Growth Companies Largest Employers In The Finnish Economy
Kauppalehti reports on some fascinating results from research conducted by Balance Consulting on the effects of growth companies in the Finnish economy. While I realise this data is very Finland centric and might not be of that much interest to others - I am sure these results will resonate in similar manner in other countries. We wrote about this in 2008 as well and it seems that the data, some one and a half years later is still very valid. The study was conducted by looking at companies whose revenue is above 1,7 million euros annually and belong to the Balance Consulting corporate databse. While the database is very thorough, it does leave a lot of the younger startups out.
During the time period of 6 years, growth companies have multiplied their workforce ten-fold while the average Finnish company has increased its workforce by a multiplier of 1,2. Something else that adds to the importance of these growth companies in Finland is the fact that while they have increased their workforce ten-fold their turnover has increased 17-fold. These are figures that no one can question.
Looking at the revenue side of things, the largest growth company churned over 51 million euros in profit. In total, the Finnish government has received over 100 million euros in taxes and other social benefits from just a few growth companies. On another note, it was also found in the study that the best companies have on an average over 50% return on equity - something most of the companies find astronomical.
In this study, growth companies had to fill a set of different criteria. These included the need for turnover to be above 1,7 million euros, but also the fact that revenue had to grow more than 50% annually, three years in a row. The latter of course being a very strict factor, diminishing the size of the population.
The downside, something we here at ArcticStartup would also like to see changed, is the small amount of these growth companies. Only 91 companies fit the criteria in the study. The question still remains for the politicians and government in general, where would the Nordic and Baltic countries be in the future if we managed to raise the importance of these companies to our economy and policy making?
While I certainly root for growth companies and startups, this research or at least the outcome is pretty no-brainer. If you set the criteria at 50% annual growth for at least 3 years in a row, the odds are most of these companies have had similar growth during all of the six years.
When you grow the revenue at least 50% per year over six years, your revenue will have grown at least eleven times higher. Some of the companies may have grown a little less and some much more (given the 17x increase in turnover), but it's not at all surprising that they also have increased their workforce an average 10x... it's almost like saying that companies with growing revenues also tend to hire more people.
What would be a lot more interesting data is, how many people are employed by startups in Finland, overall? (whatever is the definition of a startup?)
[...] reading this, you probably are) you should be feeling pretty good about now. For example, growth companies are now the largest employers in Finland, and it turns out working in Silicon Valley isn’t all it’s cracked up to be. So much [...]
You have misinterpreted the Kauppalehti article. It didn't say that "Growth Companies Largest Employers In The Finnish Economy"
It only said that they are superemployers meaning that their growth is high. That's a kind of tautology, too.