Growing a business. We hear about that every single day; if businesses don’t just want to survive, and indeed that’s not really an aspiration of too many start-ups, then growth is what they seek. High growth, fast growth, incremental growth...
It’s easy to define growth as simply doing more. Making more things to sell. Writing more stories to sell. Selling more consultancy days to clients. But there are a finite number of things, of stories, of days available to one person.
Sometimes, there is no ‘more’. Sometimes, the only option is to scale.
To scale-up a business = to increase proportionally the amount of customers a business is serving; to grow relative to size.
The scale-up. The tiny step, or giant leap, from one stage of a business to the next, really should not be underestimated in its significance, its importance or its difficulty. That’s not to say that it’s always hard, of course.
Over the next month, BQ will be publishing a series of four articles looking at the practicalities of scaling a business. Starting with a small business aspiring for opportunities to scale, and moving on to some larger businesses who have great advice to share. But, for now, we start at the very beginning.
The sole trader
Clare Freemantle runs Serious Stamp, an online business creating bespoke stamps for personal and business use worldwide. Serious Stamp is six years old, and came into being when Clare was unable to find a personalised stamp for the handmade bears she used to craft. The bears are now a hobby, and the stamp-making has become a healthy business run from her family home, around the lives of her husband, two young children and a part-time retail job.
Clare’s at a crossroads. There are a finite number of hours in a day, and a finite number of stamps you can fit in a house which doesn’t have a spare bedroom. Selling via online platforms like Etsy and Notonthehighstreet.com have made Serious Stamp a serious business, but she feels she’s hit that glass ceiling where she’s at physical capacity. She can’t store any more supplies, nor make any more stamps, than she currently is.
A creative mind, she’s full of ideas about how she could promote her business, extend and diversify, but those ideas are relegated to one of many notepads and sketchpads that adorn her working space. She can do no more, without change.
“I’d love a workshop. Somewhere to store supplies, so I can bulk buy properly, and work to make the stamps more effectively, and in peace!” Clare tells me. “But those places just don’t seem to exist for businesses like me. I need running water, which rules a lot of places out. I’ve not found anywhere local for under around £80 per week.” That’s a pretty serious investment. It’s not unaffordable, at all, but in the short term it would put some pressure on what is currently a fairly pressure-free affair.
“Working for myself, full time.” Clare’s refreshingly straight-up about her goal, and also realistic about what it’ll take to achieve it. “I can do it, no doubt. But it’s got to be right for me. Right now, working around bringing up my children, that outlay doesn’t add up for me. If someone offered me a sheds-worth of space for £25 a week I’d snatch their hands off, but I’m not finding that locally.” For Serious Stamp, scaling up requires two commodities far more precious than money: time, and space.
What can we learn about how to scale up a business from someone who hasn’t done it?
1. RISK – what’s your appetite?
There’s an inherent risk involved in scaling any business. As well as the obvious financial risk, there can be reputational risks attached to involving other people in your business, either by outsourcing, or by employing for the first time. There’s a risk that it simply will not work; in the example above, there’s a risk, albeit small, that the market for custom stamps simply is not big enough, or that Clare cannot get a big enough market share of it, to sustain a business any smaller than she already is.
Additionally for Clare, there’s a risk that scaling now will eat into her available time, more than she is willing to give. Could she work around the clock to make it work? Probably. Would her work/life balance suffer as a result? Probably. That’s where Clare’s risk appetite drops off just now.
For businesses looking to scale more significantly, for example if Clare wanted to step up to mass producing stamps to supply a high street stationary chain, then the risk involved in that would include seeking financial investment, entering into property contracts and employment contracts. Whilst there are tips to getting all of those things right, the risks they all come with should not be ignored, and should all feed into you making a decision that’s right for your business, but that lets you also sleep at night.