I’ve seen some amazing tech businesses and entrepreneurs growing and scaling at St John’s Innovation Centre.

A dynamic and supportive environment working to accelerate the growth of ambitious innovative firms in the Cambridge region. Working as a consultant here I’ve also had a unique opportunity to assist a wide range of SMEs from across the East of England. I’ve noticed one issue has been coming up again and again… On many occasions it’s not the money that business founders are struggling with, but the lack of hands on guidance, support to plan their strategy and work on growing their business.

What’s the difference between growth and scaling? I have asked myself this many times and it seems to me it’s to do with the speed of the growth and the ability of the business leaders – their vision and commitment.

To my mind a growth business tends to add resources (people / equipment etc.) as the business turnover grows – the resources growth tends to be in balance with the growing income. A good example is a service type businesses – they need more people as their sales grow as they rely on the personal touch.

A scale up business adds revenue / turnover at an exponential rate – the turnover continues to multiply while resources are added at a much slower rate. Often there are small regular increases in the people / equipment while growth goes off the scale.

Classic scale businesses tend to be software based – the business has injected money into developing their product. Once developed they can increase sales enormously with little extra cost. Scaling allows a small company to become a big company in a short space of time – the entrepreneurs’ dream so that it can be sold for a great sum – there are plenty of great examples, but a lot fall by the wayside.

What are some of the common pitfalls and how can you avoid them to give yourself a better chance of success?
I feel a scale up needs to focus on 4 critical areas: People, Strategy, Execution of that strategy and Cash.

People
Leadership: Fundamental to scaling is the right leadership. Leadership is an interesting area and I think here it is necessary to be able to recognise what you can and can’t do. Classics are the techies who develop a brilliant product – can they bring it to market and run their business? – quite often the answer is no!

The leader needs to know what they can and can’t do well – if you can’t do it well – find the person that can. A scale up business needs a leadership team – they are chosen for their broad range of management skills and their ability to grow with the business. The team need to change and they need to guide the business as it grows. They need to be able to focus on the key things needed to make the business grow and make them happen. I have seen a lot of businesses where the limiting factor is the management.

Delegation (something a lot of founders are not good at – remember I said delegation not abdication) is also a key to the scaling business. Once you start to seriously scale you will not be able to do it all yourself and will need to put in place the right people you trust to manage your ever-growing empire.
Networks / collaborations – Scaling businesses tend to have great networks / collaborations and strong relationships with their customers who they work with to build even greater products. They have a strong supply chain and know who to ask when they get stuck – their Adviser network.

Strategy
Know where you want to go and what the business does well – your core competence.
Scaling businesses look at their business through the eyes of their customers. They understand their own strengths vs the competition and keep their message simple which helps them grow. They also understand their value proposition.

The smartest have longer term (say 5-year) goal and then follow this up with short term steps that lead to that goal and work on 2 or 3 key things. They are focussed on the 2 or 3 key ‘breakthrough things’ that will give rise to the step changes needed to scale.

To really scale you also need to standardise what you do. The product offering needs to be repeatable. Take Google / Apple / Airbnb – you expect the same response and result from each of them when you do business. Your business needs that consistent response. You need a standard repeatable process. As you grow training, IT support all become more important.

Cash
The old saying ‘cash is king’ is right. Without cash the whole business collapses, as a scale up you will no doubt have some tight squeezes with cash but you should see them coming and work to mitigate them.

Scaling up is a challenge but one worth undertaking, get it right and the results can be awesome, just make sure that you have the solid foundations you need to move forward and start by behaving as if you are one already.

ABOUT PENNY
Penny Lord is an experienced business adviser and coach based at St John’s Innovation Centre delivering Enterprise Europe Network services across the East of England. If you need some support and are an innovative company looking to grow and internationalise, there may be some support available to you which is funded by the European Union and Innovate UK. Penny and other consultants in the team specialise in strategic & financial planning, raising funding, working with businesses to develop executive summaries and pitches and the other challenges you are likely to face.

Feel free to email Penny for further information at plord@stjohns.co.uk