These businesses will typically focus in some form of tech or employ SaaS, and in order to achieve the end goals it will be necessary to have a number of funding rounds.
The second category of founders are those that are content to build their new business more slowly or, on rare occasions, not at all. With these entrepreneurs it is not that they do not want to scale, it is just that they accept that to achieve aggressive growth requires not only a different mindset but also a different level of resources.
Whilst the approach might be different for the two groups, and indeed the level of commitment also, nevertheless, for both groups there are many of the same fundamental issues that need to be addressed. Depending on the ultimate aim then the emphasis might change but the core top tips to scaling your business remain the same.
- Business Plan – Drawing up your business plan will help refine your focus on what your plans are for your new business and how, and when, you will get there. It is here that you will set out your growth ambitions and the timeline required to achieve it.
- Financing – Every business of every size needs to ensure that it has adequate financial resources or access to such resources. Many early-stage businesses are loss making whilst they are scaling, and this may last for many years. This situation is acceptable as long as it is planned for, and the business has raised sufficient equity to cover the early losses.
- Cash Runway – When a business is scaling it consumes cash as any surplus income is constantly being reinvested. A minimum cash runway of six to 12 months should always be maintained and this needs to allow for contingencies also.
- Fundraising – Many scaling businesses will need to raise fresh equity finance. This will typically take much longer than expected and the first raise will be the most difficult as the business will not have such proven traction. Make sure that sufficient funding is raised each time to extend your runway to around 18 months.
- Team – Build your team carefully and try to ensure that any senior hires understand your visions for the future of the business, and that they will be able to both grow with the business and also to proactively assist in that growth.
- Titles – Be careful with job titles. If someone has the title CTO/CFO/COO or similar it can be difficult to recruit above them at a later stage as your business expands. Only give C-suite titles if they really have that potential going forward.
- Systems and Procedures – Any systems and procedures should be put in place as soon as possible and they need to be flexible enough to evolve as the business scales.
- Products and Services – In order to scale, your business will need to continue to update and enhance any products or services. This will be necessary not just to stay ahead of your competition but also to widen the potential customer base.
- Adaptability – However detailed and well thought through your original business plan was, there will always be unforeseen events and it is not possible to predict the future with any certainty. The business plan, and indeed your business, needs to be flexible and to adapt to any new challenges or opportunities that may arise.
Whether your ambitions are to slowly scale a lifestyle business or to rapidly scale a business with a view to exit at maximum value, all of these top tips remain valid.
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31st August 2022