TLDR: Work in a booming sector
Rich entrepreneurs would love to think it’s their inspirational leadership, their charisma and their eye for figures.
The more mundane truth is that the easiest way to light the growth afterburners is to be in a fast growth sector.
The rankings of the nation’s fastest growing firms bears this out. There are two such rankings – the Sunday Times Fast Track 100, and the Real Business magazine Hot 100. Both use Companies House data covering every firm in the UK to find which of them have grown their revenue fastest over the past four years. There are a few differences between the two rankings but they are in most respects similar. I have been involved in writing the Hot 100 for a few years.
And what do we find?
Every year there are clusters.
Gold has risen in price since poor old Gordon Brown flogged the nation’s stock pile for $275 an ounce in 2002, and it now stands at more than $1,700 an ounce.
Needless to say, anyone involved in gold in recent years has made a killing.
At number two and three on the Hot 100 ranking are gold firms.
Number two, Baird Investments, was founded by Tony Baird in 1967. How did he achieve this sudden growth spurt? “We were in the right business at the right time. We had the capacity, the premises and the experienced personnel to deal with the sudden demand.”
Number three is BullionVault . A little more clever, this one.
Founder Paul Tustain had a feeling that gold was going to be a growth market. He realised it is not easy for consumers to buy and sell the stuff, so he founded an online retail service, BullionVault.com. The service also stores the gold for consumers. They buy gold, own gold, but don’t need to take receipt of it. It currently holds around 28 tonnes of gold.
Online betting is another boom sector.
Betfred and Bet365 have achieved staggering growth over the past half-decade. Betfred has swollen sales by an average of 54 per cent a year for the past four years to £4.1 billion. Yes, billion. And this is a firm which was founded in 1967. The move online took it to a new level.
Bet365 follows a near identical pattern. In 2000 Denise Coates took her father’s betting shop online. The move to cyberspace means Bet365 can offer betting to punters across the globe. It says it has customers in 200 countries.
Discount stores are thriving. And what do we find? Poundworld retail, 99p Stores and Liverpool’s B&M chain flying high in the Hot 100. B&M had only 21 stores in 2005, now it is targeting 400. Sales are £549m.
The price of oil has been soaring. So we see oil firms galore in the rankings. The oil & gas price reporting agency Argus Media also makes it on the back of this boom.
It is also worth reflecting on the sectors which don’t make it. Newspaper groups. You could breed a Frankenstein hybrid of John D Rockefeller, Richard Branson and Donald Trump and he wouldn’t find a way to make money in newspapers. It is a shrinking market.
Anyone selling DVDs or (chortle) VHS cassettes is also shafted.
Sometimes entrepreneurs stumble across a new field, and like a mosquito biting into an artery, grow gargantuan in proportions with little effort. A while ago I reported on the founder of Attraction Tickets Direct. The founder was selling tickets to Disneyland in Florida as a rep. He realised there was no way to buy Disney tickets unless they were part of a full travel package. So he sold them direct. He made millions in barely no time.
Smart? Perhaps. But those millions weren’t as a result of years of painstaking R&D or plotting. He just…got lucky.
Wise up to the sector you are in. If it’s a low growth, low profit trade, then start making exit plans. Get into a sector you know will grow… Chinese car brands, nanotech, FinTech, bespoke clothing, 3D printing, virtual learning… at least these are new, exciting sectors where the winners will make fortunes.