Is it time to grow? This is the question you will have to ask yourself at some point in your business's lifespan. If you have a recurring source of revenue, a critical mass of customers and operational systems that are robust enough for the next stage, the answer is probably 'yes'.
It's not always that simple though. Dr Shai Vyakarnam, Director of the Bettany Centre for Entrepreneurship at Cranfield School of Management, explains that taking the next step on the growth journey isn't just about performance and opportunities, but how it feels.
"Growth can be daunting, especially for the start-up entrepreneur," he says.
"There needs to be a feeling of confidence in the business and in the commercial viability of the opportunities ahead. Taking that running jump requires a unique kind of energy."
Preparing to leap
“A small business founder knows when it's time to grow," adds Emma Jones, Founder of Enterprise Nation.
"It's the point when sales are coming in, and more are looking likely. It's the point when you accept that you have to build out the business - in terms of people or technology - to meet that demand. It's a nice position to be in, but requires another step of leadership from the founder as scaling a business is a whole new challenge to starting one!"
To be able to grow, Emma says, you have to let go a little and hand responsibility to a trusted team. This can be difficult for a founder who's been doing everything themselves.
A small business founder knows when it's time to grow.Emma Jones, Enterprise Nation
After analysing data from 300 companies, Dr Vyakarnam and colleagues were able to identify the most common obstacles to growth. These are:
- Proving that products and services work and that there is a need for them.
- Proving you have a sustainable business model.
- Knowing whether the business is scalable.
"The first calls for a deep understanding of the value proposition of your product or service, of what you're offering customers and how to deploy this," Dr Vyakarnam says.
"The second requires everything from a strong commercial strategy to a strong team, and the third is all about management talent, sales and marketing."
The first calls for a deep understanding of the value proposition of your product or service, of what you're offering customers and how to deploy this.Dr Shai Vyakarnam, Director of the Bettany Centre for Entrepreneurship at Cranfield School of Management
Start-up: Find anchor customers
During the start-up stage, anchor customers are those whose needs you're going to address, says Dr Vyakarnam. Engage them by letting them try out products or services for free or at a discount. Network through Chambers of Commerce, the Institute of Directors and other business organisations to find a mid-sized company to try your products. If you're working directly with consumers, pilot your offer and do demonstrations. This is the ultimate market research.
Growth: Turn to technology
Focus on how you will get yourself known. Find customers, keep them coming back and make sales, say Emma Jones. "Technology has been a huge friend to the start-up. There are many platforms that help you raise your profile, reach customers and deliver service on a budget. The job of the entrepreneur is to get to know about these tools and stay up-to-date."
Growth: Build your team
"Build a professional team of full-time employees and on-hand advisers," says Emma Jones. "This stage is all about maintaining growth, whilst staying sane. Surround yourself with all the support you can to make it through this stage."
Established: Power of the matrix
Once you're established, the product-market matrix is a powerful and simple tool for defining your growth strategy.
The X-axis shows existing to new products; the Y-axis existing to new customers. You have four choices - from the low risk of maximising your relationship with existing customers and the products you have, to the high risk of diversifying in terms of market and product.
Once you've mapped out where you want to go, you can start the detailed analysis.
Maturity: Take a risk
Once your business is mature, it's time to remember the final quadrant in the product-market matrix. It's time for that high-risk strategy. "Now you have the resources and the talent in place, you need to innovate," says Dr Vyakarnam. "Find the new S curve or choose to die quickly or slowly. It's really a case of move on or move out."
Now you have the resources and the talent in place, you need to innovate.Dr Shai Vyakarnam, Director of the Bettany Centre for Entrepreneurship at Cranfield School of Management