By Ben Chernoff, Director at Davis Grant
Tech companies are well known for their ability to quickly scale up, with many of the best ideas going from start-up to multi-million-pound businesses in just a couple of years.
You only need to look at some of the tech unicorns to see that the ability to adapt and quickly scale a business can be critical to success.
Nevertheless, many new entrepreneurs are often unprepared for this rapid growth and are so overwhelmed they struggle to scale up effectively.
To help, we have looked into some of the main challenges of scaling up. This is what we have found:
- Insufficient funding – Far too often businesses with ambitious ideas hold back on seeking extra funding, creating cash issues or preventing investment. Although seeking additional investment or borrowing comes with its own risk, it may give you the capital to quickly expand on your latest project without having to go back to ask for more from investors or lenders.
- Mistakes and errors – Everyone makes a mistake now and then. How we react and learn from our mistakes is far more important though. If a business continues to make the same or similar errors over and over again it can be costly. That is why, as well as investing in the service and product, owners need to invest in the infrastructure that delivers them and make it robust.
- Don’t become an obstacle – All too often small business owners want to retain too much control. However, there is only so much one person can achieve. Hire, delegate and empower people within your businesses to handle the work that is needed. Not got someone internally who can handle the work or don’t want to hire someone else? Outsource functions to trusted advisers, such as your accountant at a lower cost, while saving time.
- Remain rooted – While running a tech business it is easy to get lost in one particular part of your operations, be it R&D or marketing. However, business owners should remain rooted and connected to every element of their company, not least their finances. The latest accounting technology has made it increasingly easy to collaborate with your advisers and get financial insights with a quick click.
- Don’t be afraid to fail – If something you do isn’t working or you feel like part of the business isn’t functioning well, don’t be scared to ask for help or refocus your attention on parts of the businesses that are successful. As the saying goes, there is no point throwing good money after bad. Some of the most successful businesses have come from a pivot from a failing idea to a successful one.
- Always find a better, easier way – a little bit of time spent investing in bettersystems and controls can save time and money in the long run. It may not be the most exciting part of scaling up, but by putting in the right systems you can cut inefficiencies, prevent duplicated tasks and remove flaws that could be costly. During periods of rapid growth, these systems can offer a surprising amount of security and control.
If you are considering scaling up, find out how our advisory services can help you. Speak to our team today.