The Daily ScaleUp is a business column published each weekday morning and written by Kim McAllister – founder and director of Impact Online.
It appears in the Scottish Business News Network, which reaches nearly 40,000 Scottish business people per month.
The column focuses on the entrepreneurial business community in Scotland – read all the articles here, including the most read article, the story of the woman mid-exit and Kim’s own journey with an exciting Scottish scaleup.
Kim speaks to business owners and enablers to find out what challenges they face, the type of support there is available and the lessons that can be learned. Every Friday there is a case study, in which the team behind a Scottish scale-up share their story.
Kim is a trained journalist who writes freelance while also running her business Impact Online, a media consultancy focusing on content marketing, PR and social media strategy.
If you would like to chat to Kim about being featured in the column, get in touch!
Learn more about Kim’s biography here.
The unusual way to scale
It’s a holiday Monday in Edinburgh and the Highlands today – so I’m giving you a holiday bonus. This scaleup story is a little bit different, so I like that it’s not sitting in the Friday case study slot. Gilles probably will too.
You see, Gilles Baudet is an irrepressible entrepreneur.
He freely admits he’s made some mistakes along the way (imagine telling your wife you’re £95,000 in debt and she needs to work more hours to help you cover it) but his persistence is paying off.
The Interactive Team, a customer acquisitions company, is on track to turn over £3m this year – after having a bit of a hairy time two years ago.
“We’ve just moved into Maidstone, which is our seventh city,” he told me. “It’s good old fashioned sales, my staff have an incredible work ethic and I think I believe in them more than they believe in themselves sometimes.”
His staff are the key to scaling so successfully – he’s never taken the route of applying for funding or investment.
“The foundations of our business are delivering the right customers to our clients in large consistent volumes. So, in order for us to succeed and grow, we focused on building and developing a high achieving UK sales team which brought the right money in to help us hit our goals and expand nationally,” he said. “The better my team was, the stronger my business was, the more profit we made, the further we could expand.”
Growing to 160 staff in only a few years has presented its challenges
“Our biggest challenges have been adapting our business model to move with the times and national expansion. As my sales team expanded, I found it hard to build the supporting teams and all the back office teams. There is a lot of learning to be done when big changes are made in your business!” he said.
One thing I’ve heard time and again in entrepreneurial circles is the importance of trusting your instinct. Gilles is another advocate.
“My biggest mistake in business was listening to the wrong people and ignoring my gut instinct,” he admitted.
“We took a large hit in 2015, I believed we needed to change and adapt, I was told not to, to keep everything the same and it would work out. Well it didn’t, it just kept getting worse. Before it was too late I changed my business model very quickly and pushed my business hard to overcome that year!”
Six programmes to help your business grow
We also have quite a number of support programmes – for start-ups and scale-ups, for social enterprises and for specifically rural companies. Here I’ve compiled a short cheatsheet to point you in the direction of some of the initiatives that could help you on your business journey.
Elevator – Aberdeen, Dundee
Although headquartered in Bridge of Don, Elevator has business centres in 18 locations from Perth to Banff. It was the UK’s first Centre for Entrepreneurship, and combines the delivery of Business Gateway with an open access public facility, digital demonstration centre and business accelerator.
Read more about Elevator –
Entrepreneurial Spark – Glasgow, Edinburgh, Ayrshire
ESpark is free and has links to major banks and professional services. The scale up programme is designed for companies with a turnover of over £200,000 or £150,000 worth of funding. Participants must commit to key dates over the period of the programme.
Read more about Entrepreneurial Spark –
Firstport is Scotland’s development agency for social entrepreneurs and social enterprises. The package of support includes seed funding, business advice and connections. Their Social Innovation Awards applications need to be in by 9 October 2017.
Read more about Firstport –
Seedhaus – Edinburgh
Tech accelerator Seedhaus recruits five startups twice a year to join their incubator in Edinburgh. They invest £18,000 in each business through equity investment and work with them to fast track growth.
Read more about Seedhaus –
Acorn Enterprises – Fife
Aiming to fill the gap in Scotland for support in more rural locations, Acorn Enterprises caters for both businesses and students. The accelerator runs 20-week business accelerator programmes, Acorn business bootcamps and entrepreneurial events. Their 8th business accelerator, in Dundee, is open for applications.
