Scaling up is an important step for your business. Preparing to become a scale-up business is something that requires due care and attention. Your business will change a lot, and you need to make sure you’re able to handle it.
It’s important not to rush into something like scaling up, but to choose your moment carefully once you’re ready. There are a few things you need to have in hand before you start. 5 of the most important ones can be found below.
What is scaling up?
Scaling up is a phase of rapid and deliberate growth in a business. Usually either startup businesses who are ready for the next step or SMEs who have found their growth slowing and want to do something about it are the businesses that decide to scale up.
Scaling up involves making large, thought-out changes to the operations of your business to greatly increase its capacity to grow. This usually requires a significant financial backing and it’s a good idea to seek the advice of someone who has done it before.
When are you ready?
It’s rarely advisable to jump into a major change before you’re ready for it. When you were starting up, you sold an idea to investors that they backed on faith. Scaling up comes when you have evidence to show that your idea works, and the Board leadership to take it forward.
Generally a business that’s ready will have access to financial documents that show that they’re viable. They will usually be able to show exactly how they will proceed and where the customers that they need to maintain their growth can be found.
Investors at this point are typically Series A VCs with minimum tickets of over a million. So if you can’t see your business spending that much money, it may not be time for you yet.
What you need
If you want to succeed in scaling up, and if you want to convince the investors to give you the money you need for it, you need to know exactly how you’re doing it. The following are some of the most important parts of preparing to scale up.
1. Mission
Scaling up is a deliberate process so should have a measurable goal at its heart. As seen in MOST Analysis, your mission is a hard business statement of what you want to achieve. By saying what level of growth you want and how long you’ll take to get there, you build a framework about which you can construct your scale-up strategy.
2. Plan
Your business plan is the future of your business. Here you put down in writing everything you’re going to do to scale up. Sit down with your business’s key personnel and, if you’ve not done it before, a mentor or advisor and figure out exactly what your future is.
This could be deciding to diversify into a new market. It could be rethinking your sales and marketing process. Or it could be digitally transforming your organisation, but there will be some big changes to bring about a lot of growth potential in one go.
Your senior leadership needs to be on the same page about where the business is going, and will all have valuable insights on what to do. A Strategic Review can help formalise your plan and shape it into a tool for success.
3. Investment
Whatever changes you’re going to make, kickstarting the process will take money. You might need to conduct large scale market research, hire in whole new teams, or start an R&D department, none of which are cheap. Investment is how you get the cash injection to make such a big change in a single move.
The most common way of getting this money for scale-ups is through Series A investment. Series A is the first cycle of Venture Capital investments. These firms need to be sure of the businesses they’re going to invest in, so it’s crucial to get investor ready before you seek them out to avoid wasting time.
4. Board
The skillset required to be a great entrepreneur isn’t necessarily the same as that required to run a scale-up business. Some entrepreneurs choose to sell their businesses at this stage and found something new, using their talents where they believe them to be best suited.
If you wish to stay on with your business as it scales up, you need to be honest with yourself about what skills you have, and what you’re missing. As your business grows, its leadership team needs to grow too. You want to make sure you have a well rounded Board of Directors with individuals that bring the experience to areas that you are weaker on.
It’s also important to ask yourself the question: am I a CEO? It can be hard when it feels like you’re letting go of something you put so much into building, but it may be that your skills are best suited as a Director, letting another take the CEO role. In the end, only you can say what’s best for your business.
5. Structure
A small business may be able to get by with an informal structure. But in a large company, you can’t be regularly working in the business alongside your employees. Before you scale up, make a critical assessment of your existing management structure.
You don’t want your employees to be caught out not knowing how to proceed and unable to ask you. If you were to take next week off unannounced, would your business grind to a halt? If so, you should consider how you can build a more resilient management structure.
When the rapid growth of scaling up comes, you want to make sure your operations have the slack to adapt to it. You may find large numbers of new staff or new departments joining your business, and you want to try and build a framework that can accept them without breaking.
To summarise
Getting ready to scale up is all about being critical about where you are and understanding where to go. From there you know what changes you need to make to thrive in your new form. Proper preparation will set you up well to succeed when you decide it’s time to take the first big step. You can find more on what to know before you start with these 5 tips.
Our Part-time Directors and Advisors can provide your Board with the expertise you need to round it out, and they all have experience scaling up business so they know what they’re doing. If you want to know what you could change to achieve better growth, try our Scale-up Growth Diagnostic to receive a personalised growth report. Don’t hesitate to contact us and talk to one of our Regional Directors to see how we can help you.
