Gazelle companies will drive the economic recovery – but at the moment they don’t get the support they need to thrive.
That is the contention of Verne Harnish, who originally popularised the term “gazelles” and named his global business Gazelles.com. He is founder of the worldwide Entrepreneurs Organisation, whose members all run companies that gross more than £1 million a year.
The official definition of a “gazelle” is a company that grows by 20 percent a year for four years in a row, and they sit alongside “elephants” in big corporations – and “mice” in small businesses. Verne who published his latest book Scaling Up in 2015 highlights “A country with gazelles excels”
Both the Scale Up report written by Sherry Coutu and the business secretary Sajid Javid have recently highlighted gazelles as crucial to the economy – and Harnish agrees.
They all believe it is the gazelles which are likely to grow fastest and employ most – and which will be the businesses that really pull us out of the economic doldrums.
“All the real jobs growth – which is what countries need – come from this very narrow segment of companies,” says Harnish, whose company provides executive education and coaching for midsized businesses everywhere from Australia to South America. His favourite examples of gazelles are Apple and Starbucks.
“Apple started in 1976. By 2001, 25 years later they had 9,600 employees, they really werenít a force on the planet. It was since their 25th birthday they’ve gone to 60,000 plus employees. That’s real economic growth.
“Starbucks started in 1971. Twenty-five years later, Howard Schultz said “I think we’ve finally figured it out” and that’s when they turned the gas on, and they’ve gone to 140,000 plus employees.
“You can measure the health of a city, and the health of a country and the health of a region by the number of gazelles that exist.”
But in his experience, gazelles are largely ignored by governments, with too much focus put on both the elephants and the mice.
“The reality is the elephants, the large companies, who’ve tended to get a lot of special favours from governments, really aren’t the growth engines, and the mice, tons of small businesses, represent votes because of their numbers, but the reality is, and the research is clear, they’re not the drivers of the economy. The two-three percent who are technically gazelles, this little sliver, who are the drivers of the economy, really get abused, they get no respect.”
Harnish defines gazelles as mid market companies, which have been in business for 25 years and have reached a turnover of £30-50 million and are ready to move to the next level.
But the typical pattern he sees repeatedly is that a gazelle has been steadily growing and expanding and is doing well in its sector, and a large elephant comes along and is offered all sorts of tax breaks on the promise of creating jobs – so the smaller business is unable to compete.
And because entrepreneurs who run gazelles are so busy growing their businesses, they don’t have time for the lobbying and networking which are essential to win the concessions. Harnish believes the gazelles need a champion to fight their corner and that governments should stop treating them in the same way as large companies.
Harnish says: “Government needs to not support elephants at the expense of gazelles and quit treating them as if they are elephants. You’re just giving an unfair advantage to the big guys.”
“What happens is the public gets all mad at people who are rich and hiding profits overseas. So they tighten procedures, which has a knock on effect on the gazelles and guess what, the big companies don’t end up having to abide by those procedures anyway. So they take it out on the very group who need the capital to flow back into the business. They end up killing the goose that’s laying the golden eggs, because the group is invisible.”
“You go after the elephants, go after the big game and they escape and you shoot us. Quit treating us like elephants.”
“It’s important that societies have an intelligent conversation around this, and really understand, setting politics aside, what really drives growth, and get policies aligned around that.”
Verne Harnish is the founder of the world-renowned Entrepreneurs Organisation (EO) and founder and CEO of Gazelles, a global executive education and coaching company, and has spent the past 30 years educating entrepreneurial teams.
Neale Lewis is a Scale Up expert and works with Mid Market companies in the UK and across the globe helping them to achieve their growth ambitions