roundtable ... continued from previous page
Mentioning Barclays Entrepreneurs Index (EI) findings, Paul Boswell noted a scale-up success difference between the traditional day-to-day management focus on an existing marketplace as opposed to strategic entrepreneurial leadership looking outside for new market opportunities.
Claire Edmunds
“Sometimes scale-ups ‘fail’ because they don’t have the talent; their product service technology may be fantastic but they don’t have the right mix of people to lead the business forward, gain investment, or bring the right people in.”
How do scale-ups succeed?
Matt Franklin: “Start with company culture and values. Align people with a clarity of vision, a common belief in your future.” He recommended focusing on developing scale-up ‘cultural fit’, because merging different cultures together can be internally disruptive and distracting to core business objectives.
David Sanger
“On day one of Roc’s recent acquisition (September 29) we got both businesses together and created our five-year plan together, with everyone contributing. We had a 50-metre piece of paper but everyone had bought into it.”
Edmunds: “Within a small or large business, it’s a combination of vision and understanding of how you will get there, plus traction. You need good structure and implementation sitting behind the strategic vision for successful growth to work.”
The potential gains of a strategic acquisition could be wasted if parts the business didn’t understand why the acquisition was being made.
Bob Atkinson
Atkinson agreed that companywide understanding of the strategic vision, focus and an aligned culture were vital. “People need to know as plain as the nose on their face what they are expected to do. People need to be managed, but also to be comfortable being managed.”
De-risking deals was his priority. Even though InCloud is in the dynamic IT sector, Atkinson operates conservatively. “I employ people responsible for nearly 30 families and that’s quite a weight. I don’t want to boom and bust. It wouldn’t just be me affected.”
Valentine: “Whether you are growing organically or by acquisition it’s about having the right teams in place.”
Jurek Sikorski
Communication was Sanger’s overarching recommendation. “Good leaders communicate the vision and strategy well, from senior manager to the floor-sweeper. It’s the same in a scale-up; communicate regularly to your whole team. Your people must not be left guessing.”
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businessmag.co.uk Sikorski highlighted three keys:
• involvement, through good two-way communication
• respect for the individual by accepting their contribution to the business
• recognition and reward for their input and productivity.
“When you have engaged employees they are absolutely aligned on their purpose, the road map to success, and what it means to them. Remember, without people you’ve got nothing.”
Retaining customers during scale-up
The right customer-base mix can be crucial but difficult to maintain, noted Boswell. “Winning that big customer might be key to a new marketplace, or a scale-up, but it could be a double-edged sword for your business.
“Really strong scale-ups can go bust because they lose their biggest customer, or don’t focus enough on keeping a diversified customer base.”
Aiming for more customers that suit your business size and culture is a wiser way to grow, suggested Atkinson, thus avoiding ‘having to jump through hoops’ to retain big corporate clients that have the potential to wipe you out if anything untoward was to unfortunately happen. “Be careful who you take on, just because the work is there.”
Dunne agreed that scale-ups could find themselves trying to reverse out of the ‘eggs in one basket’ problem. The problem was that once within the highly-competitive but lucrative corporate supply chain many businesses were reluctant to risk leaving it entirely.
Sanger: “Customer retention is a fundamental pillar of business growth – whether organic or M&A. It’s how you survive or die. Key parts are your ongoing customer relationships, delivery of fantastic service, offering good value, exceeding contractual obligations, and shouting about it all, so that customers are aware of the excellent job you are doing for them.” Beware of competitors causing price erosion, and regularly check customer satisfaction, he added.
Scale-up funding
Boswell: “It’s actually a great time for funding. There are now more routes to scale-up for early stage businesses. We are looking at a very open funding base – high- street banks, crowd-funding, peer-to-peer landing, invoice financing, etc.”
Barclays had recently started a venture debt fund, but he admitted difficulties in finding “the right businesses, in the right place, at the right time.”
THE BUSINESS MAGAZINE – JANUARY/FEBRUARY 2018
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