I have a new column in sbnn.co.uk called The Daily ScaleUp.
Every day I cover some element of scaling a business, from finance to staffing to premises and everything in between. Each Friday I share a case study of a Scottish business on their scaleup journey.
Views for my first week are encouraging – between 500 and 1200 for each article. Here’s the first five, make sure you sign up to the SBNN newsletter to get them delivered daily to your inbox!
1 When do I scale?
At what stage should a company consider scaling up? Well, right from inception, according to Fiona Godsman.
As the chief executive of Scottish Institute for Enterprise, which helps students set up companies, she’s seen businesses like Swipii, Snap40 and Pick Protection come to life as their founders decided not to bother joining the job market.
“We do a lot of work on mindsets,” she told me. “We make sure they’re in that frame of mind where they’re considering scaling as soon as possible.”
Cripes – shouldering someone’s investment in my idea at 18 years old would have terrified me. Apparently students these days are hardier.
“No they’re used to learning, so rather than thinking “I can’t do that” they just think “I haven’t learned that yet” – there’s a constant openness,” she reassured me.
That said, the most common fear is taking on their first employee. So they’re hardy, but they’re not daft. “They’ve been living hand to mouth and keeping overheads to a minimum so being responsible for someone else’s income does scare them,” Fiona said. “But it’s the one thing our alumni say they wish they’d done earlier – you can do things twice as fast!”
Her tips are to
- anticipate your financial needs
- believe you’re worthy of the investment and
- believe it can be done
If there was one change she’d like to see, what would it be?
“More face to face meetings with investors – after all, they’re investing in the person as much as the business.”
Next time – a matchmaking service for oil and gas? One man has a plan…
2: How do I scale?
What if I told you there were six ways to scale up your business?
· use technology
These aren’t, unfortunately, my own pearls of wisdom. Rather they are the findings of Stuart Broadley, the Chief Executive of the Energy Industries Council (EIC).
He wanted to know how his members were dealing with the drop in oil prices – so he asked them. The result was one of the best industry reports I’ve read in a long time – Survive and Thrive.
In it, he and his team identify the strategies used by 26 members to grow and prosper. If these strategies work during a downturn (and the oil industry is going through a particularly challenging time right now) then imagine what effect these could have in buoyant industries.
“I’m interested in innovation, risk and access to skills,” he told me. When times are tough, people naturally batten down the hatches, but in his view, this is when companies need a helping hand to take more risk.
“Export can be the hardest thing to do, bringing a lot of risk and taking too long to convert action into profits, but we want to find a way for companies to recover faster,” he said. “One restriction to faster scale up is a lack of working capital and extra funding could really help. We also need to help SMEs quickly gain scale up skills – through assessment, training and perhaps accreditation.”
Another of his big ideas is innovation matchmaking.
“The energy industry needs a dating service for innovation,” he said. “Today, it feels more like operators stumble across the innovation – there’s nowhere to go to find what you need, and . how do innovative SMEs find their next customers?”
The EIC is working on a register of British innovators, as well as some other very interesting projects. I might lift the lid in a future column…
Next time – would going on a course help your company? One partnership is offering intriguing opportunities…
3. How do I access people to help me scale?
For a long time the narrative has focused on start-ups, now more and more initiatives to help those companies scale are springing up.
One such programme, announced this month, is the partnership between tech incubator Codebase and accountancy powerhouse PwC.
SCALE: Edinburgh – which incidentally is open to all Scottish companies, it’s just based in the capital – connects influencers and decision makers in PwC with the new kids on the block.
It lasts 10 weeks and will accept 12 cohorts, with the aim of securing them additional funding – and some new insight.
“There is no shortage of innovation programmes for startup businesses that focus on development, but once they are ready to grow to the next level, opportunities diminish,” Nigel Howlett, UK Digital Private Business leader at PwC, told me.
Clearly these scaleups have huge value to large organisations looking to innovate, so it’s worth their while helping out in terms of business development. This particular course focuses on corporate navigation, negotiation skills, channel sales, B2B sales, recruitment, procurement processes, marketing, PR and comms, investor readiness and exit.
“Engaging with established scaleups offers corporates the opportunity to invest in a tangible product, service or cutting edge technology when time and budget are limited, whilst the scale-ups can benefit from big businesses’ experience and connections” Nigel said.
