Business development 15 September 2016

From start up to scale up:how to find the path of least resistance

scale up
Scaling up is all about equipping yourself for the next phase of growth
Head of UK data communications firm REaD Group, Mark Roy, tells company founders how to successfully transition their business from ‘startup? to a period of sustained, manageable growth.

It doesnt matter how large your business is today, every founder eventually feels their venture outgrowing the term ‘startup. This usually signals a point where your revenues are now more consistent and the future looks bright.

The reality of that phase is that decisions change from being a comparatively simple yes or no? to more strategic right or wrong? maybe and perhaps? scenarios. The skills required for this phase are different that blind and naked ambition that got you here in the first place may no longer be enough to get you through.

Does this sound familiar? If so, you’re probably considering taking things to the next level.Growing a business is not as easy as it looks. There is no easy route to doing it and in most cases you will say goodbye to many of the team that got you to where you are.

Imagine a football team: How many Premier League teams have players from the third division in them? None of course. That doesnt mean that some won’t grow, develop and get better, but sadly most will not.

Growth is all about equipping yourself for the next phase, and you cannot do that without knowing what your numbers are. you’ve got to Know precisely what your target revenue, gross product and EBIT is in year one, two and three of this growth period. Now you know that, your ability to deliver on your objectives can be forecast, measured, tested and tested again.

Stress test those numbers, then get someone else to do the same for you. Remember the old mantra about costing twice as much to make half as much often proved very true but only on businesses that have kidded themselves. If you want to avoid a few obvious bumps along the way, then the three key points below might help.

Cash flow

Growth is designed to increase revenue whilst maintaining, or even growing, margin.But this takes time, and the immediate impact of growth is often initially a stagnation of revenue and a reduction of margin due to increased overheads.

People take time to embed in and deliver never under estimate how long and by how much. Do you genuinely have the reserves to withstand that stress?

Your role

You will almost certainly be the CEO, main revenue generator, financial director, HR and a few more things besides. You will have spent the last few years micro managing your business to the Nth? degree.

Now, you must let it go. Not completely of course, but now you must learn to work in a different way.You must lead as to lead someone must follow.Your business grows and you must grow with it, taking yourself away from the day-to-day operations and turning your attention to strategic business matters.

This prospect will be terrifying those of us that have done it know but without this step-change to bigger? thinking, it just won’t happen.

Process

I hate the word? most entrepreneurs do but without it you are doomed. Being able to manage growth efficiently is critical, and there are no shortcuts.


 
TAGS:

Business Advice