Read more about Acorn Enterprises –
Codebase – Edinburgh, Stirling
Codebase is a tech incubator, built entirely on private equity. They have bespoke office spaces from 2-100 staff and offer mentorship and investment. To simply join in the buzz, they also offer co-working spaces.
Read more about Codebase –
Making the leap to a scaling business
“Until it’s yours you have no idea of the pressures of finance and growth,” Mark Davidson told me, in between peeling 1000 eggs.
He set up Aye Love Real Foods with his wife Jacqueline in 2014, incorporated in 2016 and now turns over more than £300,000.
“You have to multitask and problem solve – that’s basically all there is to it,” he joked.
Before starting anything he did an “Access to markets” course with Business Gateway to gain an overview of the industry and remains committed to the business side of running a business.
“It’s all about relationships,” he said. “You have to place yourself in the market, be visible, have good contacts and then when opportunities arise people naturally say “oh, you should speak to Mark about that” and you can capitalise on that.”
When a call came from an edgy music promoter, he knew to prioritise their demands and “pulled out all the stops”. Next thing he knew, Justin Bieber was eating his Scotch eggs.
“I think my background in the festival scene was a real education – it’s a weird and wonderful world full of weird and wonderful people,” he laughed. “But a lot of what we do is around events. We focus on reputation and success – sell well and be consistently professional. It sounds so simple, but it’s hard work.”
Another lesson he’s learned is to accept support and value it. Family help out with his two small children and his Business Gateway advisor Kerry has proved invaluable. As the company grows, Mark and Jacqueline have made the decision to stay in North Ayrshire.
“Our staff are great, so that loyalty goes both ways, and we’ve had so much support that I feel we’ve gone up a few levels in the pipeline, so to speak,” he said.
With a new kitchen to build and more contracts to fulfil the future is looking bright.
“Oh I could never go back,” he said. “This is going from strength to strength so I’ll be busy for a wee while yet!”
How important are scaling companies?
The Scottish government’s enterprise agency has announced an enhanced service for companies with the potential to turnover more than £100 million.
It’s called Start2Scale and provides an intensive, tailored service focussing on the key drivers of growth: international sales, investment and talent acquisition and development.
I will be speaking to Paul Wheelhouse, Scottish Government Minister for Business, Innovation and Energy, for a future column – he was the minister who announced the new programme.
“We know that stimulating the development of, and supporting, more high growth companies with the ambition and potential to grow their turnover to over £100 million is one of the most powerful drivers of growth,” he said at the launch of Venturefest yesterday.
“According to a UK scale-up report, boosting just one per cent of our scale-up business population could create 238,000 jobs and £38 billion of GVA across the UK within three years and we want to see Scotland pursue such an objective.”
Interestingly, this new programme is based on feedback from Scottish Enterprise’s service users who have indicated that companies enjoying rapid growth face a unique set of challenges, something I’ve been trying to highlight in this column.
SE’s managing director Adrian Gillespie said the important thing is to match support to the type of growth.
“We already actively work with around 180 fast growing companies on this journey,” he said. “This enhanced service aims to build on that support, recognising that these important group of companies have specific needs. We aim to increase the number of companies we work with to 250 during 2018.”
I’ll be talking to Scottish Enterprise about this and other ways they help scaling companies in future columns.
My scaleup story: Clark Communications
PR and design business, Clark Communications scaled up in August 2016, going from a two-man operation to an eight-strong team, via the acquisition of a competitor. The deal saw the business grow not only in numbers, but also acquire a Glasgow office, adding to its established Edinburgh base. From initial discussion to signing the deal took a brisk six weeks. But, once the deal was signed, the hard work started… Managing director Lesley Brydon told me what she’s learned.
Don’t scale up for the sake of it.
“Any fast growth activity will eat up your time, and the result needs to be worth it,” she said.”Are the clients a good fit with your business and plans for the future? Does your market offer room for further growth? Is the team right? Can the business afford it? Does the ‘new’ part of your business compliment the old, or will it divide your time to a point where nothing is done well? Rapid growth can be as damaging for a business as it can be beneficial and at this stage, brutal honesty and research is crucial.”
If your client base doubles or triples overnight, they need looking after throughout the process.
“Bring them with you on the journey, and make sure that either they know things won’t change, or that they stand to benefit from your scaling up,” she said.
“To do this, having a great team that is truly on board is critical. They will provide the continuity your clients need through changing times, and if they are looked after well, and confident in the growing business, the better able they will be to bring clients along too.”
