, for all the apparent emphasis on "soft" factors, only 28 per cent of owner-managers described their leadership style as open, fair or honest. And though only 14 per cent said they were hands-on, just 5 per cent said they were democratic. Very few described their style as visionary or friendly.

Indeed, though there is comparatively little stress on the "hard" factors, there is a widespread belief that regular, timely and accurate management information are essential.

Behind management issues were product development and quality issues (cited by 62 per cent of owner-managers) and marketing and customer service issues (60 per cent).

As for growth, there are signs of a shift in emphasis from organic expansion to acquisitions and a desire to penetrate overseas markets. However, there are also warnings that a shortage of high-calibre people and price-cutting and the emergence of new businesses could become barriers to growth.

q The 1997 Independent 100 will be published in the 'Independent on Sunday' next week, with details of the Middle Market Award winners appearing the following week.