Significant success is still achievable

The saying "good things come in threes" is certainly true for a special few of the Deloitte & Touche/Indy 100 winners this year. As we announce the winners for our third annual awards for fast-growing businesses, nine companies have made an appearance every year. The "hat-trickers" – Private & Commercial Financial Group, Central Trust, ASK Central, Central Modus Group, CCS Group, Interport, Local Contract Hire and Leasing, Euro Food Brands, JP Boden & Co – are widely spread by both geography and sector. We also welcome 31 companies, including LA Fitness and Spring Grove Property Maintenance, to the list for the second year running.

What are the points to note from this year's awards? Although there is a broadly similar pattern of winner to previous years, three themes are clear: a change in regional spread; the dramatic reduction in the number of listed companies; and the change in industry sectors represented.

In the past, winners have been heavily concentrated in London and the South-east. But for the first time, the number of companies in this region has fallen to below 60 per cent. This has been matched with substantial increases in fast-growing companies in the West Midlands, the North-west and Scotland. Last year there were 13 winners representing these three regions. This year a quarter of the winners are based in these areas.

What is the reason for this change in regional spread? The Government will no doubt point to the various incentive schemes for businesses in regional areas. But more generally, the rising cost of managing a successful business in London and the South-east – particularly the cost of property – may well have had an impact, putting the regions at a competitive advantage. The list of Deloitte & Touche/Indy 100 winners suggests that it is the dynamic fast-growing company, which is flexible and innovative in its business planning, that is consistently successful. Such businesses will be monitoring costs carefully and looking for opportunities in the markets they serve. They may have been coaxed out of the capital by the variety of prospects that lie elsewhere.

A special mention should go to Dobbies Garden Centre. Not only is it one of the companies thriving in the Scottish region, but established in 1865, it is also the most mature company in the listings.

A closer look at this year's winners shows that the number of listed companies has fallen dramatically from 28 in 2002 to 13 in 2003. And the number of companies listed in the London Stock Exchange's Techmark index are at an all-time low with just one winner in this year's rankings. Could it be that quoted companies are not growing, or is it that growing companies are not listing? It is true that funding from flotations has been harder to obtain over the past two years in this economic climate. But growing businesses should be encouraged to hear that this does not look like a trend set to continue. Many firms are currently preparing for flotations in 2004 and beyond when they believe funding will be made available to attractive dynamic companies.

Not surprisingly, as the business cycle has turned, the mix of types of business in the list over the last three years has changed. Our research into the labour market (Deloitte & Touche/REC Report on Jobs) has tracked a consistent slowdown in the growth in demand for staff since the second half of 2002, and as a result the recruitment sector is suffering. In 2001, the sector was well represented with more than one in 10 winners in the recruitment business. Dataworkforce, the telecom recruitment consultants, was the second fastest growing business of 2001. This year, only two recruitment firms have made the listing.

This year's winner, United Foods International, illustrates the success of a less obvious sector which is consistently represented. About 5 per cent of winners each year have been in the food sector. The manufacturing and retail sectors both have a healthier presence in 2003 than previously.

In this unpredictable climate, it is interesting to ask what this year's winners will be doing in the future. Research by Professor David Storey of the Warwick Business School predicts that in seven years from now 44 per cent of this year's winners will fall in the £5m-£100m turnover bracket. A quarter (27 per cent) will have been acquired. Only 8 per cent will have shrunk to turnover below £5m, and 13 per cent will have been liquidated. At the other end, 8 per cent will have outgrown the list, with sales of over £100m.

The message from this year's awards remains positive. Despite difficult trading conditions, we can celebrate the Deloitte & Touche/Indy 100 winners' outstanding ability to demonstrate that growth and significant profits are still achievable. Let's hope that good things are not limited to threes and that we welcome back the hat-trickers and others next year.

David Wenborn is partner, Dynamic Companies Programme, at Deloitte & Touche. Additional material by Samantha Gale, senior manager, Dynamic Companies Programme, at Deloitte & Touche