Scaling up your start-up: 4 tips for new businesses
We speak with Philip Brennan, one of our business energy comparison partners and Head of Businesscomparison.com, on his tips to scaling up your new business.
Despite 45 per cent of the UK’s small and medium sized businesses wanting to expand this year, many lack the proper funding in order to grow. Developing your business to ensure long term success is a challenge.
Growing too fast can cause you to run out of money, whilst turning away work can potentially enhance income for your competitors. Here are four tips to move your business onwards and upwards.
1) Plan Ahead
Analyse what steps you’ve already taken in your business to get to the stage you’re at. Whilst it might appear painful to dwell on negatives and be indulgent to rake over successes, it’s a valuable process to consider what went right and wrong and what you learned along the way.
It’s helpful to analyse your spending to gain insights into what represented good and bad investments. For example, you may have decided to outsource work to contractors or agencies with specific skillsets such as marketing or social media, however, as your business moves forward it may represent a better investment to have these roles filled in-house. Create a short term and long term plan and make sure the two are aligned, it is all too easy to get caught in the moment and lose focus of your long term plans.
An increasing number of small and medium sized businesses are updating their plans annually, with some even altering them every six months. This is a useful strategy to drive your business towards your long term goals. Finally, share your plans with your employees. Despite being at the helm of your business you’re not going to be able to grow it alone. Make sure that staff are aware of your plans and that they are able to contribute to them. Communicating your plans effectively is central to making them a reality.
2) Invest Time In Quality Recruitment
If you’re scaling up your business, then it’s likely that you’ll be taking on new staff to help the process. Take the time to pinpoint exactly what skills and experience you require from your new members of staff, and be clear and accurate about what you want from a new employee. Look within your existing staff to consider whether you have any potential candidates.
Is there any training you can offer to support their professional growth and equip them for the emerging needs of your business? Consider the practical implications of taking on new talent and the financial consequences it brings, such as new equipment, training budget or even larger premises. Increasingly, SMEs are turning to virtual offices, with staff working from home.
The case for this type of working is impressive with just under a third of UK office workers reporting an increase in productivity when functioning outside of the workplace.
Whatever you do don’t panic hire – if you fail to entice the right candidate the first time around then be patient and re-advertise. Investing in people is investing in your future. With a talented and dedicated workforce your business is far more likely to thrive.
3) Research Your Business' Financial Options
In order to avoid being stuck in a financial rut, take the time to carry out research into the best deals available for your business. Whether it be commercial mortgages, invoice financing or bank loans, it’s much more financially savvy to have a look around. Over one million sole traders have been rejected by banks, whilst a further third have been declined for a bank loan.
As a business owner, you need to be aware of the alternative options. Although funding is key for a business it shouldn’t be a reason for delay or failure. Going via a bank can become expensive and there is always the possibility of getting declined. Choose a lender which suits your business needs. Business bank accounts and loans offer different products and services so compare what’s on offer to get the right deal for your specific business requirements.
As your enterprise grows and you need different financial support, consider switching your business bank account. If you need to buy equipment or machinery, then asset finance may be the way to go. A massive 82 per cent of SMEs are unaware of alternative business funding options and 60 per cent of SMEs are currently spending less than an hour researching lending providers so take the time to carry out your research online or over the phone.
Have confidence that you can take control of your business finances and select the deals that are best for your firm. Comparing and switching deals to save money is very much within consumer culture right now, with many of us using this method to source the best deals for consumer energy, insurance and mortgages.
That said, there really is no reason why business owners shouldn’t carry out the same process for their mortgage search. After all, the costs are likely to be greater and so are the savings! It is also important to make sure that you are fully aware of the terms and conditions of the loan or finance agreement.
4) Make Savings For Your Business Where Possible
Raising the capital to grow and develop your business could mean tightening the purse strings elsewhere. Make sure that you have the best possible business energy, banking and finance rates. Don’t just concentrate on the specific areas of growth but look to improve and economise on how you already organise your bills and finances.
There are savings to be made and identifying them does not have to be a laborious task. The Federation of Small Businesses claim a third of small firms highlight the cost of energy as a barrier to the growth and success of their company. Despite this, 70 per cent of enterprises experience difficulty comparing energy tariffs and 43 per cent have never switched supplier. Not only that but many small business owners are failing to carry out even the most basic actions to save on gas and electricity bills.
It was recently revealed that small and medium sized enterprises have been charged £4 billion per year in hidden bank costs to transfer money internationally. Being shrewd with your business costs can make all the difference when it comes to upscaling your company.
Ultimately, you should be aware that, while you are growing your business, the structure of your operation is likely to change. There will be new costs, expenses and challenges associated with this stage so it’s wise to stay on track with company finances, which will ideally lead to success.