How to combat the slowdown in scale-up businesses

A worrying picture has emerged in a study that could indicate the potential for future prosperity in the Netherlands. The review of activity of small- and medium-sized businesses (SMEs) was presented to a distinguished gathering during a meeting of nlgroeit, a platform that aims to help entrepreneurs to grow their companies. But there was also advice about the best way forward, presented by Professor Justin Jansen from Rotterdam School of Management, Erasmus University (RSM). He gave his findings and advice at an nlgroeit gathering in Gouda’s city hall on 2 December 2020. Other speakers were Queen Máxima of the Netherlands and Occo Roelofsen (as members of the Dutch Committee for Entrepreneurship). Well-known scale-up entrepreneurs such as Jitse Groen of TakeAway, Michiel Muller of Picnic as well as Elske Doets of Doets Reizen participated in the plenary session.

It has been a testing time for all kinds of business, and the resilience of Dutch SMEs is on the line. The study found a worryingly small increase in the number of small businesses scaling up in size as they grow their business. Prof. Jansen said that until 2018 there were more than 300 scale-ups annually, but in 2019 there were only 30.

The definition of a scale-up company for this study is one that grows more than 20 per cent annually in revenue or in number of employees. They make up about 6 per cent of companies in the Netherlands.

Resilience and agility

Prof. Jansen’s presentation about growth in the Netherlands highlighted the need to build a growth platform that could help SMEs of all types and sectors to address their specific challenges to growth.

“Growing in a healthy way is not only about getting bigger. It’s also about becoming better, stronger and faster – and of course, more sustainable. This makes SME companies more agile. And it makes the SME landscape more vital and more resilient,” said Justin Jansen, a professor of corporate entrepreneurship and one of the academic experts behind the Erasmus Centre for Entrepreneurship (ECE).

He also explained the inactivity in scale-ups over the last couple of years: “Scale-ups used to grow quickly with a webshop, but now they have to do more – they have to create apps for the energy transition, or offer new services for health care, or shift production processes or automate them. It now takes longer to grow in these sectors than in the days when all you had to do was add a webshop.”

Not an easy path

Scale-ups still have a lot of work to do, says Professor Jansen. After exuberant growth, two-thirds of them will have to deal with a serious decline that, according to the participants of the nlgroeit event, can only be tackled with intensive guidance. “But it’s not an easy path. I hope mentors from nlgroeit can help these entrepreneurs with specialisations, with advice about financing international growth, or about the changing relationship with customers and suppliers.” Professor Jansen’s findings are published in the ScaleUp Dashboard 2020.

Speaking in the plenary session, Queen Máxima emphasized that scale-ups are usually innovative and give the economy a boost. She also participated in the brainstorming sessions about the future of nlgroeit and the future of the Netherlands.

nlgroeit

The platform nlgroeit aims to help entrepreneurs to grow their companies, for example by putting them in touch with successful entrepreneurs and by organising knowledge-sharing and networking events.

Erasmus Centre for Entrepreneurship

The Erasmus Centre for Entrepreneurship (ECE) is based in Rotterdam and empowers start-ups, SMEs, and corporates to turn ideas into innovations by bringing business and academia together.

More information

Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s top-ranked business schools. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who can become a force for positive change by carrying their innovative mindset into a sustainable future. Our first-class range of bachelor, master, MBA, PhD and executive programmes encourage them to become critical, creative, caring and collaborative thinkers and doers. www.rsm.nl

For more information about RSM or this release, please contact Erika Harriford-McLaren, communications manager for RSM, on +31 10 408 2877 or by email at harriford@rsm.nl.