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Growth experience: The three opportunities ambitious businesses must seize
We've partnered with Raconteur to deliver a research program to look at what's driving UK businesses with ambitions to grow. In this first article Raconteur speak to entrepreneurs about the importance of partnerships, the right business model and having clear goals and values.
Despite facing unprecedented challenges, UK businesses are bullish about their prospects in the year ahead.
When Wing and Sharon set up their packaging business in June 2020, they knew they were taking a huge risk. Covid was raging around the world, forcing countries into lockdown and economies to a standstill.
Yet, like the best entrepreneurs, the husband and wife duo saw an opportunity in a crisis. They had long wanted to launch a sustainable packaging business for e-commerce brands, recognising that retailers were struggling to improve their offering despite fierce consumer pressure. And when the pandemic struck, sparking a massive increase in online shopping, the pair knew the time had come.
“There were huge challenges when we started. Sharon had to go to China to set up our supplier base and wasn’t able to come back for nine months because of lockdown,” says Wing. “But if we had started the business earlier or later it wouldn’t have worked. The pandemic was a change moment we had to seize.”
Fast-forward three years and the couple’s bet has paid off. Sourceful’s customers include well-known brands such as health-tech business Zoe and drinks company Trip. The business now employs 90 people globally and tripled its revenues last year.
Wing and Sharon’s success story is awe-inspiring but it is not unique. UK businesses continue to face significant challenges, including geopolitical uncertainty, rapid digital transformation and a complex regulatory landscape. Yet despite this, most are still hungry to grow, with HSBC UK’s recent Going Global for Growth report finding that almost 450,000 businesses across the UK expect to extend their global reach this year.
Soft’ leadership skills have been more important than ‘hard’ technical skills, as they have helped to build morale and manage uncertainty.
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Clear goals and values
The Bank also found certain attributes are common to those businesses able to demonstrate growth, including a strong leadership culture, an ability to foster innovation, and the capacity to navigate global expansion.
“Successful entrepreneurs always know what their goals are and have clear values,” says Frances Howell, who is managing director for HSBC UK corporate banking in the Midlands and East Anglia and has spent her career helping companies grow. “They build diverse teams that collaborate well to drive innovation, and they understand their markets and where the opportunities lie, be that domestically or overseas.”
Great communication skills, a knack for incentivising and developing staff and a penchant for creativity also help. However, it all starts with the right leadership, says Miss Howell. “Everything falls off the back of that. If they are not looking forward or focusing on these key things, they may struggle.”
Certainly that was the case for Wing and Sharon, who became HSBC business customers as Sourceful began to trade across borders. The firm faced real challenges at the start, says Wing, as it was trying to crack a market dominated by industry giants and needed to communicate what made it unique.
At the same time the business – which serves clients via a global network of suppliers – had to manage teams on the ground in the UK and China.
"We had to get these two sets of staff to understand each other which wasn’t easy,” Wing says. “There was a seven-hour time difference between Manchester and Shenzhen, so the teams only crossed over for four hours each day. It really made meetings feel important – you didn’t have infinite time, you had to make it work and get on with things.”
There were also language and cultural barriers, including around how to communicate and give feedback when things weren't going so well. Strong leadership was essential to foster the right culture in a fast-growing, global team, says Wing.
“You have to encourage your people to be ambitious in the face of change when you’re starting a business. But you also need to be transparent and share the highs and lows,” he says. “‘Soft’ leadership skills have been more important than ‘hard’ technical skills, as they have helped to build morale and manage uncertainty.”
It’s not just the technology, it’s the business model
David Craig is chief executive of Iceotope, which provides precision liquid cooling systems for data centres around the world. The Sheffield-based firm has seen rapid growth since it was founded in 2015 thanks to surging demand for cloud computing and more recently artificial intelligence. It employs 80 staff globally and counts Intel and HP among its clients.
Like Sourceful it has had to fight to communicate its unique value proposition in an industry dominated by giants. Strong leadership has also kept the business on track during an intense period of growth.
When you are in growth mode it is about understanding and communicating your vision – the benefits you have to offer and the values you represent.
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“You also have to build a collaborative and collegiate workplace so you have the right people and processes in place. And you need the right coalition of investors, partners and customers around you in order to succeed.”
Innovation has underpinned Iceotope’s rapid growth, with the firm boasting more than 50 patents for its unique technology. Mr Craig says the firm’s cooling systems are more efficient than those traditionally used by data centres, which gives the firm its edge.
Yet Mr Craig prefers a wider definition of innovation when it comes to explaining the company’s success.
“It’s not just the technology, it’s the business model,” he says. “For example, from early on we decided to focus on data centres, even though you could put our cooling systems in electric vehicles, as we don’t want to be all things to everyone and note quite enough to anyone. Credibility doesn’t come by spreading yourself too thinly.
We don’t want to be all things to everyone and not quite enough to anyone. Credibility doesn’t come by spreading yourself too thinly.
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Too often businesses fail to view innovation in this holistic sense and and miss out on wider opportunities,” says HSBC’s Miss Howell.
“Too many firms think innovation is just about investing in new kit or AI. But it’s actually anything that will create value in your business, be that using tech or assets to unlock cash or trying out new processes,” she says. “It should also be the responsibility of everyone in a business to drive innovation, not just the senior management. That requires good comms and two-way feedback with your staff.”
The right partner for growth
International expansion is another route to growth for many UK businesses, but it comes with challenges. Firms may face regulatory and cultural barriers when entering new markets, not to mention difficulties in moving capital across borders. Many will often seek the support of trusted external partners to get a handle on the opportunities and risks.
“Internationalisation is very complex, there are lots of local gotchas that happen,” says Wing. “Many things can't be predicted purely from looking at your home market.”
Sourceful chose to bank with HSBC for exactly this reason, he says, describing it as a “truly global bank”. As the packaging business expanded its global reach to support its clients’ needs, it had to find a way to make and receive payments in multiple local markets.
“We started off with local banks in each market but that was too slow and cumbersome. There were lots of options that sounded good but weren’t in reality, as they couldn’t pull it all together,” Wing says.
“But going through HSBC UK was really easy and took away a headache. The last thing you need to worry about is opening a foreign bank account, or being able to send money to a supplier. I didn’t realise how hard it would be.”
HSBC can also help businesses source funding overseas, and it provides guidance to clients on global market trends.
Mr Craig, meanwhile, says HSBC’s “deep global roots” and influence has helped his company target clients across the US, Europe and the Middle East.
99.9% of Iceotope’s business is international so HSBC UK was always going to be a natural banking partner.
“On a practical level, it is about facilitating transactions in different currencies and moving assets across borders, which HSBC UK does seamlessly. But I have also been surprised by the degree of engagement and involvement HSBC has shown in terms of strategic support.”
After a tough few years, UK businesses are feeling more optimistic as inflation recedes and investment picks up. Yet many challenges remain and an increasing number of firms are turning to their banks for strategic support.
According to HSBC UK research, some 76% of growth businesses agree it is important to have tailored solutions from their bank to support their growth ambitions.
Most also want their lender to proactively offer market insights and other intelligence to help them strategically. Miss Howell says trusted external partners are vital to ensuring business thrive in an uncertain world.
“The best thing we can do as a bank is bring ideas and solutions to our business customers,” concludes Miss Howell. “It’s not just about funding, it’s about understanding what they want and helping them achieve it.”
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