Getting a business off the ground brings with it many challenges. And, when it then comes to scaling up, leaders will have to contend with a whole other set of matters. But the hard work is worth it and rewards plentiful.
Only 1% of UK’s SMEs are scale-ups, or firms with high-growth potential, and yet they generate nearly £500billion. That equates to a fifth (22%) of all SME turnover, which is a significant number for such a small proportion of the nation’s enterprises.
By definition, scale-ups are SMEs growing at 20% or more, in terms of employees or turnover, over the last three years. There are around 29,000 of them in the UK today, with a further 13,000 scaling pipeline businesses hot on their heels. Each will undoubtedly be at the forefront of opportunity and coming up with some brilliantly innovative ideas and solutions and disrupting the markets in which they operate.
But how do you move from start-up to scale up? Scaling up a business requires different skills sets to those required to get it off the ground. Here are six key considerations for those business leaders who are looking to transition.
What’s the purpose of your business?
It’s important to understand why your business exists. Most people think it’s for money, but that’s rarely the real reason. Whilst having financial security is important, there’s lots of research that shows the limited effect of wealth on happiness.
One recent study carried out at the University of Bath examines the relationship between income and happiness. It seems that, up to a point and within a specific set of circumstances, money can buy happiness. But beyond that, the relationship between the two becomes much looser and uncertain. There are many more factors to consider.
The one thing that really impacts the happiness, and therefore success of a business, is its purpose. It connects your team, provides structure and gives everyone a common drive towards shared goals. People that work in a company that has a sense of meaningful purpose are happier and more productive, which gives a business a better chance of success and growth.
A recent study found that happy employees are 12% more productive than unhappy ones. It’s the same when it comes to engagement – with those companies with engaged employees enjoying 21% increased profitability than those who are disengaged.
Are you ready to make systemic change?
Real change required to move a business from start-up to scale-up can be messy, difficult and unpredictable – and business owners and leaders need to be prepared for that.
It takes courage and a certain amount of risk to move to the next level – to be ready to take an honest look at how your business is run, at what’s good and what needs to be better. Why are you working the way you are? Are your processes what they should be? Are you doing things the same way you’ve always done them, or are you imitating others?
One of the most recent and sizable systemic changes to UK businesses is the challenge to working time. Most work Monday to Friday, in a 9am to 5pm cycle. But the growing momentum of the four-day workweek – which was permanently adopted by Tyler Grange following a successful pilot – challenges what’s been the norm for decades. As a result, productivity and employee happiness have significantly increased and tiredness and absenteeism are down. But it doesn’t have to be a four-day week – it could be any work pattern that’s more relevant to how we live our lives today.
So, what are your standard practices and are they in need of a shake up? You really need to think about this one, because changes in the workplace are being made at a dizzying pace. You must adapt or you will cease to be relevant, and you put your business at risk.
Are you committed to ESG and social impact?
ESG is a not only a way for your business to become more efficient, gain entry to new markets and win new customers. It also has a major role in shaping society and how we live. So, it’s the responsibility of business founders and leaders to find ways to do help it to thrive and, by doing so, they’ll go a long way in delivering on their meaningful purpose.
Gone are the days when you could sit on the side-lines and leave Environmental, Social and Governance to politicians. ESG is the new politics of business and employees, clients, suppliers and partners are all demanding that business takes it seriously.
By not having a strategy in place to deal with these questions, then recruitment, sales and purchasing becomes much harder than they need to be. Once developed and shared, a sense of purpose will be created that goes far beyond financial gains – providing businesses with the security and ability to grow, whatever obstacles are thrown their way.
Do you place equal importance on your employees’ physical and mental health?
Those scale-ups that shift their thinking towards how they can help their people thrive will see the biggest impact and return on investment. With mental health becoming the defining issue for HR professionals nationally, addressing it head on is crucial for growth.
Nearly one in five UK adults have had to take time off work in the past year due to stress. A recent study suggests that the UK risks being a ‘burnt out nation’ because of it, and another cites that work-related mental health issues have doubled, and now cost the nation’s businesses £118billion annually.
Radical change is needed to combat this surge and we must put in place more effective measures to safeguard those who are struggling. They should be at the very core of a company’s retention and reward strategy and shouldn’t be undertaken by enthusiastic HR departments with little experience.
I’m sorry, but mental health first aiders and wellness apps just won’t cut it. Instead, employees should be provided with real support and real initiatives that can make a difference to their mental wellbeing, as well as improving their physical health, motivation, morale and productivity.
A growing number of businesses are providing employees with easy access to in-house psychologists and counsellors – an investment that will benefit for years to come. And it’s not just the big firms. We appointed an inhouse psychologist at Tyler Grange and reduced absenteeism by 70%. Let that sink in.
Looking after employees can really drive your growth journey and, by taking the same people with you, you’ll reach your milestones much faster. It also means you’ll be able to move away from the day-to-day and get that strategic thinking time, which is so vital to driving your business forward.
By not doing so, business growth slows down growth and can even fail – with the issues generally starting with the founders. It’s important to get the right advice from qualified professionals – well-meaning support from amateurs has the potential to do a lot more harm than good.
Is your company culture clearly defined?
It’s incredibly important to nail your culture. It provides our ultimate competitive advantage, and yet it’s so often poorly defined. Far from another corporate buzzword, culture is the embodiment of the attitudes, behaviours and values of everyone who works at a company – laying the strongest foundations for its long-term success.
Ask yourself why you exist as a business, and what do you stand for? If you can’t answer these questions then how will your customers, recruits and suppliers know if you are the right fit for them?
It’s much easier to run a business that has a strong aligned culture and, by nailing it, a business becomes much easier to scale. As the famous management consultant Peter Drucker is often quoted saying. ‘Culture Eats Strategy for Breakfast’. I think he’s right.
Does your business plan reflect the world around you?
We live in a dynamic and ever-changing world – one where planning with foresight will get you ahead. However, be careful not to ignore the market around you.
Flexibility really is the key to scale-up success. Thriving businesses tend to start with a great idea but are not afraid to move away from the original plan. To quote another famous strategist, the German field marshal, known as Moltke the Elder, “no plan survives first contact with the enemy”. In world of business, this means that as soon as you write a plan, it’s out of date and needs to be revised.
It’s important to recognise that what you start out doing may not be where the business ends up. So, plan but be prepared to pivot your proposition or product when required. Adapt your plan as you go – a strong direction of travel is far more important than a rigid route.
Tyler Grange employees over 100 people across its seven-strong UK office network. It’s a member of the All-Party Parliamentary Group on ESG, the Better Business Network and supports the Better Business Act – all of which promote a cleaner, greener, fairer future for all.
