Knitting and crochet is an activity that generates annual global supplies of up to $100 billion in sales. On the world most popular hobbies, it ranks top. In just four years, Knitting and crafting enabled LoveCrafts to grow from a start-up to a global business.
Whereas there is no single route or road map to scaling up a business, our experience with start-ups with the potential to grow fast has given us a chance to pick some lessons that can help any start-up business scale up. Here are six of these vital lessons.
1. Understand the ways of managing rapid growth.
A well skilled and qualified management team is one of the essential qualities that investors look for while conducting due diligence to establish a company’s ability to scale to higher heights successfully.
Combinations of qualities including dynamic and strategic approach as well as relevant experience are key ingredients for management teams to expand a business successfully. The ability to oversee growth in sales, recruit the appropriate workforce and building a robust social media platform are also essential elements of a management team.
Weaknesses in the management teams can wreck a business, hence the need for a management team with proven ability in handling people, systems, and business finances.
2. Take advantage of digital platforms
For start-ups, the digital platform presents an alternative route of challenging the traditional players who stick to brick and mortar legacy and are not keen to utilize knowledge on online platforms.
LoveCrafts has cut a niche in the digital marketplace with the correct engagement of content, commerce, and community. There has been an increase in venture funding in digital marketing. Firms such as Deliveroo create disrupting business models using top-notch technology tools.
Digital platforms come with several advantages such as lower cost of customer acquisition and an opportunity to spread wings globally at a minimum cost.
3. Bring together a team of talented professionals
Given that technology platforms require a substantial investment, access to funds and availability of talent for digital platforms determine the pace at which businesses scale up.
A 2017 Tech Nation survey that involved more than 2,700 digital tech founders indicated that over half of the founders regard identifying employees with digital skills as a major setback to a start-up’s growth. It also reported that start-ups struggle if they lack a brilliant team.
With Britain’s exit from the EU, the future of the job market is quite uncertain. About 31% of employees in London and South-East working for digital technology companies are foreigners.
4. Source funding to enhance growth
The report by Tech Nation further stated that access to finance posed a challenge to more than 40% of the businesses. The survey confirmed earlier findings by Oxford and Cambridge universities business schools that the two most influential boosters to a start-up’s scaling up are identifying management and finance.
For your business to be able to support increasing sales as it grows, you need to secure investments before your start-up starts to grow so that your business’ software platforms, logistics, etc. are robust enough to accommodate the growth. Note, this will most likely mean dilutive funding, and if it does consider tax reliefs investors can gain to make you more investible such as Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) or Venture Capital Trust (VCT). You can also consider non-dilutive funding such as debt, R&D Tax Credits and Grants.
5. Plan your expansion Route strategically.
An expansion plan is paramount. By addressing the question of skills, management information systems, governance and market entry route among other essentials, your start-up will successfully formulate a scaling up strategy.
A company planning to expand globally should first consider creating a board with an international representation way before internationalizing the business. Similarly, the company must strategically choose its target markets.
A good example is Skyscanner. It is a travel search company that made a footprint in Europe and Asia ahead of the US. This strategy put Skyscanner in sight of a Chinese travel related investor, Ctrip, who bought it for £1 billion in 2016.
6.Set achievable targets for yourself
Importantly, look at the local market and the possibilities it presents and make efforts towards capturing a wider market share, mergers and acquisitions. The key thing is to set measurable goals with milestones that will add the highest value to your start-up business.
Ultimately, scaling up presents an opportunity to create more wealth, drives innovation, attracts investors and creates employment. This is the bigger picture which you should look at. A study by Nesta forecast that if scale-ups in the UK grew by just 1%, they would create over 150,000 new jobs and eject about £225 billion into UK’s GDP by 2034.
Though it is a challenge to grow a business, LoveCrafts analogy presents a pattern for success that involves
- Putting together a team of skilled professionals
- Getting funds from a supportive and engaged investor
- Laying down an ambitious but achievable expansion strategy
- Having a strong technology platform and efficient operations
These strategies are just the tip of the iceberg when considering business growth. Scaling up your start-up takes preparation, planning and funding.
Download our E-Guide today, for advice on funding company growth.