Mapping: Temporary growth – by 2023 the gazelles will be fewer


This year’s recovery for the Gazelles is predicted to come off next year in an increasingly tough environment. The hardest hit are industries such as construction, consultants and business services, while new growth opportunities exist in energy and trade. At the same time, Gazell companies’ ability to create employment becomes even more important in a recession.Published: December 5, 2022, 10:45 p.mAfter three years of reduced number of Gazelle companies, this year the trend turned upwards again when 745 companies passed Di’s requirements to be named one of Sweden’s fastest growing companies. Last year, only 698 companies passed the same requirements. The support programs for Swedish business during the corona pandemic became an effective airbag that allowed many companies to survive and come back. A rapid recovery of the industrial economy and last year’s strong GDP growth have therefore favored the emergence of more Gazell companies again. The majority of the 21 county winners in this year’s Gazell competition also state that they continue to grow. Despite that, this year’s recovery is predicted to be short-lived.”It looks bleak now, so even if many companies manage to continue their growth journey and become Gazelles next year too, there are many more who will see the increasingly tough macro environment with record inflation, rising interest rates and increased costs for, among other things, electricity and fuel eat away at profitability. One of the requirements to become a Gazelle company is that the total operating profit for the last four years is positive, which can be difficult to achieve for many companies, so we therefore have to count on fewer Gazelles next year,” says Per Weidenman, senior analyst at the decision support company Bisnode which is the Gazell competition’s data supplier.It will be tougher for industries which is dependent on strong demand in the domestic market. In the wake of the pandemic and the Ukraine war, the cost increases negatively affect demand. “We are experiencing a cost shock so people are now preparing for a recession, which slows down domestic demand. Gazelle industries such as consultants and business services that deliver services to large Swedish companies are among the first to be hit when companies have to shrink their suits,” says Per Weidenman. And when the trade association Byggföretagen’s economic forecast says that the construction industry is facing a tough winter mainly due to reduced housing construction, it also affect Gasellistan’s largest industry.This year, nine out of 21 are county winners a construction and contracting company, no other industry comes close. An impressive result despite the fact that the introduction of the amortization requirement in 2018 has halved the number of fast-growing construction companies in Gasellistan. “The industries that dominated Gasellistan just before a crisis will also be the ones that are hit hardest in the economic downturn. Now in the crisis after the economic peak in 2018, it is construction, consulting companies and business services that are having an extra tough time,” he says. But there are glimmers of light and resilience. Common to many Gazell companies is a low level of indebtedness. “Because Gazeller has a greater degree of self-financing, it now also has a better position than companies that are highly leveraged when the interest costs drag away. Now there is little time for dividends, pay-back, for a more cautious financial strategy.”Crises also create new business opportunities. Already this year, several Gazelles active in electrification and energy supply are on the list. One such example is this year’s Supergasell Minnovation, which provides Northvolt with expertise in operating the battery factory in Skellefteå. “The Gazell competition is a competition in entrepreneurship and the Gazell entrepreneurs have shown a good ability to adapt to new circumstances and seize new business opportunities even in a downturn. With large societal investments in, for example, the energy transition, there will also be more entrepreneurs who see new opportunities and succeed in creating growth, and then it will be Gazelle.”Another winning industry are the trading companies. According to Per Weidenman, there is still more growth in e-commerce. Already in this year’s Gazelle competition, you can see how consumers’ changed and more digitized buying behavior accelerated by the pandemic has created more fast-growing trading companies. It has overtaken the consulting companies and IT companies and is now the second largest Gazelle industry. The last time it happened was in 2016. Gazelle companies also have an important role in creating employment in the Swedish economy. The fast-growing companies make up only one percent of Sweden’s joint-stock companies, but account for four out of ten new jobs in the private sector. This year’s Gazelles have together created just over 10,500 new jobs in their companies during the measurement period 2018-2021. This year is also the first time that the percentage of new Gazelle companies on the list accounts for over half of the job creation. “This is a positive finding because it shows the power of growth in the companies four years before they are designated as Gazelle companies, this is when labor is most needed to cope with an expansion that produces rapid growth. So favoring the growth of new Gazelle companies also benefits the Swedish economy, which is good for everyone,” says Per Weidenman.

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