30 second summary:
Scale -ups are characterised by having clear plans for growth, being innovative and achieving higher productivity than their peers. Despite these characteristics, every scale-up faces three challenges – to effectively access and address their market, to attract and retain and develop great people and high performance teams, and to secure the necessary finances to support their ambitions.
That needs a strategy - and here we look at a 5-step process to help you scope the strategic direction of your business.
The OECD defines a “scale-up” business (a high-growth business) as one that is growing turnover by more than 20% a year over a period of three years with at least 10 employees at the start of the period.
As such, scale -ups are characterised by having clear plans for growth, being innovative and achieving higher productivity than their peers.
Despite these three characteristics, every scale-up faces three challenges – to effectively access and address their market, to attract and retain and develop great people (and build high performance teams), to secure the necessary finances to support their ambitions.
How can/do scale-up businesses strategise to address these challenges – as, without splitting hairs, a plan is for all intents and purposes a strategy?
First - many business owners and business leaders spend a lot of their time firefighting, dealing with the day to day issues of running their business. They struggle to make time to develop a clear strategy or plan for their company, to take time to work on the business not in the business.
Second – many business owners don’t know where best to start.
Clearly scale-ups both make time to strategise and find an effective way to do so.
How about you?
Let us introduce you to a 5-step process to help you scope the strategic direction of your business:
- Start with the “big picture” of what you want to achieve
Your mission and vision and purpose for the business - what you want your business to be in, say, three years.
- Set the objectives that you want to achieve
The “stepping stones” that will evidence your mission/ vision/ purpose. Make them SMART – specific, measurable, achievable, relevant, time-bound – relative to your markets, people and finance as well as products, services and innovation.
- Identify which members of your team (the “doers”) will deliver each objective
Those most suited and able and passionate about the objectives and the part of the vision that they fulfil.
- Scope what you need to do - your strategies to deliver those objectives.
If you’ve set those objectives, they’re not being delivered at present! What must your business, and the “doers”, do differently to deliver those objectives? Sub-strategies need to be detailed into action plans.
- Specify incremental resources and supporters required to fulfil the strategies
This feeds into the budget for the strategy and business plan.
As comprehensive as it is, for an SME this process, especially when facilitated by an objective third party, can take as little as four days – ideally non-consecutive.
Especially with the uncertainty of today’s business and political climate, make sure you address the following 8 drivers that optimise business value during the above strategic process:
- Financial performance – to increase profits and predictability of future profit streams
- Growth potential – the scalability of your business: geographically, horizontally, vertically
- Resilience – reducing reliance on a single customer, supplier, source of finance or person
- Cash generation – through strong working capital management
- Recurring income – so that your turnover isn’t starting from scratch every month
- Sustainable competitive advantage – what Warren Buffett refers to as a protective 'moat'
- Customer satisfaction - pursued consistently, rigorously, passionately; measured objectively
- Independence from “owners” or single individuals - systemising your business and developing a high performing management team that can operate accountably and effectively.
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