Last week’s news that UK is second only to Switzerland in the The World Intellectual Property Organisation’s (WIPO) global innovation index is a notable achievement. It is a welcome accolade for our thriving SME and start-up scene that has been showing rapid growth recently.
Looking beyond the headlines, SMEs account for 99% of all UK businesses. They are a crucial part of UK economy and according to findings from the British Business Bank are responsible for 60% of national employment and almost 50% of turnover.
This huge swell of businesses is what is responsible for our rise to second in the global innovation index. However, should it be surprising that we’re second, or that we’re second to Switzerland.
More pertinently, what have the Swiss got that we don’t? The answer is nothing so, while commendable, we shouldn’t be back slapping too hard right now. What we should be doing is looking at how we can reach number one, and how we can stay there. In order to do this, the next step for our burgeoning collection of SMEs is scaling – taking our businesses from good, to great.
The Scale-up Report on UK Economic Growth, which based its findings on an analysis of 50 Scale-up programmes piloted in 20 different countries predicted that “scale-up” companies could “contribute a million new jobs and an additional £1 trillion to UK Economic Growth by 2034”. Here are five things you should consider when looking to scale:
Understand your market (and how it is changing)
The fundamental areas you knew when you started your business have most likely changed, which poses some critical questions. What do your ideal customers looks like now?
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How has your company evolved? What does the competition look like now? You need to take a look around and reaffirm yourself with your market. By doing so, you will also see who has already scaled and how they’ve done it. That way you can get a grip on what sort of investment you’re likely to need to exploit those bigger opportunities.
Have the ‘right’ kind of money
There’s no denying it, scaling requires money so you will need two things – either a massive cash war chest or investment from another source. This is key because there are a myriad of financing options out there and you need to pick the right one for your business and your goals.
If you don’t know the difference between crowdfunding or business angels then you need to learn, fast, as there is every chance your decision here will make or break your attempts to scale your business.
Shop around – there are many options. There is never a ‘one size fits all’ funding source and what has worked for your competitors, may not work for you. That is why we set-up the Business Funding Show, which is backed by some of the UK’s most celebrated entrepreneurs like Richard Reed (Innocent), people who have successfully scaled businesses and contributed to the UK’s ‘scale-up economy’.
Evaluate your processes
Scaling, like any aspect of business, rarely follows initial plan. Anything from a change in suppliers to uncontrollable economic factors are likely to play a role and you need to be able to adapt.
When you get to scaling stage, you will also have many aspects of the business to consider – from product development to sales. This means juggling lots of balls. Serial entrepreneur and CEO of British electric car charging company POD Point, Erik Fairbairn summed it up well, “Each time your business doubles everything seems to break; your sales process, finance processes, management information flow, so every time your company doubles in size, you end up re-designing every process you have.”
Scaling will require more people, but you need employees who buy into what you’re trying to achieve and know that your company has forward momentum. It could also mean adding in a level of middle management you simply didn’t need before.
Also, bear in mind that you might need to hire to help you scale. Do you need people to carry out your existing operations, freeing up your senior people to focus on growth, or do you need experts in other markets to support overseas operations? You need to ask yourself if the existing leadership can scale the business or if you need to bring in experts.
Think Big; Act Bold
This doesn’t mean delusional daydreaming. Chances are, that if you’re looking to scale, you’ve got your business to a decent place already. The key here is strategically taking your business to the next level.
If you have a £1m business, why can’t it be £10m? Scaling is your opportunity to put the boosters on what you have built so far. You probably had reservations when you started and look how far you have come so you should have no fear when it comes to taking the next step.
Further reading: What US VCs look for in European start-ups