Some business owners get so immersed in the day to day that they neglect the business vision and struggle to scale up. BusinessZone’s Christian Annesley spoke to Matt Levington of business coaching franchise Business Doctors to walk through the issue – and how to address it.
Why do you think vision is so important if you want to scale in a considered way?
It matters because every business that’s scaling up needs its leaders to set some visionary goals to aspire to and live by. It doesn’t matter if forecasting or modelling for the business can only be done with confidence or accuracy over shorter time frames – six or 12 or 18 months, say. A growing business still needs a real long-term vision to live by.
Why do I say this? Partly it’s because a leader setting a challenging goal is the best way to get a business moving in the right direction, whatever pessimism or lack of ambition others may express. No-one, for example, could ever accuse Facebook’s Mark Zuckerberg of lacking a vision and some cast-iron self-belief – and it has got Facebook a long way in a short time.
OK. What should a vision look like?
A visionary goal that helps a business to scale up should potentially be achievable further down the line but not be something that’s possible in the short term. It should strive for something more than the current reality and not be limiting at all.
In other words, it’s a big idea that sets the bar high. That’s a mindset that helps you to scale.
How does this relate to scaling up?
First, that visions need to be believable – and then believed – if they are to motivate and inspire. Second, that once you start planning around being a bigger business great things will often flow from that – and quickly. Just because the big-vision partner was sometimes unrealistic about prospects, it didn’t mean he was far off-target. Some of the deals he kept talking about when we first showed up really did come off – maybe not quite as described, but convincingly enough to take the business from a minnow to a decent-sized player in a marketplace in just a couple of years.
Could you talk more about the challenge of scaling up?
Yes, certainly. Imagine your vision is to grow a company from £1m to £7m turnover within five years. Before you even get started on that journey, the next step is to imagine what a £7m-turnover version of the company will look like. How many staff will it have, and with what skills? How much space will it need? Where might it need offices? What technologies will it be using? What partners will it have? What leadership team will it need in place to run effectively?
Your vision needs to be a big idea that sets the bar high. That’s a mindset that helps you to scale.
My point is simple, I suppose: you need to think about this now, not just as a flight of fancy but because a business that’s turning over seven times more will look different to today’s company – and getting there will be a journey. It’s a journey that needs to start at once.
As companies grow they need more structures in place if they are to work well. They need a management team with complementary skills, for starters. Someone to run the finances, someone to look after HR issues, someone to drive operational matters, someone to develop new business, perhaps someone to oversee IT needs. These are requirements that can’t be fulfilled overnight but need to be worked towards – usually over several years.
Having a vision, in other words, gives you a framework for how the business will run from here. It should inform what happens each and every day, because no-one creates a big, successful business by accident. You need the intent and a structured plan in order to scale up in the right way.
Is this stuff instinctive for some leaders?
I don’t think it’s instinctive. Some business leaders, and particularly serial entrepreneurs who have been there and done it, know this and apply the logic from the moment they start a business. Some even have an exit strategy in mind, and how to get from here to there.
Most don’t, however. Entrepreneurs and business leaders come in all shapes and sizes, and a good proportion don’t think that way at all. Some are excited by the process of creating something from nothing and tend to fall down on some of the detail and attention to needed for sustainable growth. Or others start a business because they can see the market opportunity, but then get bogged down in the day-to-day.
There are many variations on the theme, of course, but it seems safe to say that, among the millions of small businesses here in the UK, only a minority – and a small one at that – are run by leaders who have got all the bases covered from start to finish.
How do you get started on the vision to scale?
At first it can be shocking when you begin to think about the current business structure and compare it with the kind of structure that will be needed to sustain a bigger company. All of those new systems and processes and locations and people to support can look overwhelming.
No-one creates a big, successful business by accident. You need the intent and a structured plan in order to scale up in the right way.
But once you start to break things down everything will soon look quite different. After all, getting a company from £1m to £7m turnover won’t need seven times more staff or seven times more suppliers or seven times more space – or seven times more anything, in all likelihood.
That’s one of the beauties of business – economies of scale mean you will be more efficient as you start to grow (and particularly if you are already established and aren’t trying to get from three to ten staff, where profitability doesn’t always improve smoothly with staffing and investment). A £1.2m turnover business might employ 15 staff, but to get to £6m might only need 30 staff. It’s not an easy evolution, and will take time, but the effort really is repaid in most cases.
And, of course, it’s the vision that gets everything moving. Being on a road somewhere requires a destination: planned evolution is the aim rather than stumbling forwards in search of ‘organic’ growth.
OK. Can you explore the question of first steps?
Once you’ve started on this journey there should be no reason to turn back. Suddenly feel like you need a sales director, having never had one? Of course you do! But one step at a time.
Working with your vision in mind at all times should make you purposeful on all fronts, because it will affect everything. For starters, it will affect your relationships with customers and suppliers and with staff – and mostly for the better. But everything new has its challenges, too. This is a change that will affect how you think about all your relationships and probably what many of them think about you.
Consider when you are recruiting staff, even at a relatively junior level. All of sudden you’ve got this story to tell about where the company is headed and how you plan to get there. That’s just the kind of idea likely to get would-be employees excited, isn’t it? It probably also helps you stand out from the competition that your would-be staffer may also be talking to. And, the real beauty of it, assuming you’ve fully committed, is that it’s absolutely true! You really are on this journey with this particular, ambitious goal in mind – and anyone that joins should want to buy into that.
Partner companies are also likely to get excited at where the company is headed and what it might mean by extension for their business. They might commit to some new projects, and deepen the relationship all round for both sides’ mutual benefit.
And, then there are the customers. If it’s a B2B business, some of these might now be inclined to view the business more like a potential partner – or just to do more business all around. If the customer or potential customer is in the public sector then it might be the difference between being able to bid for some work or not. For example, if you are able to describe your company in a tender bid how it will look if you win the work rather than how it looks now, it could put you on a different footing entirely.
What about the risks? Might you overreach with some of this?
There are risks that attach to every growth journey. For example, in the case of public tenders, you don’t want to over-promise or over-extend yourself in a way that some would view as fraudulent. But equally there are great opportunities as you start to grow. In some ways the world of business gets easier as you move up a level or two. Some of the competition actually thins out as you grow. There are often better, longer contracts up for grabs, with better pricing relative to your own costs, and work that lets you plan ahead and invest with more confidence than ever. And there are new customers that you can go after that were previously out of reach because you didn’t fit their supplier profile.
In short, things can start happening quickly. It’s that much easier to raise finance, for one thing – a huge sticking point for many smaller companies.
There is a lot more to say about the internal challenges that come with scaling a company and motivating staff, but I hope this is thought-provoking for starters.