8 of the biggest obstacles to business growth and how you can smash them
haysmacintyre’s Chris Cork shares his observations from attending the first Future Guns event, hosted by Home House
It was fascinating to hear about this year’s Young Guns entries’ businesses, the experiences they’ve had and the challenges they’re facing. Congratulations to all who attended the event; the creative, media and technology team at haysmacintyre never fail to be impressed by each awards year cohort and this year was no exception.
Many of the businesses we met are disruptive – taking established business models and offering them in new formats or utilising them in innovative ways. It’s great to see a new generation taking on the big market players (be they the social media giants, pension providers or the supermarkets) and carving out their own market niche. Yet while products and markets are changing at breakneck speed, many of the challenges faced by growing businesses remain the same. Here are some of the issues delegates were talking to us about:
Any growing business wants to win new clients and gain exposure. Staying on top of increasing overheads, while negotiating favourable credit and payment terms is one of the toughest challenges a young business faces. This is a risk known as ‘over-trading’; maintaining a positive cash-flow is just as important as the bottom line.
Talented, committed people are the foundation of any successful organisation. Holding onto them is never easy, especially in growth markets where the potential rewards can be so great. There are myriad ways to incentivise staff including share options, equity and bonuses. Getting the balance correct will help ensure they stay focused on the right goals.
Preserving the core ethos
As a business grows, founders find their time increasingly divided by the many demands that running an organisation places on them. HR, legal and finance functions are crucial ‘infrastructure’ that often have to keep up with exponential early years growth.
Dealing with investors
To make it to the next level, it is almost certain that external funding will be needed. Investment can take many forms (venture capitalist or business angel, debt or equity) and it is crucial that the type of capital sought suits what a business and its founders are aiming to achieve. Once on board, investors require a level of transparency and reporting that many entrepreneurs may not be used to providing. This can take the form of monthly management accounts, board reports and formal business plans and even an annual audit. Good quality investment is essential to harnessing a business’s potential, but the right tools need to be in place to meet the demands it creates.
How best to rise to these challenges? Sadly there is no simple answer, but adopting the right approaches from the get-go will enhance the chances of success significantly:
Delegate the right functions
As a business grows, those with the vision can no longer complete or directly manage every task, nor should they. Work out what can be done by someone else, trust them, and delegate. This allows greater focus on growing the business and preserving what's made it successful to date.
Take the right advice
As noted above, quality support from outside the business can help the business achieve its vision, and quicker, although it might demand what feels like a sizeable initial outlay. This is especially the case when it comes to making the right decisions on time consuming and complex areas such as fundraising, intellectual property and staff incentivisation.
Know your business
It goes without saying that knowing what your business is doing and how it is performing is essential to success. However, increasing the volume of information on performance is not the way to go about achieving this. One page of concise information on KPIs, headline financials and quality commentary is worth reams of raw data.
Share your experiences
It is a very effective way of learning and preparing for the unseen challenges ahead. So, if you get the opportunity to meet up with fellow entrepreneurs, seize it. There’s always something you can take away, and it’s good fun as well, as the Future Guns event demonstrated.
The inaugural Future Guns event was hosted by Marylebone’s exclusive Home House, bringing together the best and brightest candidates for induction into a future Young Guns class and tracking their progress. Now in its 15th year, Young Guns celebrates the most promising, disruptive and exceptional entrepreneurs in the country aged 35 and under.