Moving from start-up to scaleup is one of the most difficult moves for any business to make. While a start-up has more freedom to figure things out, a scaleup is viewed as secure and on the path towards accelerated growth.
However, as with any journey, there are obstacles which will arise along the way that business leaders need to overcome in order to succeed. Here, I delve into the four most common obstacles scaling business in 2020 will face and how to come out on top.
#1 – Keeping IT up to date
As start-ups become more successful and workloads increase, the demand for up-to-date resources and technologies increases as well. However, investing in modern technology can be a huge financial barrier. Lloyds Banking Group claim that small businesses spend up to £2,440 on their IT start-up costs alone; add to this monthly charges for phones and broadband, and they are spending a hefty sum on technology.
However, investing in technology is crucial when it comes to promoting workplace efficiency which will facilitate the transition to scaleup. Adopting remote communication tools such as instant messaging, conference calls and web meetings, will allow for more flexible working alternatives. Not only will these tools enhance staff welfare and productivity but inevitably minimise office costs.
#2 – Lack of investment
While the level of investment available to start-ups has long been a major barrier to scaling, European start-ups are on the cusp of a golden age. In 2020, it’s predicted that US venture capital firms will grow their presence in Europe by investing more seed funding for new businesses.
In addition to this, there are many government schemes which are invaluable to small businesses in offering great insight for those looking to grow in 2020. The Department for Business, Energy & Industrial Strategy and Start Up Loans offer loans of up to £25,000 plus advice on writing up business plans, as well as free mentoring from business experts.
Realistically, few people like change, but these growing pains are all part of the exciting journey from start-up to scaleup. For start-ups looking to develop, conflicting directions can make it hard to know if your company is on the right path. So, when planning budgets for 2020, focus on being flexible and managing external factors rationally in order to achieve scaleup status.
#3 – Increased competition
The more start-ups that are founded, the greater the level of competition; and 2020 is set to be a bumper year when it comes to the continued growth of start-ups. Although often viewed as a negative, competition is in fact very healthy for start-ups.
Increased competition inspires companies to innovate and focus solely on the goal of scaling up and providing the best service to customers. Having another company challenging you throughout this journey should be viewed as an opportunity to inspire the workforce and boost team motivation.
#4 – Brexit
Unsurprisingly, Brexit will continue to be a huge consideration for start-ups in 2020. There have been consistent fears around a sudden lack of foreign investment, difficulties in recruiting top tier talent, and concerns about accessing European programs. These issues have resulted in more start-ups looking to expand and develop outside of the UK.
However, small businesses can still grow and succeed despite these concerns. To do so, the focus must be on rapidly adapting and learning to manage Brexit’s potential outcomes by working actively alongside European partners. This way, businesses can fortify relationships with investors without concerning themselves with Brexit uncertainties.
The journey from start-up to scaleup is fast paced and changeable. While this is all part of the exciting journey, it also means that any business looking to overcome obstacles must plan meticulously and be as flexible as possible, in order to achieve their goals in 2020.
Andrew Johnson is finance director of PowWowNow