Rob Stone, below, whose rags-to-riches story has seen him create and grow the Instaloft brand from a small start-up to a £14 million turnover empire in seven years, is keen to help aspiring entrepreneurs on their own journey to success. Here, he gives his top five steps from start-up to scale up.
According to the ScaleUp Institute, scale-ups are the engine drivers of local economies, creating high quality jobs and apprenticeships, and driving innovation. On average, they are 42% more productive than start-ups or larger firms. A scale-up business is defined as one which has increased turnover and/or employee numbers annually by more than 20% over a three-year period. Despite the huge contributions these businesses make to both local and national economies, the transition from start-up to scale-up can pose a number of challenges, calling for a different approach to that of getting your business off the ground in the initial start-up phase. Here are some key factors you should consider when planning this transition, to ensure your business has the right infrastructure and resources in place to scale and grow.
Stress test your business model
Transitioning into the scale-up phase requires you to ensure your operating model is fit for purpose as you onboard new employees and grow your customer base. Having a strategy in place and carefully considering the impact growth will have on the running of your business and the resources you have to hand is vital to a smooth transition.
Cashflow is the lifeblood of your business, so naturally your priority should be to ensure you have the necessary financial foundations in place to handle increases in costs and other expenses associated with a growing firm. Planning for future growth early on, including employees, inventory space and finance, will mean addressing these issues before they become debilitating and endanger your expansion.
Formalise systems and processes
Sustainable growth can only be achieved if you have clearly defined systems and processes in place for the major functions of your business. This allows operational efficiency, keeps the focus on driving the business forward, and means you can replicate your onboarding process of new hires.
Identifying where you can automate repetitive and time-consuming tasks is key to maintaining efficiency. Key functions such as marketing campaigns or administrative tasks such as payroll can all be automated and optimised. As you establish processes for your business, it is important to document them and make them easily accessible and understandable. This will allow them to be easily replicated through the entire business.
Create leaders and define roles
When first starting out in business, the chances are both you and your team were responsible for a host of functions ranging from selling, marketing, administration and everything in between. While this is vital in the early stages of a business, as you look to expand, you need to consider how you will define roles and teams to divide responsibilities and functions in an efficient way.
Similarly, while it might be painful as an entrepreneur to relinquish control over certain aspects of day-to-day running, recognising your limitations is important to achieving business growth. Allowing people to take on management and leadership roles is what will enable you to build a scalable, corporate structure, and keep you focussed on the business, not simply in the business.
Diversify the business
As your business starts to grow, it is crucial not to become over-dependent on a single customer or client for your revenues. While serving customers well can of course lead to more business, your firm should not live or die by a small handful of customers or clients.
Scaling a company successfully means constantly being on the lookout to diversify your customer base and develop new business. This likewise applies to your revenue streams. In competitive industries, it is vital to develop new products and services that give you a competitive edge, and future proof the earning potential of your business during uncertain times.
Create a company culture
Establishing a successful business past the start-up phase requires recruiting and retaining the best talent, and the most effective way to do this is to have a positive company culture.
Finding the right employees can be a huge cost to the business, so having a well-defined culture within your organisation will help you identify candidates who personify these values, and can grow and develop with the business. Beginning to strategically manage human resources as your company starts to expand will pay off in the long run, and ensure you keep the right people for your business.
It is natural that a company will experience growing pains as it makes the transition from a small start-up to a dynamic scale-up. Being prepared to make the necessary changes, and having a strategy in place early on will make the transition far smoother, and ensure you are expanding in the right direction.