Writing for Business Advice, Guy Tolhurst, a seasoned mentor to entrepreneurs and founder of Intelligent Partnership, offers his take on what startup founders need to do in order to scale-up their company in 2018.
In terms of startup creation, the UK is second only to Silicon Valley – 660,000 companies were established here last year alone. It’s often said that we’re a “nation of shopkeepers”, and that attitude hasn’t much changed in the digital age. It’s just that instead of greengrocers, we have thousands of small firms disrupting and revolutionising every field bar none. Today, we are a nation of startups.
But in terms of graduating from startup to scale-up – from building an offering to seeing it grow exponentially – the UK lags drastically behind its global counterparts, moribund in thirteenth place.
This needs to change. UK entrepreneurs exceed at coming up with bold, ambitious ideas, but often, I think, lack the financial nous and resilience to see them flourish into world-beating organisations.
It’s all very well creating a culture that engenders outstanding startup creation, but something is amiss if we don’t succeed in going beyond that. More importantly, as we face the uncertainty of Brexit, it’s paramount that businesses possess the tools to scale-up and stay up.
Fast growth companies are job engines, and according to one estimate – by banking group RBS – even a one per cent increase in the number of successful scale-ups could result in the UK’s collective payroll increasing by 288,000. Some 99 per cent of UK firms fall in the SME bracket – their future is our future, and they should be treated with fervour.
To grow, it is needless to say that funding is crucial. We recently undertook extensive research which proves a positive correlation between taking on equity investment and fast growth. It seems obvious, but to many it is not.
Often, founders focus on building a great product, but lack the business acumen to understand taking on strategic investment that will see the business blossom. This isn’t their fault. The investment waters are muddied – what is available and from who isn’t obvious.
There exists meagre advice for early-stage businesses with ambitions of scaling up, from both the public and private sectors. According to last year’s Scaleup Institute’s Annual Scaleup Review, half of the firms surveyed identified a lack of support as an impediment, while a third of scaling companies say they lack the appropriate funding to achieve their growth plans.
The answer, as ever, is education. There needs to be a groundswell of information to, not just SMEs, but the investment communities that will foster their growth. We’re attempting to attack this educational dearth face on. Our latest project, 100 Stories of Growth – Capital at Work aims to tell the real life stories – the human narrative – of high-growth firms.
Investment is about more than just money, and capital isn’t limited to finance. The people who work with you, the way they feel about the company, the skills you need going forward, are just as, if not more, important. With the right sort of equity investment and investment partner comes the benefits of capital in all its forms – be it financial, human, intellectual, or emotional capital.
By having authentic, honest accounts of the successes and failures along the path to scaling-up, those thinking about the next step can transpose these learned experiences to their own.
By improving their understanding of when and how to deploy capital effectively, the decisions businesses make are better informed – that’s why we’re encouraging all ambitious businesses to visit 100stories.co.uk to engage with the campaign. I’m hoping this new platform will give hundreds of businesses the inspiration, insight and signposts to unlock their potential, and succeed.
Scaling up is a big step, but with the right tools and support, it doesn’t need to be frightening.
Guy Tolhurst is an entrepreneur, business mentor and founder of Intelligent Partnership
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