How and Why Red Flag Alert Measures Growth
by Erin Fogarty
Almost everyone has heard of the mythical unicorn company; those that almost overnight emerge from obscurity to dominate the business pages and office conversation, sometimes experiencing just as sudden and spectacular fall from grace. They are often seen as the pinnacle of business achievement and the dream business partner.
Perhaps not as well-known as the unicorns is the more mundane, gazelle companies even though it is they who are more likely to be the perfect customer.
What is a gazelle company?
A gazelle company is a young or relatively young, consistently fast-growing company that is regularly and rapidly increasing both its revenue and employee numbers. To class as a gazelle company, they must have seen revenue growth of 20% or more year on year for at least four years. They will also have started with a base revenue of over £100,000. This rapid growth means that the company will have at least doubled its revenue over the four year period.
This period of sustained growth does not have to be in the first few years of the company’s life, and many are at least somewhat established before they start seeing this level of consistent success. Having had this time to organically build their business and construct internal frameworks can often contribute to a gazelle company’s consistent success and offset the problem of overexpansion and overextension that can cause the downfall of a new and rapidly growing company. As such, they are seen as particularly reliable and desirable companies to both invest in and do business with.
Gazelle companies are often associated with the tech sector, with Apple, Google and Amazon once being noticeable examples, but can come from any sector; food, retail and apparel frequently produce gazelle companies and any sector that is a contemporary ‘growth sector’ is likely to contain gazelles.
Whilst some can see 20% growth year on year for a prolonged period, most gazelles will see their growth slowly decrease as they become a large company that is a force in their local, national, or international market. In competitive economies, the latter is especially true as new start-ups or other large, high-turnover companies see their success and start to directly compete with them. Their proven success also makes them an attractive acquisition for investment funds or market giants who then fold them into their business portfolio.
Why gazelle companies are important
Gazelle companies are seen as an important source of job creation, especially in the entrepreneurial western economies. Whether this is creating jobs in the tens or hundreds within a smaller local economy or in the tens of thousands across the globe.
This is especially true in times of economic difficulty. When economies slow down, as we are currently experiencing, small companies see a massive spike in insolvencies. Each failure does not see many redundancies but gradually the accumulative effect starts to show in unemployment rates. Midsized companies that have been stagnant or are in a sector particularly affected by economic slowdowns, such as construction, also fail in large numbers during these times and each can leave anywhere from dozens to a few hundred people without jobs.
It is rare for the largest companies to fail but in times of hardship, they invariably shrink their workforce, as seen in the post-COVID layoffs of US tech giants.
Gazelle companies also serve as a barometer of industries and areas that are performing well and seeing growth on a large scale, or in new industries that are emerging. This serves to encourage wider investment on a corporate or governmental scale.
Why Gazelle companies can be perfect customers
It is the steady and consistent success of gazelles that makes them such desirable business partners. Contracts with them are likely to expand with their company but not at such a rate that they will outstrip your ability to meet their needs.
They are also usually financially stable and expanding at a sustainable rate which means that they can be relied on to be a source of revenue for an extended period. The reputation that gazelles invariably garner by their success also makes them ideal customers to include in your marketing efforts to attract new business.
Find the best customers with Red Flag Alert
Red Flag Alert is an industry leading B2B data and credit reference agency. We have over 20 years of experience in accurately identifying business distress and predicting growth. Our B2B Prospector Tool allows you to easily find your perfect customers, including high growth companies, by allowing you to select from over 100 filters, including our proprietary growth score.
Our platform can tie seamlessly into your CRM system, feeding data directly into your platform, keeping your records up to date and allowing you to both search for prospects and automatically create records within your system.
As well as these the Red Flag Alert includes detailed reports on every UK company and 360 million international companies, easy-to-understand financial health ratings, a fully customisable company monitoring tool and a fully digital AML compliance suite. Try Red Flag Alert and get a free seven day trial and hunt for a gazelle today.
