SEO & Content Manager
Is your overall business goal to exit through an acquisition - or go public? If so, you’ll need to hatch a plan to grow, whether that’s by scaling up or a more traditional growth strategy. In this article, we explore the things you need to think about when getting into gear to scale.
Two basic questions to ask yourself:
Is my business suited to scaling up?
Scaling up is about growing customers rapidly while keeping costs at a minimum. This means that in order to move from startup to scaleup, you need to be past the totally experimental stage and fairly confident about your return on investment (ROI).
Not all businesses are suited to scaling up. A scalable business needs to be capable of expanding rapidly and increasing revenues without increasing costs.
Am I ready to move from startup to scaleup?
If you’ve figured out what works and you’re able to grow rapidly without taking too many risks, read on, but beware: scaling too quickly can lead to disastrous consequences, so you need to think carefully about timing things right. Examples of when you may be diving in too quickly include:
- If you’re acquiring more customers than you can keep up with
- You don’t yet have solid traction in the market
Problems that seem small now are going to get much bigger as you grow (and more difficult to fix). And if you start to attract bad online reviews, the reputational damage can be difficult to recover from.
If your business is suited to scaling up and you’re ready to get things in motion, it’s time to look inwards and assess your current situation in more detail. Thinking about the following questions can help:
Do you really know your customers?
Understanding your customer base is critical to any business. This will dictate a lot of the decisions you make as you grow and ensure you focus your resources in the right place, from product development, to branding and how you market to and communicate with your audience. So, if you feel like you're not quite there yet, perhaps it’s time to spend a bit more time researching the market and testing ideas, before making further plans to expand.
Have you got the leadership support you need?
Running a scaleup is very different to running a startup. It involves different leadership skills, behaviours and responsibilities. So, as well as bringing on the right talent to run different areas of the business, it’s also important to think about the support you need in your role as a CEO. This could involve appointing a chairman, non-executive director or a mentor.
Having someone else with experience to support you will make the journey less daunting and help you make tough decisions when you need to.
How’s your company culture shaping up?
It’s an easy aspect to forget about - particularly as the culture you’ve created up to this point will have developed organically, by and large. But one of the biggest challenges of going from startup to scaleup is retaining the culture that you've created with your smaller team. So, make sure you have a clear idea of the culture you want to foster and how to maintain it. You’ll need everyone on board - coming up with a list of values and leaving it at that isn’t going to cut it.
The UK isn’t a bad place to be if you’re looking to build your business; it’s fourth in the world for scale up investment and first in the world for fintech scale up investment. Yet despite this, UK scaleups face a £15 billion gap in demand for capital to grow business versus what’s available.
The bottom line is, you can’t grow without capital. And although scaling up is about increasing revenue without a significant increase in resource, you’ll likely still need it for a number of reasons related to scaling up: to diversify your product range; for marketing budget; for hiring new team members and investing in the technology you need to run things.
Keeping a close eye on your competition gives you insight into the prevalent currents in your market. It also helps you to avoid their mistakes and keep your ideas fresh. When it comes to scaling, study those competitors which are growing and flourishing. You could even ask their advice. It can be a mistake to isolate yourself totally from your competitors – they’re not your enemies.
Drawing up your business plans
Where would you like to be in five years time? How will you get there? What are your USPs, which markets could you potentially engage with, and what are your business’s most scalable points? How could you make the most of all this? Knowing the answers to all these questions is essential, and they should all be addressed in your growth plan, which is similar to your business plan, but - you guessed it - with a focus on growth.
Customer acquisition strategy (sales and marketing plans)
Customer acquisition is a key aspect of business growth. As touched on earlier, it’s imperative that you understand your market and which acquisition channels reach your potential customers most effectively. Do they respond best to PPC, social media advertising, or a more personal sales approach? This should also be coupled with an understanding of the marketing needed to support these approaches and what return on investment (ROI) you can expect for each.
So far, you'll have probably financed your operations through some combination of savings, friends and family, or perhaps some angel investment. But once it's time to scaleup, you're probably going to need a further cash injection. Need a refresh on startup funding? Check out our simple guide to the startup funding timeline.
Building and managing your team
As a founder, you've probably been involved in every business decision made about every area of your business up to now. As CEO of a scaleup, it’s important to relinquish some of this control.
Taking your business to the next level means bringing in new people and teams to run different operations. Scaling is all about building out the key areas of the business that will support your product and service as your customer base increases.
A strong, diverse team with a growing range of skills is the best asset you can have when scaling your business. So, while you'll still be around to oversee things, you have to be prepared to delegate. Some entrepreneurs find this tough, as we’ve discussed in our blog on making the tricky step from founder to CEO.
We've made buying insurance simple. Get started.
- 22 January 20214 minute read
The future of health, wellness and medical tech is looking bright. Here are 9 innovators we are excited about.