Defying Gravity: High-Growth Entrepreneurs Buck the Macroeconomic Factors
Challenging Other Companies
2012 Ernst & Young Entrepreneur Of The Year Companies, which together employ
more than 700,000 people, achieved 30 percent job growth and 48 percent
revenue growth, dramatically outpacing firms on the S&P Index
PALM SPRINGS, Calif., Nov.15, 2012
PALM SPRINGS, Calif., Nov.15, 2012 /PRNewswire/ --Resilience, innovation and
a unique perspective on risk taking are just three of eight critical factors
that separate the very best entrepreneurs from others, according to Ernst &
Young LLP, which is honoring America's top entrepreneurs at its 26^th annual
Ernst & YoungEntrepreneur Of The Year® gala in Palm Springs on Saturday,
While the U.S. economy continues to wrestle with persistently high
unemployment, slow growth and challenges from other developed and emerging
economies, the more than 600 American companies named as finalists in the 2012
U.S. Ernst & Young Entrepreneur Of The Year® program are creating jobs,
expanding their businesses and planning for growth. Ernst & Young, in
collaboration with the Ewing Marion Kauffman Foundation, took a look at what
these companies are doing right, and in a new paper, "Defying gravity:
High-growth entrepreneurship in a slow-growth economy," released today at the
Ernst & Young Strategic Growth Forum®, identify eight reasons why these
exceptional companies are bucking the trend and finding success.
The Entrepreneur Of The Year finalists are spread across all industries,
including technology, manufacturing, consumer products and energy. Between
2009 and 2011, these companies, which together employ nearly 700,000 people,
achieved 30 percent job growth (over 150,000 jobs) and 48 percent revenue
growth, dwarfing U.S. figures as well as companies in the Standard & Poor's
index, which had revenue per share growth of only 15.9 percent over the
two-year period from 2009 to 2011. Companies in energy, cleantech and natural
resources led in employment growth, at 49 percent over the period 2009 to
2011, closely followed by technology (42 percent) and services (33 percent).
"The high-growth companies that win our Entrepreneur Of The Year award have
historically proved to be a bellwether for some of the most disruptive
innovations of all time," says Herb Engert, Strategic Growth Markets Leader,
Ernst & Young LLP. "These ambitious stars inspire their teams to address some
of the world's most pressing issues and unmet needs, often creating completely
new products or services. They are known for disrupting or creating entirely
new industries and creating jobs no matter the state of the overall economy."
"In contrast to the most popular notions about innovative high-growth
companies, the Ernst & Young Entrepreneur Of The Year finalists show that the
potential for growth, innovation and job creation are present across the
country and in all types of industries," says Dane Stangler, director of
Research & Policy at the Kauffman Foundation.
So what are these companies doing right? According to the paper, the eight key
reasons these companies are succeeding are because they:
1.Have a unique perspective on risk. A majority of the entrepreneurs
indicate they believe entrepreneurs are born, not made. This explains
their passion to identify an unmet need in the marketplace and then set
out to solve it, versus their counterparts who either miss the need
altogether or see a need and conclude someone else could or should solve
2.Communicate their vision and instill passion in great teams. Regardless of
their position in the marketplace, these companies overwhelmingly cite
people as their leading priority. This is not simply a generalized focus
on the workforce. The findings reveal a strong concern for the individual
employee among entrepreneurial companies. This is in sharp contrast to
well-established global companies, many of which have been more interested
recently in implementing efficiency and productivity increases that
translate into headcount reductions. In addition, where entrepreneurial
companies really differentiate themselves is in their ability to
communicate their vision and instill their passion. More than 40 percent
cite this as their biggest strength.
3.Demonstrate resilience and rapid recovery. Everyone makes mistakes,
including successful entrepreneurs. More than 30 percent of the
entrepreneurs acknowledged having made one or more bad decisions or
encountering significant difficulty in execution. But while all businesses
make bad decisions from time to time, the best entrepreneurs and their
teams seem to be more resilient. Encountering obstacles, they are able to
set a new course and rapidly recover — perhaps being able to react much
more nimbly than their large corporate counterparts and to learn from
mistakes to avoid making them again.