If you’re a small business with one director/shareholder, do not underestimate the workload you will face!
“From scaling up IT and telecoms provision, to making sure the office infrastructure can cope with a bigger team, and getting new clients and people brought into the fold – the ‘to do’ list is suddenly enormous when you scale up quickly, as opposed to organically,” she said.
“It can be overwhelming. The legal process for an acquisition is intense, particularly if you are trying to keep the costs down by doing some of the legwork yourself. Choose good legal and accountancy advisers (get recommendations), and make sure all the people around you are geared up to help in their own way – including paid advisers, mentors, your team (existing and new), and your family who can offer invaluable personal support.
Ordering teaspoons isn’t your priority.
Building a good foundation for the future business is.”
Skills for scaling
The pace of growth can threaten to overwhelm leaders. Even Lesley Eccles, co-founder of fantasy sports app – and unicorn – FanDuel, admitted to me once that, at one point, there were so many new faces, she had no idea who worked for her and who didn’t.
Making sure your key staff can handle the growing team is crucial to a business’s continued success – but how on earth do they do that?
“By investing time in yourself and in them,” says Malcolm McGregor, director and founder of Broadreach Retail Consultancy.
“You’re so task-focused when you’re growing you often ignore the needs of the individual. When a team increases quickly you have to be really good at planning.”
He raised an interesting point about formalizing the knowledge in the company. One person can’t hold all the keys – that information has to be accessible and there has to be a process for the right people to access it.
As companies scale, job roles have a habit of changing out of all recognition, so this is another argument for taking the time to know individuals.
“Match their skills to your needs and performance manage them so that they are reaching their full potential. Be very clear about the objectives and nurture them. In a scale up especially stakes are often high, so encourage them, protect them when things don’t go so well and celebrate with them to build their confidence. Do it well and they won’t leave,” he says.
It seems the key here is time – something probably none of us has in abundance. But it makes sense that a little time spent early on laying the right foundations should pay dividends in the long term.
Tomorrow, I chat to one organization gathering all the local scale-ups for the benefit of the next generation…
Funding your scale up
“The right people and the right idea” – you may be surprised to learn that these are key elements that angel investors look for in a scale up.
I chatted to Jackie Waring this week. She’s the founder and CEO of Investing Women, a serial entrepreneur in her own right who now champions women-led businesses. If anyone knows how to prepare your company for investment, she does, but the flexibility of her approach surprised me.
“We start conversations at a very early stage,” she told me. “Often businesses can’t afford to employ people, so we try to connect them with the right advisors. Having people from the industry who are genuinely part of the team, perhaps in a mentoring capacity, mitigates the risk for investors. It can also really speed up the route to market – and often these mentors end up making more commitment, as a non-exec director or as an advisor.”
Obviously Jackie speaks companies with a business model that allows for the type of scale that appeals to investors, but angel investors in particular are very interested in the company’s people.
“I think as a board of all women, we’re very tuned in to the type of entrepreneur we see in front of us,” she said. “A red flag goes up if they’re not willing to listen!”
She places a high value on “coachability” – an openness to advice and a willingness to seek feedback.
“The best entrepreneurs are clear on their strengths and admit where the gaps are, even to their potential investors,” she said. “They shouldn’t feel pressured to know everything, because no one does!”
She talks about ‘patient capital’, particularly in industries like biotech, where the time to take a product to market can be very long. The right mentors or advisors can advise on licensing technology, for example, to shorten the time it takes to generate revenue and mitigate the risk for investors.
“We provide training called a Day with the Angels, where we address everything to get the company investment-ready, because it’s in everyone’s interests for them to be prepared at the pitch,” she added.
One company which has benefited from Investing Women’s expertise and backing is Scottish Bioenergy. The company has just received over £500,000 of investment – look out for the story in a future column.
Promoting your scaleup
However, I’m not going to hijack it, instead I crowd sourced the answers from PR professionals across Scotland.
They all agreed that if a business is scaling, the absolute key thing is to keep control of the messaging. Much like hanging onto the “start-up culture” as your team expands, ensuring consistency in your image to the outside world must be a priority.
“I’d get a few meaty paragraphs together that really explain who you are and what you sell,” said Lisa Palompo Dixon, founder and director of Palompo PR. “You need to make sure everyone is singing from the same hymn sheet.”
