Record numbers of people start a business each year. However, more than half of them will fail within five years. Few of those survivors will ever achieve the type of growth worthy of the name "scale-up" or "high-growth business".
Scale-ups are businesses with ten or more employees that average growth in staff or turnover of 20% a year over three years. Sometimes they are called "high-growth businesses".
So how do you become a high-growth business, and what are the key challenges you could face when scaling up your business?
Growing pains
Many firms don't achieve significant growth because they struggle to find staff with the required knowledge, skills and talent. Small firms in many sectors are facing a skills shortage, which prevents them from scaling up. If your business wants to scale up and grow, you need to put enough time and effort into recruiting for growth. The recruitment process can be long and challenging.
Another key scale-up challenge is a lack of leadership capability. Not all business owners are great managers or leaders. If your business is to achieve significant growth then great leadership is essential. Perhaps you need to develop your leadership skills?
Leading growth requires a clear strategy and vision, as well as the ability to get buy-in from others. It is often said that a manager's job is to plan, organise and coordinate, while a leader's job is to persuade, inspire and motivate, which is vital when scaling up.
Funding growth
Winning enough new customers and/or boosting revenue from existing customers is also critical to scaling up and growing a business. Selling to customers overseas could dramatically transform your fortunes. Help is available from a number of organisations, including the Department for Business and Trade and the British Chambers of Commerce. They can provide information and support that may help you to become a successful exporter.
Trying to scale your business is not without risk, and whichever way you plan to grow you will need the necessary finance to avoid serious cash flow issues that could threaten your business' survival.
Key scale-up funding options include reinvesting your profits, bank finance, private equity (aka venture capital), angel investors and selling shares in your business. Asset finance could also provide some growth capital, while some businesses are now financing their growth through crowdfunding.
The Better Business Finance website has information about the finance options open to your business. Often the solution comes from more than one source, so research your scale-up funding options thoroughly. Make sure you take advice from trusted financial advisers.
Scale-up growth options
To scale successfully, your business model must be scalable and your business must be able to access the experience, knowledge and talent it needs. You can bring in expertise by recruiting non-executive board members. You will also need the premises, equipment and machinery as well as the technology and management systems to support your plans for growth.
Key growth strategy options when seeking to scale a business include introducing or developing new products or services (including diversifying by offering products or service your business isn't known for), targeting new markets (in the UK and overseas or new sectors if you sell B2B), trying new sales channels (eg selling online if you don't already do so), turning your business into a franchise, and merging with or buying another business. Each of these can increase your market share significantly.
Whatever your decision, plenty of research is essential (especially if you're entering a new market). You also need to seek tailored guidance from trusted professional advisers. You must plan carefully and budget for growth. Scaling a business requires skilled management. It takes time, hard work and commitment - and you can't allow it to become all-consuming to the point where you're neglecting other important areas of your business.
Find out what support is available from your local Growth Hub (local public-private sector partnerships often led by the Local Enterprise Partnerships) and other accelerator programmes offered by universities, banks, business support organisations and so on. The government's website offers advice on growing a business. Finding a mentor can also prove worthwhile (visit the Mentors Me website). Investors usually have knowledge and contacts too that can prove invaluable and open doors when you want to take your business to the next level.