4.Embrace innovation. Entrepreneurial companies are the predominant sources
of radical innovations. While older and larger companies can also innovate
effectively, more established companies tend to resist radical innovation
that might displace their existing revenue streams in the short term.
Successful entrepreneurs know that their agility and propensity for
innovation can make them an attractive investment, acquisition or
5.Do what they do best. High-growth entrepreneurs focus on the things they
do best and appropriately partner with other, often larger corporations,
to carry out certain infrastructure and technology needs, administrative
functions, sales channels, manufacturing and distribution and regulatory
compliance. This enables more rapid, flexible and cost-effective
scalability as the business grows.
6.Pursue geographic expansion. The majority of the entrepreneurs indicate
they are continuing to expand their businesses in domestic (U.S.) markets,
while more than 20 percent indicated they are expanding in developed
global markets. Many, especially those with revenues greater than $1
billion, indicate they are expanding into emerging global markets.
7.Secure the right capital at the right time. The entrepreneurs report
accessing a wide range of funding sources as they have grown their
businesses. Nearly half report raising venture capital, angel investment
or private equity. Roughly a third cite the use of personal funds, while
another quarter access bank loans. And, 16 percent received funds from
friends and family. Few indicate they have accessed government grants –
perhaps due to the risk- reward tradeoff involved in paperwork and
compliance, continued volatility in the rules, concerns about government
disclosure requirements or simply the length of time it takes for such
grants to be completed.
8.Preserve what they've built. Successful entrepreneurs look to preserve
those company qualities that made them a market leader. Their four top
concerns as they are grow and mature are preserving company culture (52
percent), attracting and maintaining top talent (44 percent), protecting
and enhancing brand and reputation (38 percent) and retaining best
customers (30 percent).
"Our Entrepreneur Of The Year finalists and winners have 'cracked the code'
for achieving extraordinary growth in challenging economic times," comments
Bryan Pearce, Director, Entrepreneur Of The Year and Venture Capital Advisory
Group, Ernst & Young LLP. "Their exemplary way of doing business creates jobs
and enriches communities while demonstrating how it is possible to defy the
gravitational undertow of economic stagnation."
To view the full report, please visit: www.ey.com/DefyingGravity
About Ernst & Young's Entrepreneur Of The Year
Ernst & Young's Entrepreneur Of The Year is the world's most prestigious
business award for entrepreneurs. The unique award makes a difference through
the way it encourages entrepreneurial activity among those with potential and
recognizes the contribution of people who inspire others with their vision,
leadership and achievement. As the first and only truly global award of its
kind, Entrepreneur Of The Year celebrates those who are building and leading
successful, growing and dynamic businesses, recognizing them through regional,
national and global awards programs in more than 140 cities in 50 countries.
For more information please visit:
About Ernst & Young LLP's Strategic Growth Markets practice
Ernst & Young LLP's Strategic Growth Markets (SGM) practice guides leading
high-growth companies. Our multidisciplinary team of elite professionals
provides perspective and advice to help our clients accelerate market
leadership. SGM delivers assurance, tax, transactions and advisory services to
thousands of companies spanning all industries. Ernst & Young is the
undisputed leader in taking companies public, advising key government agencies
on the issues impacting high-growth companies and convening the experts who
shape the business climate. For more information, please visit us at
ey.com/us/strategicgrowthmarkets, or follow news on Twitter at EY_Growth.
About the Kauffman Foundation
The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that
works with partners to advance entrepreneurship in America and improve the
education of children and youth. Founded by late entrepreneur and
philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City,
Mo. For more information, visit www.kauffman.org, and follow the Foundation on
www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.
About Ernst & Young
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services. Worldwide, our 167,000 people are united by our shared values and an
unwavering commitment to quality. We make a difference by helping our people,
our clients and our wider communities achieve their potential.
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SOURCE Ernst & Young LLP
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