In a recent survey, a quarter of small business owners said growing a business was more difficult than starting one. We talk to those in the know about developing a strategy for growth and making sure you grow your business at the right time.
1. Innovate with pricing & payments
Pricing and payments provide scope for creativity, beyond the core product or service. James Poyser, who set up his online company inniAccounts when he was a contractor, has now introduced a sympathetic pricing plan that gives people the option to take a break from using its services, with nothing to pay.
He says: “It’s great for self-employed people who are between contracts or want to take the summer off. No one else offers this, and it has attracted new customers and grown our business. We’ve modelled the plan, so we know we’re not too exposed commercially. It has also positioned us well for post-Brexit uncertainty,” he adds.
For online retailers, offering a secure online system is imperative to boost consumer confidence and sales. In person, having a range of payment options is also important as cash transactions become less frequent, and card and contactless payments rise in prominence.
Philip McHugh, CEO of Barclaycard business solutions, says: “Shoppers carry far less cash than ever before and, for many, paying by credit or debit card is now the norm – even for small purchases.”
2. Control costs
Research from Geniac suggests that the average small business will spend more than £22,000 on administration in its first year – around £2,500 more than expected.
“Finding the time of focus on growth at all is a real challenge,” says Geniac co-founder Mike Galvin. “Startup owners often become a jack of all trades, trying to sort out the payroll, draw up contracts, balance the books … Outsourcing some of this can help business grow more quickly.”
Keep a close eye on outgoing costs, shop around for bargains and don’t be afraid to renegotiate a contract that is no longer good value for money, say experts. Even small charges can add up over time.
3. Think and act big – from day one
It’s important to set the right tone early on – from having formals meetings and documenting everything properly, to the way you promote yourself.
Digital media enable small companies to seem much bigger than they really are. “Learn to punch above your weight,” advises Alastair Turner, Global CEO of PR and communications agency Aspectus. “Be different. Your size is an advantage: you can be quicker and more radical than the big guys.”
It’s also worth taking a global view sooner rather than later. “The most successful startups target a niche local market to test their business assumptions; once there’s strong local user adoption they quickly expand to new geographies,” says Andy Shannon, head of global at Startupbootcamp.
This is supported by a recent report (pdf) from the Federation of Small Business, which found that firms less than four years old are the most likely to consider exporting.
4. Make sure you’re adequately funded and appropriately advised
Apprenticeship matching service GetMyFirstJob has recently doubled its headcount, and couldn’t have done it without funding. Managing director David Allison says the service, which helps young people get a foot on the career ladder, “tapped into a nationwide need”. The site took off quickly, but the firm initially only spent £75 on marketing in the first year.
Nesta’s impact investment fund, which makes money available to businesses having a positive impact on people’s lives, agreed to lend £500,000 in January 2015 to help the business grow the team, and its wider group of training providers, colleges and employers. More recently the business has attracted a further £1m, some from Nesta again, and the rest from City & Guilds.
To maximise these resources, GetMyFirstJob has sought professional help, from chartered accountants, media advisors and legal advisors. It has also appointed an external chairman, with extensive experience in high-growth companies. “[The chairman] has given us the confidence to grow the business in new and innovative ways,” Allison says. The company now manages over 30,000 apprentice applications each month.
5. Don’t risk the crown jewels
Although you’ll want to shout about your USP, don’t give too much away. “Keep some cards close to your chest,” says Miriam Dervan, founder and CEO of MDE Services Group, which provides specialist meeting planning and patient services to life sciences companies. When the firm launched in 2002, it quickly became well known.
“We were almost too good at what we did,” Dervan says. “Our competitors began replicating the services we provided and more. We’ve learned to keep a lot of our developments to ourselves now, even if that means we have to sacrifice some media coverage.”
Cybercrime is another threat that can put a business’s raison d’etre under threat. In the UK, cybercrime and other attacks, costs businesses £34bn each year. Not protecting your business from online crime can have grave repercussions. The good news is there are simple steps you can take to do just that.
Paul Clarke, product director for global payment acceptance at Barclaycard says: “An easy way for businesses to stay one step ahead is to carry out a risk assessment of their business to help them understand what information they’re holding and where. This will also help them identify who is likely to want that information, it’s potential value, and the controls they need to have in place to protect it.”
6. Follow the profit
Some customers and products are more profitable than others, so focus your efforts wisely. “Go for low-hanging fruit, and know which products clients will pay more money for,” advises Steve Gaskin, founder and MD of Right Angle Events, a corporate team-building events company which uses crime scene investigation tasks to get people to work together.
The company holds awards and advises the BBC on crime dramas. Its experiences can be costed to suit all budgets, right up to sending helicopters to meet clients. Although it offers some attractive packages, the company never discounts its products so as not to devalue them.
7. Make your customers work for you
If a customer is clearly delighted, ask for a review or referral - even if it’s just a mention on Facebook or Twitter. There’s nothing more credible than a word-of-mouth recommendation, so encourage customers to think about whether they know others who could benefit from your product or service. You could consider offering a loyalty discount to encourage referrals.
Similarly, seek customer feedback about other features, products or services they would be interested in. If they trust you already, they’re much more likely to buy from you long term, rather than go looking for a new supplier.
8. Think laterally
To take growth to the next level, you may need to think outside your own box. “Don’t focus entirely on organic growth,” advises Sharon Richey, founder and CEO of marketing agency BEcause, adding that looking to new markets or products can provide the kind of growth entrepreneurs are looking for.
One option is to diversify, as long as this doesn’t weaken your core proposition. “This can be the key to successful and sustained growth,” says Darren Fell, CEO & co-founder of Crunch, a cloud-based accountancy service.
“We disrupted the traditional accountancy market in 2009. Now that we understand the challenges faced by our clients, we’ve diversified into new lines,” Fell says. Among its new offerings are a specialist mortgage service to help the self-employed buy a home, and a debt collection service to help them chase overdue invoices.
9. But don’t be distracted
Whatever you do, stay focused, warns Stuart Miller, chairman of the Small Business Charter. Today, he is CEO of click-and-collect locker provider ByBox, a £73m turnover business, but says he has come back from the brink of near failure more than once during his career.
“The scale-up phase of rapid growth is a white-knuckle ride,” he says. “It doesn’t matter how well you plan and anticipate – there will still be fires to be contained, and it’s a huge temptation for the CEO to get their hands dirty, when they should be galvanising the senior team and planning what happens next.”
10. Keep the passion alive
“A start-up won’t succeed without passion about what you want to accomplish,” warns Hugo Burge, CEO of Momondo Group, the parent company of Cheapflights and Momondo.
“It’s crucial to distil what it is that drives you, and articulate this to your team and the outside world. Take time to nurture and cultivate it – it will carry you and your company,” he says. “Things can and probably will go wrong, so you need the perseverance to stay resilient and committed to the end goal.”
Content on this page is paid for and produced to a brief agreed with Barclaycard, sponsor of the Smarter Working hub on the Guardian Small Business Network.
