Every parent knows that it’s a lot easier to create a child than it is to raise one. But while there’s been a lot of talk about supporting entrepreneurs and their start-ups over the years, there hasn’t been a great deal said about how to nurture your baby business into a fully productive, adult one.
It’s an area in which Sherry Coutu, angel investor and entrepreneur, thinks the UK is sorely lacking. In her report, The Scale-up Manifesto, she suggests that the government should be offering more support to those companies looking to scale up, rather than just those looking to start up.
So what is a scale-up? As defined by Coutu, it’s an enterprise with more than 10 employees that has an average annual growth of more than 20% over a three-year period. And according to the report, a one per cent increase in the population of scale-ups could create an additional 238,000 jobs – and give the UK economy a £38 billion boost.
If you’re a start-up that’s ready for the next step, expansion can be an exciting time. But it’s not something that you should rush into. Here are five simple tips to help you nurture your baby into a mature, successful company:
1. Make sure you’re ready
Let’s be clear – if your business isn’t enjoying comfortable profits or consistent demand in its current state, you might want to think twice about trying to grow. In a survey of over 3,200 start-ups, 74% were found to fail due to premature scaling. So it’s important to be sure that it’s the right time.
It’s no good lining up new clients with huge orders if you don’t have the infrastructure to handle bigger volumes. Wherever you can, automate processes such as your sales, bill-paying, and databases. While you’re usually limited by the size of your team, automated process are scalable, so get as many parts of the chain automated as you can and get used to working that way on a smaller level first.
And if you’re still a relatively young enterprise, it’s never too late for some extra market research. Get some customer feedback about your products and services and how they could be improved. Test out a few improvements you’ve been working on and take the time to perfect your marketing efforts. It’s much less risky to play around with things now, before the stakes are raised.
2. Find multiple sources of capital
If you’re going to grow, you’re going to need funding. And while a start-up might not need much more than a couple of thousand pounds and the drive of a visionary entrepreneur, scaling up is a whole different game. You’re going to need much more capital this time around, and it might be far quicker and easier to get if you piece it together from a few different sources.
Aside from smaller sums generally being easier to get hold of, you could find that winning funds from different places is an advantage in itself. Private investors are much more inclined to take you seriously once they learn that you’ve passed the close examination of a reputable lending bank, and your own employees may even be willing to buy some share options once the professional investors have cast their vote of confidence.
3. Learn to love networking
No matter how good your products and services are, you can’t ignore the advantage of knowing the right people. If you want to scale up your enterprise, you’re going to need new clients, new partners and the best new recruits. And while a dedicated marketing campaign can get you all of these things, sometimes you can quickly hit the jackpot with just a little networking and it’s usually free.
You’re also going to need to find investors – and once you’ve found them, they’ll need convincing. No matter how small your enterprise is, it pays to look like you know what you’re doing, so do what you can to look established. Start building an online presence and hire out a professional meeting room for any important investment pitches.
4. Step away from the core work
We all know that the founders of small companies have a massive influence on the quality and productivity of the business. But if you want to see your baby grow, you can’t spend all of your time taking sales calls or processing invoices.
Select responsible employees, delegate to them, and train your staff to manage themselves. And once you’ve trained them, put them to the test by taking a couple of weeks’ holiday, or spend a week at home working on your plans for growth. You might not be thrilled when you return to learn that you’re no longer needed, but you should now be free to work on the larger strategies of expanding your enterprise.
5. Take your time
While you’d probably be delighted to see your business taking off in a flurry of unexpected, rapid growth, it’s probably more of a sign that things are about to get out of control. It takes time to grow a business while retaining the strength and solidarity of a smaller company, so don’t get ahead of yourself.
Research, test and develop new ideas or routes into new markets. With every step forward, remain objective. Ask how your business could sustain itself at the current pace. Is your cash flow still healthy? Are you still delivering everything on time? Are you still set to turn a profit? If you’re satisfied with your answers, then it’s time for the next step. If you’re not, you’ve still got some work to do before you keep scaling up.