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 doesn’t 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 doesn’t 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.

More will be expected of you from a greater number of larger clients, spending more money on more complex solutions, and you need to deliver.

The process – this new way of working – comes with the knowledge of new recruits as well as that of your existing staff. So managing your staff, keeping them engaged and invested in your goals now becomes an inexorable part of your mission.

Get the process of communicating your growth strategy to your both new and existing staff wrong and there will be no growth, as you will fall at the first hurdle. However, get it right and they will commit with that same ambition that got your business to this point in the first place.

Growing your business is no walk in the park, but with a clear plan on how you are going to reach your end goal, you can find the path of least resistance. In the words of Thomas Edison, vision without execution is hallucination.

Mark Roy is the founder of REaD Group.

Read on to discover the three phases of change you’re likely to go through as a startup CEO. 

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