If in doubt, refer back to the business plan.
“If you know where you’re going and have bottomed out the strategy properly, then the comms plan flows from that,” said Emma Gordon, formerly of Aberdeen-based Fifth Ring and now director of Bydand Copywriting. “In essence, same advice regardless of size and stage: right people; right way; right time.”
Photography is a service your company needs to invest in as you scale. If there’s one thing journalists are going to want as you tell your story, it’s great pictures.
“As much as your team may be camera shy, invest in great, professional photography of the key people and obviously the products,” Lisa added. “If you sell a service, think of creative ways to illustrate what you do.”
[Bonus tip – for print media, images must be at least 2MB and 300dpi. For online, low resolution images are better.]
Finally, take a critical look at your social media.
Chris Fairbairn, account manager at Holyrood PR, said you should put your employees at the forefront.
“They’re your first ambassadors, use employee-generated content to create a genuine image of your company that keeps you likeable and relatable. It helps with the culture of the company too.”
Tomorrow I will be hijacking the column as I’ll be starting my journey as part of the team at a very exciting Scottish scaleup…
Joining a scaleup
Last week I was chuffed to bits to win a three way pitch and join the team at GlenWyvis Distillery as their social media strategist.
This morning I’m on a train to Dingwall to visit the construction site.
You see, GlenWyvis hasn’t actually started production yet. It’s a unique – and perhaps quintessential – scaleup story.
From a field to a 100%-community-owned distillery in just two short years.
Read more –
Huge money is involved. They’ve raised nearly £3 million from crowd funding and share offers so far and they’re still open for investment. The impact on the surrounding area is far-reaching, not only as a source of jobs but as a magnet to the region and an engine for local investment. Can you tell I’m excited to be involved?
It’s funny because the thing that’s struck me most about being involved in a scaleup like this is speed.
The pace of work is going to be nuts. I’ve had the position for a week and I’ve met the MD, coordinated a press trip, outlined the social plan to Christmas and made the 170 mile trip north.
Everyone pitches in. I’ve had a lot of questions and everybody’s been quick to answer, help, copy me into emails and generally share information. This is where scaleups really shine. Imagine if every business had this level of cooperation? How productive would it be if every team was unified by a single clear goal?
As a community benefit society they are absolutely focused on delivering value, both for their investors and for the wider community.
This way of working is going to suit me very well, I think. I like to get stuck right in to projects, I enjoy working across teams and feeling like I’m helping to build something.
I might even get a wee dram at some point.
Tomorrow, I’ve got a brilliant story to share with you, of a couple whose decade of persistence has paid off as they secure half a million pounds of investment.
My scaleup story – Scottish Bioenergy
Blue Smarties were always my favourite.
I remember when they first came out – I was eight. Mum bought me a tube with a plastic pop-off lid with a letter on the back and I fished around eagerly for the new blue one.
You see blue is a big deal – so big, it’s just landed Polly Marston Van Alstyne’s company half a million pounds.
Scottish Bioenergy has figured out a way to produce a natural blue food dye from algae on an industrial scale. Now they’re growing like a, well, I would say fungus…
“It was nearly 10 years of research and development plus a little bit of luck that the market conditions were right,” she told me. The company raised investment last month thanks in large part to Investing Women and Kelvin Capital, who recognized the international possibilities.
A Nielsen survey last year found 61% of the 30,000 respondents want to avoid artificial colours in their food shop. Meanwhile the US has recently approved spirulina extract (the fancy name for the blue dye) as a foodstuff.
“I think it’s important to put the work into the foundations, even though it was a long time to wonder if you’d ever get anywhere with it,” she admitted. “But we’re now in a position where we’re very confident in the technology and that makes both us and the investors more comfortable.”
The American and her Northern Irish husband are now building a ‘showcase’ at BioCity near Glasgow where four 2000 litre bioreactors will be in production by the end of November.
“The climate in California is very different – there it’s like a hobby, you’re either a start-up or an investor,” she said. “I think there’s less flexibility here, you need to follow the path of the Scottish Co-investment Fund in order to qualify for tax relief for investors. Having said that, the support here is wonderful. We met Jackie Waring at Investing Women in December and the networking aspect has been invaluable. Especially as a woman, to feel like someone has your back and is so supportive and enthusiastic is really important.”
If you have a story of how you scaled up your business, drop me a line email@example.com
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…
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…
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…
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.