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

Nov 15, 2012, 05:00 ET from Ernst & Young LLP

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 26th annual Ernst & Young Entrepreneur Of The Year®  gala in Palm Springs on Saturday, November 17.

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 it.

  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 partnership target.

  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:

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, 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, and follow the Foundation on and

About Ernst & Young
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SOURCE Ernst & Young LLP