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With a surge in people setting up their own businesses and apps, and jumping into the entrepreneurial world of Startups and Scale-ups there’s been a lot said about what to watch out for and things to keep in mind when scaling and growing that business.
I’m sure nothing I’m saying here is radical or even that new, but I wanted to summarise my view of what I’ve seen really catch startups out as they transition through the different growth phases.
So let’s go to the start point. You are sitting there in your ‘maybe corporate job’ eating your daily sandwich or healthy tub from one of the increasingly emerging health cafes, when an idea occurs. So you decide to explore it a little further and in no time it’s running along nicely; you’ve got interest, maybe investment, a couple of mates/ colleagues are coming on board and there’s a bit of a buzz.
Increasingly you find yourself putting more into this in the evenings after your day job and trying to work out how to scale it back so you can do more on ‘your thing’. At some point you move to full time and now you are one of the full time entrepreneurs hanging out in Old Street’s silicon roundabout (or somewhere similar) testing your product. So far so good and all sounds familiar? RIGHT?
You put so much heart and soul into your new idea or venture. You often invest your own cash, not to mention time and effort at the cost often of family time, friends and social life that it makes sense to try and learn from others that have gone through the same growing pains before you. But its worth it because you are on to a great thing……and you probably are. Your thing is growing and you’re really seeing massive progress and growth………..So where are the pitfalls? What can you do to avoid dropping off the cliff and being caught out by all those blockers?
I believe that the MAIN GOAL for GROWTH is to enhance the overall customer experience taking into account various aspects of the value proposition, such as the quality of the product and pricing, in line with the market and customer needs. How your company can meet those demands and support the growth internally in a sustainable way, is how you deliver against that.
First – let’s look at a few of the key stats
According to the FSB (Federation of Small Businesses) there are 5.7 million businesses in the UK of which small businesses accounted for 99.3% of all private sector businesses at the start of 2017 and more relevantly 99.9% were small or medium-sized enterprises (SMEs).
This is pretty sobering when we also know that 95% of Startups fail – which means a lot of people never even get through the first gate and into proper growth mode.
Its also pretty scary when you consider that SMEs also account for 3/5 of employment and half of turnover, and it’s an area that we all know is continuing to grow. So if you are one of those businesses that’s moving forward and trying to grow then it highlights more significantly the need to learn from others before you do whatever you can to succeed. (At the time of writing it’s also acknowledged that a significant growth area within these stats is apportioned to those considered part of the gig economy – independent :- consultants, specialists, interims, contractors or freelance and those self employed working and running their own independent income (around 200K increase last year alone)
So whilst these stats are all very interesting why does it really matter?
In short, if we know that so many startups fail to reach a reasonable growth stage then it’s going to impact a lot of people creating more uncertainty in already uncertain times – especially given we know that there are 16M people employed within Small and Medium Enterprises. And of course, no one thinks it’s going to happen to them!
We hear about Scale-ups but what does that really mean?
Surely its just another jingoism and when asked this I tend to agree. Scale-ups are businesses that are in significant growth mode. Generally they have at least 10 or so employees, but can have been around 1 year or 10 + years. The key is that they are businesses that are being impacted heavily by all the factors that affect growth and by default, all the challenges and changes or transitions that go with that – people, culture, tech, systems, process, marketplace, customers location (global vs local etc), demand, regulation etc. (..feel free to contact me with anything else you think scale-up means!)
1) Delegate and build skills
When a business is transitioning through its evolution phases; from startup to scaling mode and then putting down significant roots, what separates them from the rest of the pack is not necessarily how long they been going or how big they are (people or money) it’s HOW they operate and manage themselves, or in simpler terms the maturity of their operating processes.
There is one other key factor, and it usually centres around the founding team or CEO. They have progressed from being jack-of-all-trades / multiple-hats-wearer (that to so many startups will be familiar) and will have moved into a strategic /evangelist role. Sometimes they even recognise the need to bring in a CEO with the skills to do this, but it’s based on a recognition that to grow your business, whilst wanting to hold the reins through all the different stages, its unlikely to bring success without significant support! Hiring the right people who fill skills gaps and compliment your own skillset is critical – no one can be all things, and nor would we ever want to be. This is one of the single biggest blockers to growth that I have seen from startup to scale up. CEOs and Founders grapple to pass down responsibility and delegate or hand off tasks that they feel they can do quicker and better themselves – but it’s false economy in the long term.
