There’s a lot of talk about starting up - but what about scaling up? Once the first couple of years of trading is over, you’re not really thought of as a startup any more and you lose people’s attention. But you’re not an established business quite yet, you’ve plenty still to learn (granted, businesses at any stage will always have something to learn), and to be honest, help and guidance at this stage is probably more important than it was at the beginning!
This is why at Virgin StartUp we introduced the StepUp programme - a series of workshops and resources designed to help businesses bridge that awkward startup gap and realise their potential. We chatted to Ian Mason, Head of Development and member of the founding team at Virgin StartUp, about the need for a programme like this, and how it helps.
Why it’s important
We started StepUp after looking at what support was available for startups past the early stages, for the areas where, from our experience, businesses tend to struggle when getting going. I’m an Economist, so I took a look at the stats: in the US, 20% of businesses have 10-49 employees, but in the UK this figure is just 3.7%. There are many reasons for this, but one is that there’s not enough support for startups that want to move to the next level; they get stuck and perhaps aren’t sure what step to take next. StepUp therefore, is aimed squarely at solving the challenges of people who want to scale but don’t know how.
Developing the right programme
To find out more about these challenges, we held focus groups with different types of entrepreneurs at different stages to investigate the issues holding them back. We ended up with a programme that covered two key things - how to sell better, and how to find the money necessary to develop the business. We focus on the skills that someone needs to do well at these things. Things such as sales strategy, negotiating and storytelling all feed into the business and give entrepreneurs the knowledge and confidence to improve. It’s all practical and delivered by experts from major organisations. The goal is that people leave with practical outcomes - whether that means going on to win angel investment or professionalising their sales process.
A really interesting mistake many entrepreneurs make, is not truly understanding who your customer is. You may have what you think is your target market - but because you’ve pivoted and changed your business along the startup process, it’s common that who you’re appealing to is actually not who you think it is – and, more importantly, not who you’re targeting – no wonder the sales aren’t flowing! A good exercise is to stand up and do an elevator pitch for your business, then get people to compare what you’ve said to what’s on your website; the difference is often fascinating. Every change to your business model has an impact on your business and its customers, but when things are changing so rapidly and you’re in the thick of things, it can be hard to see the wood for the trees, so take a step back and re-evaluate this regularly.
How to scale up well
If I had to isolate one vital element of scaling up effectively, it would be putting structure around sales processes. Always think about developing the sales pipeline, and who needs to be in the pipeline at each stage of your business - this isn’t something that ends with your first year, when you’ve got to the end of your initial business plan. It’s an ongoing practice. For example, you get early adopters of technology, who count for 1-2% of people that will buy something brand new, like a game-changing phone. The same applies for startups – roughly 2% of everyone you target will purchase from you. So, to get paying customers (and enough of them) you need to have many, many people at the top of the pipeline and then work out how many people you need to filter down to at each stage in order to reach that 2% of buyers at the end. If you don’t monitor this, you won’t be able to maintain a consistent level of sales. Developing consistent sales is the key to scaling a business.
Looking to the future
This is just the beginning of our offering to businesses that want to scale, and we hope that other business organisations will start recognising the need for this kind of support too. We want to see people coming back to us thriving and succeeding - employing more people, increasing their revenue, and winning investment. We’ve seen businesses raise major investments after participating in StepUp.
It hugely inspires me when you get a group of 25 businesses in one room, all of whom have already achieved incredible things. Companies that have dedicated customers, capital, super-fans, and all who have achieved it in such a small space of time. If we can continue to come together and support businesses at this stage, who knows the potential we can unlock?