It takes a specific type of person to set up their own business. Ambitious, passionate and switched on, some of the smartest people you’ll meet are entrepreneurs. But being smart and having the drive to succeed don’t make you immune to bumps in the road. In fact, it may be the opposite – throwing yourself fully into making your idea a reality may make things harder for you as you continue to scale and grow.
Don’t run before you can walk
Growing a business is a very exciting time for an entrepreneur, but growing too fast can be hard at best and lead to failure at worst. A feasible scale-up plan needs to be devised, where there’s enough budget built in to be able to adapt it to meet new or unexpected business needs.
No growing venture is going to perfectly execute their business plan.
However, there are a few things entrepreneurs should consider before putting their scale-up roadmap into place, to avoid potential catastrophe. Ensuring the right infrastructure is in place is key. Outgrowing the sales system, record keeping method or even office space means a company will have to upgrade, which can be costly, so it makes sense to check all business functions are scalable before the company accelerates its growth.
Also making sure there is a good support network in place to help identify and resolve any potential risks will be invaluable to a scaling business. Using other-people-who’ve-been-there-before’s experience – whether they be an investor, former colleague or even a entrepreneurial friend – can help a business avoid some of the basic pitfalls or remedy any issues incurred as part of the growth process.
Access to funding
It’s an obvious challenge and one that you’ll probably be familiar with as a reader of Oliver*, but to successfully scale is extremely costly.
The amounts involved run into the millions, which means scale-up businesses have traditionally been at the mercy of VCs and Angels to get the funding they need. With a turbulent financial landscape in the UK, which has been exacerbated by Brexit, there has been a decline in readiness from institutional investors to commit.
However, it’s not all doom and gloom. Although they may be inclined to commit less funding to a round,
institutions are becoming more collaborative with alternative finance platforms,
widening the potential pool of investment. Companies raising via a mixture of institutional and crowd sourced funding have been known to get a surplus of investment, deciding to take an overfund and have some well needed extra liquidity to act as a buffer as they put their expansion plans in place.
Getting the right people on-board
One of the hardest things about growing a venture into a scale-up business is letting go. Unfortunately, to succeed entrepreneurs can’t have an in-depth involvement in every aspect of their business. This is why smart talent acquisition is crucial.
Founders must not be tempted to hire someone ‘just because they are there’. It’s far more beneficial to hold out for the right person, who has the skills and passion needed to grow the business. This can sometimes take months, so entrepreneurs may need to outsource some operations on a contract basis to keep things ticking over.
The benefits of having someone who really wants to be part of a scale-up business will be crucial to successful growth,
as an alignment of goals across the team will help achieve a smoother delivery of the growth business plan.
Enthusiasm is key, but they also need to be able to connect you with the right people. By employing someone with a strong industry network and proven track record in their field, entrepreneurs can optimise their access to further talent and industry advice.
Although there are many challenges for scale-up businesses, those who overcome them grow to be some of the most recognisable names in UK PLC – remember TransferWise, Zoopla and ASOS all had to start somewhere.
About the Author – James Codling
James co-founded VentureFounders in 2014 with the vision of giving ordinary investors access to early-stage opportunities that were previously out of their reach. A dynamic and driven entrepreneur, he wanted to create a new type of equity investment platform; one that gave investors the ability to co-invest in exciting British businesses alongside leading institutional and Angel investors and that aligned itself with its investors to drive longer-term value creation.
As Managing Director, James oversees all aspects of the business, with a particular focus on sourcing, vetting and advising companies that are looking to raise finance through VentureFounders. James has 15 years of private equity experience, having previously held investment roles at J.P. Morgan and Montagu Private Equity. At Montagu, James held directorships in a number of their portfolio companies.