Why don’t more UK businesses think in the billions?

British businesses have a habit of building quick and selling fast, with many of the global powerhouses hailing from Germany and the USA. Why is this? And why don’t British firms often build for the long-term?

Why do so few UK businesses expand to become global giants? Are there structural obstacles in place, such as lack of investment? Does it come down to culture – to different values and attitudes than in the US? Or is it a failure to think far into the future, past short-term gains?


Mark Pearson, CEO of Fuel Ventures, considers a lack of funding the primary obstacle for UK businesses looking to grow. “Business owners will often launch start-ups with their own personal investment or will raise a small amount of money in their first round of funding. However, growing a business is difficult and expansion is expensive. Many businesses struggle to access the cash needed to develop, leading many to become stuck at SME level.”

Mark cites a recent study by Liberis, which found that over half of UK businesses struggle to access the funding they need to grow. “Without funding education and vital cash injection, business growth becomes stunted, prompting CEOs to sell quickly,” he explains.

The reticence of investors may also be due in part to the long timeframe needed to scale a business, especially when R&D is required. Sean Fielding is the Director of Innovation, Impact and Business at the University of Exeter, as well as Chair of the UK’s Association for Knowledge Exchange Professionals. He says: “Science-based businesses can be highly successful, but they can also take a long time to prove the concept and gain customers.  We find that there is less experience of high-tech, high-growth companies amongst UK investors and funds are often structured to expect a quite short-term payback.

“Since UK investors tend to have expectations of high and early returns, they are likely to sell out to the next wave of investors after a relatively short period. There is therefore a marked difference between the amount of time that investors in the US stay associated with their investments compared with the UK. 

“In response to this, UK universities have been leading the way in supporting the development of so called ‘patient capital’ schemes where the investors typically do not expect an exit for up to 15 years. Currently this is a specialist market with a small number of players, but we think it will grow because the returns can be substantial.”

Investment is only part of the picture, however, and Chris Atkinson, UK Managing Director of Strategic Leaders, does not consider funding to be the primary barrier to UK business growth. “We see multinational companies investing heavily in the UK, so I don’t see that investment is the issue. It is more likely to be the human factors such as organisational culture or attitude that influence growth.”

Workplace culture

With Brexit perpetually at the forefront of public discussion, people have been asking what it means to be British. Part of what makes us unique is our workplace culture. For example, British workforces tend to feel comfortable challenging instructions. Chris Atkinson says: “For the last seven years I have worked with a large German manufacturing company with plants in the UK. There is what you might call a rebellious attitude in the UK. It often manifests in wanting to challenge the directions given by the head office and trying to do things differently in the UK than how things are done in other countries. Often these differences become something that the British feel very proud of.”

But is it necessarily good to always insist on a ‘British’ approach? Comparisons between UK attitudes and those of workforces abroad may not always swing in our favour.

Chris notes: “I was working in the USA recently with a Swiss company and was immediately struck by how adaptable and positive the teams were in the States. We had some problems with logistics and communication, but the group were not affected at all – they adapted and had a great experience. If that happened in the UK, I would expect to have a battle on my hands to win the group over from that moment onwards.”

National attitudes

Of course, culture goes beyond the attitudes of single teams in workplaces. It may be that countries like the US and Germany are predisposed on a larger, social scale to encourage high-growth businesses.

Chris Atkinson, who has worked extensively with firms in the UK and abroad, says: “Generally, organisations in the States have a more optimistic outlook – they are self-confident and motivated. British organisations tend to have a more cautious attitude to the future and are somewhat cynical of the hype of the American approach. German companies take a more methodical approach; they organise and structure themselves for the future. This involves more robust planning and processes than we tend to have in the UK. So, in some ways the UK falls in between two approaches, not as emotional as the States but also not as methodical as German firms.”

David Doughty, too, thinks British society may in some ways hinder business ambitions. “Dare I say it?” David says, “I think a lot of it has to do with class. The US and Germany are relatively class-free societies whereas the UK is still dominated by class, and most investors tend to come from, and deal with, members of the upper echelons of society.

 “My own experience is that investors, particularly VCs, have very little day-to-day knowledge of business, especially the areas they are investing in. They lack the patience to invest for the longer term compared with their counterparts in the US and Germany – it is only in bio-tech, particularly gene technology, where UK investors have successfully contributed to the growth of Unicorns – and this is because the nature of the industry demands a 15 year pay-back period. Many UK software start-ups have had to go to the US to raise funding and grow as UK investors look to invest too little to get a return too early.”

The global giants of the US may also have incubated in a particularly potent consumerism. Chris Atkinson notes, “Having just got back from USA I was reminded how strong their advertising culture is and how powerful brands are. The culture in the USA both consumes and produces a huge amount of media and this facilitates the growth of mega-brands which ultimately delivers the global companies. In Europe, and especially the UK, we are more conservative about putting millions into advertising and, as consumers, we are more sceptical of the claims of large marketing campaigns. I think that puts a lot of British companies off – we would rather our product or service speak for itself.”

The Virgin conundrum

If one company – and one entrepreneur – would seem to defy the limits of UK investment and culture, Richard Branson’s Virgin springs to mind. Branson is not shy or retiring, and Virgin has not scaled to sell. Has Branson successfully adopted US entrepreneurial culture within the UK?

In short, no – or at least, an American-style swagger is not the fundamental ingredient. David Doughty points to a different US import: “Richard Branson is a self-publicist who has managed to keep his private life private.

“There are many successful entrepreneurs from the UK who have built global businesses but, without exception, they have had investment from overseas and particularly the US.”

Chris Atkinson, too, warns: “I think we need to be careful about applying the cult of celebrity to the business world. We like to create heroic figures and want attribute success to their unique approach. However, it is very clear that those figureheads are just one part of a large management structure that, together, delivers the outcomes. We should recognise the successful contribution of many UK firms that operate internationally without looking for a charismatic celebrity leader to attribute the secret of their
success to.”

Misplaced ambitions

The US may dominate global market capital and host the world’s megacompanies. But is size really everything? Chris Atkinson urges UK businesses to consider their future goals carefully.

“If you read the press about the growth of Agile as a concept, we are seeing that bigger is not better. Even the largest companies are now trying to replicate the agility, flexibility and responsiveness of smaller, faster organisations,” Chris says.

“It is a battle they cannot win – their business model and structure is not fit for our VUCA (Volatile, Uncertain, Complex, Ambiguous) world. It could well be that the future of all industry and the most prosperous organisations in the 21st century will be about speed rather than scale.”