Issues To Consider When Scaling A Business

Although establishing a new business is a challenging task scaling a business to the next level brings its own, different challenges.

According to data from McKinsey, only 22% of new businesses launched in the past decade have successfully scaled.

Why is this?  Based on our experience at NJR, there are several common factors, largely arising from the fact that as businesses progress from the start-up / early stage to the scaling stage certain aspects are neglected or not effectively dealt with.

In this communication we highlight 5 major areas of attention for any scaling business:

  • Strategy & planning
  • Sales & marketing
  • Process & Productivity
  • Culture & Communication
  • Talent & Skills.

Strategy & Planning 

At the start-up stage of a business strategy and plans are simple and understandable – get product to market, make sales and establish a steady revenue.

Once some of these initial goals have been achieved, the business needs to decide how it is going build on this initial platform, not just in the short-term but also in the longer term.  Clear strategies and plans are essential to direct and guide this growth.  A typical key consideration relates to products, customers and markets – should the business look to widen its product range and geographical footprint or continue to focus on its developed business.  The key here is focus – staying focused on what you’ve shown works and building on that.  Developing new customer segments, geographies and / or products brings cost and risk.  They may be factors for the longer term and issues like this and how and when they can be dealt with will be addressed in the strategic plan.

Sales & Marketing 

Start-up and early-stage companies are typically sales-driven with the aim of gaining customers and revenue as quickly as possible.

As a company develops, it can take a more strategic approach to markets building on the knowledge and customer feedback it has gained in the early years about the key strengths of its products and the markets where it has been particularly successful.

This will then allow the company to take a more targeted and cost-effective approach to business development.

Process & Productivity 

In the early years of a new business process invariably takes a back seat.  The goals and tasks are simple and well-understood, teams are small and there is a high degree of multi-tasking.  As a business grows and matures, process and productivity become much more important – indeed one definition of a scaling business is one that identifies ways to grow more efficiently, resulting in revenue growth at a substantially greater rate than increases in resources and expenses.

Many small businesses have an aversion to process believing that it will inhibit agility.  The opposite is more likely to be true.  The secret is identifying those parts of the business that would benefit from consistent processes and systems thus freeing up valuable employee time to focus on more important tasks.

Culture & Communication

As businesses grow both in terms of headcount and complexity, culture will inevitably change from a period when there was a small tight-knit team operating in a single location.  This is because growth brings more complex business strategy, more headcount, faster pace of change and often multiple sites.  This situation has become even more complex following the rise in remote and hybrid working.

In this context, constant communication and well-developed approaches to employee engagement become critical.  In situations like this it is impossible to over-communicate.

Talent & Skills 

At the heart of everything are talent and skills.  Scaling businesses require different skills and experience to start-up businesses.  There are several reasons for this. One is the need to move from contracted-out services to full-time in-house managers and executives – this relates particularly to services such as HR, Finance, IT and Marketing.  Another is the need for more specialisation in the executive and management teams to free up bandwidth and ensure that relevant individuals can focus on priority items.  And a final one, is that many early-stage business owners do not possess the skills and experience to scale a business – they haven’t experienced the scaling journey before and don’t understand how best to drive and manage it.

Strengthening the leadership and management team is a crucial factor in successful business scaling, whilst another, often overlooked measure of success, is how soon leadership embrace and engage the valuable and cost-effective resource of Non-Executive Directors.

How NJR can help!

At NJR we have extensive experience of working with a range of flourishing SME’s as strategic advisers and Executive Search partners of choice to ensure that they attract and recruit the best senior talent to help them on their scaling journey.

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If you’re interested in finding out more and having a commitment free consultation, please don’t hesitate to contact us.