Successful applicants get access to PwC subject matter experts, industry specialists and insights into the market challenges and trends, so if you think you’d benefit from it, click here for more info.
Next time – talent is the number one barrier to growth. One headhunter tells us what’s going on in Scotland…
4 How do I get the right staff so I can scale?
People. It’s what business is all about – yet hiring can be daunting and frustrating. It’s a huge commitment.
It’s also the number one issue facing companies looking to scale, according to research by the Scale Up Institute.
Competing for specific in-demand skills, being able to afford the best talent in the marketplace, the internal expectations of the board and being able to attract global talent to Scotland are all very real pain points.
I had a chat with Michael Dickson, an associate at Carlyle executive search practice in Edinburgh, to find out what the Scottish marketplace is like at the moment.
“Scotland has a very talented and diverse workforce and when you look at specific industries in isolation we have some of the world’s best entrepreneurs, technologists, financial services leaders and oil & gas specialists,” he told me.
“But when you start to look more generally across the market or indeed within sectors where Scotland does not have as many businesses, like logistics or retail, it becomes a lot more difficult to fill the gaps.”
He cited examples of production & supply chain director for a global FMCG business and a head of cloud services for a leading financial services client – both were tricky because most of the specialists were based in England or abroad. Scottish scale-ups are having to fight against economic and political uncertainty (read Brexit) as well as the expectations for flexible or remote working.
“Emerging skill-sets related to regulatory or technology change, like GDPR, cloud, or cyber security expertise are all skill-sets that were less common or did not even exist several years ago,” he pointed out. “These are gaps that businesses across the UK are facing, not just our clients based in Scotland.”
The good news is that scale ups are sexy. Scotland has an impressive track record and candidates are keen to be part of the next BrewDog or Skyscanner.
“We have worked closely with start-ups and scaleups to help solve several of these challenges either through employing interim specialists or placing candidates on a portfolio basis across a number of companies,” Michael said.
“The interim impact executive or portfolio candidate is often a good solution for a “scaleup” when it comes to a number of challenges in talent attraction, including financial restraints, time requirements or competition in the market place.”
Our final column of the week is a case study – looking at one company who’s recently secured a six figure investment. Tomorrow, Bellfield Brewery tells me about the journey…
Raising nearly half a million pounds in equity investment is no small feat – and it’s exactly what Bellfield Brewery did last month.
The UK’s only dedicated gluten-free microbrewery had raised investment before through crowdfunding, but this time it was about attracting fewer, bigger investors, as director Giselle Dye told me.
“They were both extremely rigorous processes and demand a great deal of time so I wouldn’t recommend rushing into either unless you have a really robust business plan and all the supporting documentation that you’ll be asked for as part of the due diligence process,” she said.
“Both were equally supportive and helpful and patient with us which is what you need, as a start up!”
As the Edinburgh-based company has grown, they’ve faced challenges which will no doubt sound familiar – running a businesses with a part-time team, bootstrapping and scaling up production.
“As any manufacturing business will know, you have to produce the goods and pay for them, before you can sell them and then it often takes 3 months before you get paid!” Giselle said.
The £430,000 invested by the angel syndicate Equity Gap and supported by Scottish Investment Bank, will allow the team to go full time on permanent contracts and increase the sales team.
But as with all scaleup stories, the investment was only part of the journey.
Giselle is very grateful to a number of agencies for their support, including Business Gateway and Scottish Enterprise.
“We started off working with Business Gateway in Edinburgh – Evan McLean – and got fantastic advice and support. They were always quick and super-helpful,” she said.
“They work closely with Scottish Enterprise, so put us in touch with other teams including Innovation, Organisational Development and SDI and we were able to apply for grants that helped us at crucial points in our journey.
“We’re lucky enough to have just been taken on as an Account Managed business by Scottish Enterprise – our Business Gateway advisor, Evan, put us forward and supported our case – and we’re very much looking forward to the turbo-charged support that this apparently offers!
“I’d also really like to single out Scotland Food & Drink for praise; they are really helpful, proactive and incredibly supportive of small businesses like ours.”
If you have a story about how your business scaled, drop me a line firstname.lastname@example.org.