“The only thing I fear more than change is no change. The business of being static makes me nuts.” – Twyla Tharp
2) Information Gathering
This breaks down in to a few key areas:
a) Know your target market, audience and their primary demographic traits
Create an avatar of your customers – know them, talk to them, know what makes them tick and why what you are doing is relevant to them and what motivates them – this way you will be able to reach them, communicate in a meaningful way with them and so build an enduring relationship with them. Whatever industry you work in, trends and the way customers interact with you will also adapt and change, and so do their expectations!
As I point out in my Top 10 tips download (See the www.6links.co website for this) – your customer sets the pace and tone of what the market demands.
- Carry out regular customer research
- SWOT the marketplace
- Know your audience and their needs
- TEST YOUR MARKET with prototypes before you create your next product or service
b) Know your competition
There are many products out there doing the same thing and that’s ok, but know why and what you are doing differently. “once an idea gets hot or gets market validation, there may be many entrants in a space. And while obsessing over the competition is not healthy, ignoring them was also a recipe for failure in 19% of the startup failures ”according to a recent research report from CB Insights. Additionally they also found that of businesses being outcompeted 20% or so had no idea what was going on with their competitors. Do your SWOT!
c) Serve your marketplace and not your own interests!
As you build knowledge of your marketplace, test your audience on your (new) proposition and ensure that its something that they want – if you are more interested in solving a specific interest or problem rather than those that serves a market need you will fall foul of the same issue that so many have done before. 42% of failed businesses cited trying to solve a problem that wasn’t really a problem!
“Startups fail when they are not solving a market problem. We were not solving a large enough problem that we could universally serve with a scalable solution. We had great technology, great data on shopping behavior, great reputation as a though leader, great expertise, great advisors, etc, but what we didn’t have was technology or business model that solved a pain point in a scalable way.” – Treehouse logic (failed startup)
3) TIME Management (AND MONEY)
Speaking to a number of businesses going through their growing pains – time was the one area that they all wish they had more of. Digging deeper in to this I uncovered a few key causes for this.
Hiring/ delegations and training – it takes time to find the right people and then you have to train them up to the culture, standards and processes. Granted – when these hires don’t work out, you are back to the drawing board and need to start again but every time this happens you will be sharpening your vision on what you are really looking for.
Its widely acknowledged to be time and energy sapping, and often it seems easier to just do the job yourself instead of delegating or training someone up on your team to do what you need due to the amount of time it takes. But this really is a case of “a stitch in time saves 9” and we all know it. False economy and all that. You have to take the plunge at some point and your business will keep faltering if you don’t.
Interrogate your processes and hand off points across Customer services, team members and business operational teams. Review your business and operations processes – if these don’t scale as your business expands you will find that you teams will start to create workarounds and workarounds to workarounds as things start to break = massive inefficiency. (I recently worked in a business where just by reviewing simple daily processes we removed over 35% innefficency and workarounds and manual processes to outdated and unscalable basic processes from years before.) Productivity is a big thing and costs you and your team money, so keep your finger on this pulse!
The question of how should you spend your money was a frequent conundrum and reason for failure cited by around 30% of all failed startups. Where to spend cash is a key area of conflict and concern – so creating a roadmap and spend profile for all areas of your business expenditure is critical. And if you are an agile culture then you can build/ grow in increments – so anything that doesn’t warrant investment, be it that feature for your app or functionality on your site, that you thought was critical (often only 20% of these are actually what Customers actually want) then you wont be wasting your cash! Make it count. If you aren’t agile, then look at this as part of operational and cultural change inititaves – its not about doing Agile but BEING agile in mindset and habit culturally and delivering incrementally to prioritized needs and tasks.
And finally I’ll add one more bonus point to keep focus on!
4) User Centered DESIGN – Your user is at the heart of and underpins everything!!
“Bad things happen when you ignore what a users wants and need, whether consciously or accidentally.” – CB Insights
I attended and interviewed a number of the speakers at the recent FITC Design and innovation conference in Amsterdam – with the likes of Beeple, Marpi, Territory studio (makers of Bladerunner 2049 and Guardians of the Galaxy), David Carson titles, and many others- The single common thread that could be identified in every talk and presentation was that all cited User and Human-centered design at the heart of everything – no matter what industry you are in! (link to videos below)
So to summarise:
Even in a business that is not wanting to expand, keep the focus on the 3 simple areas of Skills, Time & Information, and Design to ensure you are constantly readjusting and reworking all aspects of your business model and plan. Keeping apace of the marketplace and your customers needs underpins everything you do in business. Every process, task, technology, system, tool and skill that you bring in to your workplace is to support the ultimate product or service you are delivering to your customer. They might be the end user, but they set the parameters for everything you do on a rolling basis from the very beginning.
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