For a start-up business to become a scale-up, it must grow by more than 20% in revenue or headcount for three consecutive years. This is no mean feat and any aspirational entrepreneurs hoping for this kind of rapid growth will need a clear roadmap to success.
Relatively few businesses experience the scale- up moment — less than one in 40. To address this, Smith & Williamson undertook the largest- ever sentiment study of this vital business community. We interviewed 500 scale-ups and more than 500 businesses yet to achieve their scale-up moment, charting the secrets of their success to enable more SMEs to find their own route to growth.
The research, which culminated in our Dream Bigger report earlier this year, outlines practical guidance for businesses looking for fast growth to consider.
Work out your funding requirements at the beginning
When looking for finance, timing is key. Often, businesses leave this to the last minute but that can result in having to hand over more equity or taking on a higher loan interest rate than was originally intended. Start early and pick wisely.
Get moving quickly
A business is far more likely to become a scale-up if it strives for high growth from the outset. In our report, we found that one in three (32%) scale-ups reaches this status in less than four years.
Embrace tech and innovation
50% of scale-ups claim advances in technology have been critical to their expansion yet among slower-growth firms this number drops to just 18%. Our ‘Dream Bigger’ research shows high- growth companies also place far more emphasis on having an innovative business strategy.
Professionalise your business
Many of today’s high-growth businesses started life as market disruptors. However, to continue their growth trajectory, they all had to professionalise their operations at an appropriate stage on their growth journey. This is about establishing a clear business strategy, implementing the right processes and building the best possible team to help take the company to the next level. Once you’ve established this team, all its members should become integral to growth plans journey and play an active role working on the business as well as within it.
Venture into new markets
Looking beyond the natural borders of your business in terms of both sector and location can be key to achieving high growth. With that in mind, it’s not surprising that two in five scale- ups claim venturing into new markets was the turning point that led to their period of rapid expansion. As well as boosting revenue, overseas expansion can reduce costs and provide access to new markets and talent while multiple time zones can sometimes boost productivity
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on www.smithandwilliamson.com prior to the launch of Evelyn Partners.