Business School

Turnover growth and profit

Insight into turnover growth and profitability by sector, which highlights differences between manufacturers and business services.

Growing groups

42% reported no, or declining, turnover growth (no growth) between 2007 and 2010 (Figure 3). 35% had grown moderately (moderate growth – less than 10% annualised), and 24% had experienced fast turnover growth (fast growth – 10% or more annualised). Notably, almost a third of the medium-sized businesses were in the fast growth group. In contrast, only a fifth of the micro businesses were in this group and almost half were in the no-growth group.


There were differences between manufacturers and non-manufacturers. More business service firms than manufacturers were fast growers (26% versus 21%) and fewer were non-growers. Within both sectors, more high-tech businesses were in the fast growth group.

Figure 3: Level of turnover growth by sector and size



Many of the no growth businesses, however, were highly profitable. (Profits here refer to pre-tax profits, including directors, partners or owners' remuneration, but before deduction of interest and tax). About 39% had profits in the last year (to 2010) in excess of 15% of turnover, only 17% experienced a loss. The majority of fast growers grew profitably as well; 43% had profits of 15% or more, while only 4% reported a loss. Most profitable, however, were the moderately growing businesses; 53% had profits of 15% or more and 30% achieved profits of 30% or more. Fast-growing businesses may well have foregone profits for growth.

There were striking differences in profits between manufacturers and business services. Only 29% of manufacturers had profits of 15% or more compared with 59% of business services; 10% had profits of 30% or more compared with 35%. Interestingly, conventional business services – which were much more likely to be modest growers and not fast growers – had higher profits than high-tech business services.

Box 1: Business success - one end of the spectrum
An open question in the survey asked: "How do you see success in your business, and how do you measure it?" Using the software Leximancer, we analysed the responses of CEOs whose businesses had grown in the past three years, had innovated, and were exporting (about 13% of the total). These CEOs had an orientation to growth, were externally focused, but at the same time looked to their business, and especially their employees to serve their customers and markets. There were nuances within this group, however; the moderate growers were more focused on "markets", and were concerned both with their staffs’ moral and wellbeing, while those growing really quickly focused on "customers" and "sales", but mentioned staff less often – perhaps because they were so busy growing.