Over the past twenty years I’ve worked with numerous scale-up businesses and regardless of sector, there are some common things that successful scale-ups do really well, and as you might expect there are some common challenges that most if not all scale-ups have had to overcome.
Before I share more, it’s worth sharing a few words on what defines a scale-up business. There are countless definitions that are often contextualised to support some form of retrospective published report or growth statistic. Most of the time a scale-up is defined either by year on year revenue growth, employee growth or customer growth, if not a combination of such.
Arguably the best, and simplest, definition I’ve come across, and the one this post is based upon, is ‘a scale-up business is one where revenue is growing faster than costs.’ A business where revenue and costs are growing at the same rate is a growing business rather than a scaleup business.
10 things that scale-ups might consider.
1. Storytelling is such a crucial skill – the most successful businesses are great at this. If you can't easily describe what you do and why you do what you do, you can't tell prospective customers why you're different, and you will find it so much harder to beat your competition, succeed and grow. Check out Simon Sinek ‘Start with Why’ on YouTube to discover more about this topic.
2. No plan is a plan to fail - If you don't have a scale-up business plan linked to performance outcomes then there is no plan for your success. You’re ultimately 'just doing work' and risk treading the same path and making no progress. It’s important to remember that all business activity needs to have a purpose, over and above best endeavours.
3. Don’t let the technology anchor pull you under – A story I’ve heard countless times. With the very best intentions, you successfully build and deploy a solution for one customer, then each subsequent customer has a slightly different set of requirements to the last, which you code up and release. Then one day, probably when you get to around twenty customers, you find yourself spending more time and valuable resource maintaining what you’ve already delivered than you do ensuring continued growth. If this has happened to you already it can be addressed, albeit the solution is generally difficult and can be costly. Instead consider up front how to make your solution support 200, 200,000 or 200,000,000 customers. There are many solutions and one approach might be how to onboard customers using configuration rather than bespoke customisation.
4. Forget trying to hire ready-made skills, especially for emergent tech – you’re wasting your time as they don’t exist, or if they do then they’re super rare. Instead hire people who demonstrate initiative, can learn fast, and create an environment where they can tap into experts and experiment.
5. Growth isn’t all sales, sales, sales – some might say it is, but only if they are the right kind of sales. Whilst it’s very tempting to accept any sale in pursuit of growth, the wrong sales can create a significant drag and have a detrimental effect on your ability to scale. Identify the preferred customer segments/types that best support your business plan and stick to the list.
6. Forget about the customer at your peril – a common mistake with some scale-ups is that they forget, or deviate significantly from, their original purpose of delivering solutions to address customer needs. Instead they spend a disproportionate amount of time focusing internally on structure, operating models, and business processes. Keep asking yourself, why do we really need this, and will this activity help the business scale faster.
7. Cherish the people that got you to where you are today – don’t swap them out for ‘experienced scale people’. For sure having access to some people with experience of scaling is beneficial, but if your existing people have the potential to grow and continued hunger for success, then invest in their ongoing development and/or link them up with experienced mentors. Their institutional knowledge will be difficult to replace, and with the right help they can grow as your company grows.
8. Go big or go home – a much overused saying, but if you’re seeking external investment to scale your business then set your growth ambitions high and make sure you ask for enough investment to make a significant difference rather than enough for just a small difference. Of course, you will likely have to earn the right to any investment so make sure you are rock solid on points 1 and 2.
9. Avoid organisation bloat – piling bodies into small companies in an attempt to make them big companies overnight is a recipe for disaster. Scale your team at a pace the rest of the organisation can handle, hang on to that founder’s mindset, stay nimble, control costs, and be agile. If you’re not sure if a role is absolutely right for your business then instead of hiring a permanent head, bring in a temp with relevant expertise, it’s easier to change if you find the role isn’t delivering what you expected.
10. Never be afraid to ask for help and advice - maximise the rich business ecosystem that’s available across the North East. There are literally hundreds of meetup and business support groups that anyone can readily access. I’ve worked with large business, scale-ups and startups, across private, public and third sectors, and without exception, the people from North East’s business communities are supportive and willing to give up some of their time for a chat over a coffee.
This post was originally featured as part of Bdaily's Startup Awareness Week