10 ways to transform your SME into a high-growth business machine » SMEInsider

10 ways to transform your SME into a high-growth business machine

Starting up in a new business is a rollercoaster of nerves and excitement, but once you’ve got things off the ground, it can swiftly stagnate. Led by the serial entrepreneur Robert Foster of Red Ochre, the Digital Accelerator Programme’s Business Planning for Growth Workshop had some top nuggets of advice for making sure your company keeps on growing at a rapid rate. Here are ten of the best.

1. Pick the right moment to ask for money  

The moment you set up a new company is not the time to look for funding – you’ll have far more luck if you can show that you’ve created and tested a product, and can prove it’s shown signs of success. But what about when you want to try out your product in a new market or country? Reinvesting profits reaped from organic growth is, of course, the least risky way forward, but there may be times that you need extra cash to help you along.

Foster recommends avoiding debt-based finance like bank loans where possible, as these will eat into your cashflow further along the line. Instead, he says, setting up a jointly funded venture with a company in the country you’re going into can help to split the risk while helping you get valuable insights from someone that understands your market. This may involve setting up a separate company on paper, purely for the purpose of your expansion – for example a Special Purchase Vehicle/Entity (SPV/SPE) or, in China, a Wholly Foreign-Owned Entity (WFOE). Alternatively, you could think about selling shares to raise money, just make sure you don’t give away too much in your enthusiasm. Which brings us to…

2. Think about what you offer investors apart from equity 

Asking for a loan or giving away a huge chunk of your business aren’t the only ways to raise money, says Foster. In fact, a more creative approach can often lead to a win-win situation. Think about other ways that your business can benefit that company. Perhaps they can use your intellectual property in a different, highly profitable way to you? Perhaps you can help them meet some of their ethical or environmental targets? Or perhaps, as in one real-life example that Foster gave (of a media company he had worked with), you help to train up young creative talent that can feed directly into your investor’s recruitment pool?

Think of your potential investors as you would a client, identify their pain points, and focus on how investing in you could form the solution.

3. Beware the rigid business plan 

Banks love a five year plan, but as any entrepreneur knows, they are mostly nonsense. As Foster says: “Anything beyond three years is basically just making things up – anything beyond two years, if you’re a tech company.”

While you may have to jump through the requisite hoops if you’re applying for outside funding, internally you need to be far more open to change. Remember what you stand for and what you’re trying to achieve, but trying to stick slavishly to your original business plan might well be what’s keeping you back. Ask yourself how things have changed since you started out, in your business and in the wider industry, and be brave enough to question whether you could take things in a different direction.

 4. Borrow ideas from different disciplines 

“You can call it sharing best practice or ripping off someone else’s idea,” jokes Foster, but exaptation, or transferring ideas that are commonplace in a different discipline to your own is one of the biggest drivers of innovation in any industry. Look at what works really well in a different sector and think about how these ideas could be adapted to your product or service.

5. Focus on the thought leaders 

For every 10 people who say they would be likely to pay for your idea, only one actually will. The key is not to keep hammering all of these tentative customers to make the switch, but instead to identify who the thought leaders are in their industry, and then to target them. Once you win over the influencers in your potential new market, uptake tends to snowball.

6. … But woo the gatekeepers! 

If you’re selling to other businesses, or even occasionally direct to consumers, there are situations where you know your target audience loves the idea but for some reason you still can’t make the sale. This, says Foster, is a common problem, and it often boils down to a lack of understanding of how a purchasing decision is actually made. For example, it’s not enough to know from your research that 80% of CEOs love what you do if you can’t get past their PAs to pitch the idea. In the corporate world, a new purchase has to pass through through the ranks from the actual user to the recommenders and influencers that shape the purchasing decision, up to the person that actually signs the cheques. Working out who these people are and how to woo them, as well as identifying which people in an organisation are likely to oppose the purchase and why, will have an enormous impact on your ability to sell.

7. Adapt your value proposition to the times 

“Do you want to be disruptive, or do you want to prop up the old order?” is a question that Foster believes all companies should be asking themselves. The times they are a-changing, and the thing that made you a lifesaver to your customers 18 months ago may now underwhelm them at best. It’s essential that you not only look for new ways to make your product or service better, but that you make sure you still understand what “better” means – and that involves asking them what they want, and then delivering it.

8. Share knowledge within your team  

The best way to improve is to question everything. Asking your team to reflect on what’s working and what can be improved in an excellent way to do this – just make sure that you are actually sharing this information between you so that you can all learn from each other’s mistakes, successes and solutions. This will help you to grow and improve at an accelerated rate.

9. Be a strategist, not a meddler 

The primary culprits when it comes to hindering growth are directors themselves, says Foster. As teams expand, many fall into two categories: heroes (“I’m going to work 18 hours a day even though I’ve hired six people because no one can do it as well as I can and it will all fall apart without me”) and meddlers (“I’ve hired six people who are experts at what they do but I’m going to go around micromanaging every decision they make all day anyway”). Both of these are anathema to growth. Instead, directors and CEOs need to become strategists, able to look at the company as a whole, work out where it needs to go next and impart their vision to the team – then give their colleagues the breathing space to make it a reality.

10. Know when to sell up

Some entrepreneurs are busy dreaming about selling their company for millions before they’ve even made the first sale. Others cling on until they’re bored as hell and growth has stagnated before they start to consider their exit plan. Instead, says Foster, you need to get your timing just right, so that things are looking their rosiest just as you put the company on the market. So, if you don’t think you want to do this forever, wait until you’re on a steady upward trajectory but not before things start to flatten out. That’s your moment to gracefully depart.