You have finally found a working business model, proven it in practice and now have a good financial record. You are investing heavily in growth, no longer needing to experiment with product features or even your audience. You are scaling-up.
The scale-up phase is one of the most pivotal points in your business. The decisions you make and the challenges you face now will determine the success of your company tomorrow.
With 660,00 start-ups registered in the UK in 2018, it's no surprise that most materials focus on helping start-ups succeed. We're going to look at the universal issues that all scale-ups face, and touch upon how to tackle them.
Growing Pains
All businesses face problems. Challenges that change on what seems like a daily basis. The difficulty for a scale-up is that often, all of these challenges tend to appear at once. Making sure that you take the time to develop a strategy that addresses the most common pain points can secure your long-term growth:
- Sales – As you scale up the pressure to sell grows. Your investors will have expectations of profit margins sitting at around 20%. This figure varies between industries; typically, this is healthy for a scale-up. However, scaling up takes extra investment, those new clients can't be serviced by an already stretched team, and new team members can't be brought in without additional revenues. Investing in the right sales team becomes vital. Sales extend beyond the right person, your processes and technologies all need to be geared towards supporting the efforts of your sales team. Without it, they can't succeed, and you can't grow.
- Team - Your existing team have helped you get to where you are today. They have all played many functions; your CMO probably had to have a role in delivery, maybe even HR. Now you are a scale-up it is time to make sure everyone within the business can focus on what they do best. You can no longer afford to hire people who can do a little of everything; you need an expert in sales or finance who will ensure that area is as successful as possible. Sometimes you'll have to make difficult decisions, is the person who helped get the business to this point the right one for this next stage? It can be incredibly difficult to approach this objectively; after all, you wouldn't be here without them. Developing the right metrics to track success becomes vital for you to make the right decisions about your team.
- Culture – You're no longer a start-up, and that feeling of comradery and we're in this together will start to disappear. Older team-members might not react well to new hires doing work they previously had responsibility for. It can make them feel undervalued. It is crucial for you to make sure the culture of the company remains united in the goal of serving the customer.
- Process – As you scale the operations that worked before will begin to serve you less. Systems that generated effective results will start to show cracks and eventually fail you, the team and your customers. It is essential that you review your processes, developing a scalable infrastructure that supports the growth of your employees and business.
- Communication – Internally, communication as a start-up was never a problem. You all moved together with a united purpose. As you grow, it becomes harder to make sure that each employee has the right direction. Fostering an environment that encourages open communication will help you discover weaknesses that can be solved and ensure the whole business is aligned and empowered to succeed.
- Marketing - Through the start-up phase, you had the opportunity to get to know your customers, what they require and tested how to market to them. Now your business has entered a new stage the way you market also has to adapt. The initial work you have done provides a valuable stepping stone to develop more in-depth strategies. You now need to put your brand into the minds of your customers, making certain they know you are the company that will solve their particular problem or need. Investing in experts who can put together a winning strategy and know-how to execute the plan will yield long-term rewards.
Entering the scale-up stage is exciting; an opportunity for sustainable growth becomes a reality but the challenges and risks of making the wrong choice also scale with the business.
Plan for your growth. Take a step back. Seek the advice of someone who has been through a scale-up, and develop a strategy that addresses a mix of problems that will come your way. Growth is never easy, but the right preparation and having a clear strategy will always yield results.