What barriers must businesses overcome to reach the next level of growth?
Business growth barriers are all too common a challenge for entrepreneurs, regardless of how well established their businesses are. As many Scottish businesses have enjoyed solid growth since the last recession, a new focus on entrepreneurship has seen the help and support available to start-ups vastly increase. But, as the first successful cohorts from the new incubators and accelerator programs are finding, transforming these ventures into larger businesses that bring serious money and jobs into their communities is a different matter.
It is the classic ‘next level growth’ trap: the skill set needed to scale up is very different from what entrepreneurs learn when pitching an initial idea and trying to make it work; and the financing that is needed is also on a different order of magnitude. Yet if successful start-ups cannot be transformed into thriving medium-sized businesses, most of the advantages touted for an entrepreneurial economy are lost.
Earlier this year, a study by Grant Thornton LLP identified £4.3 billion of potential Scottish business growth that was being lost to an array of barriers including technology, access to skills, talent and innovation, and financial issues. In order to address this crucial issue, Strathclyde Business School recently joined with Glasgow City Council to develop a growth programme for the city’s ambitious and innovative enterprises. The iGAP @ Tontine programme is being offered to clients of the City Council’s Tontine business accelerator, which attracts and nurtures high-growth entrepreneurial talent and is host to many of Glasgow’s significant growth companies of the future.
WeDO member, Professor John Anderson, Head of SME Engagement at Strathclyde Business School, said the key barriers to achieving next-level growth were typically innovation, skills and people. John comments:
“We can help directly with the innovation gap. We can bring in academic colleagues who are experts in their field, and we teach companies to take an approach grounded in research: everything needs to be tested and validated in the market.”
The skills and business approach necessary to progress is also a barrier that is directly addressed by iGAP. Building on the Business School’s pioneering Growth Advantage Programme, it delivers relevant, accessible and practical learning for the leaders of ambitious businesses in Scotland looking to scale up.
Anderson says many of the entrepreneurs who arrive at iGAP do not have a fully formed management team in place, Instead, they are still having to do everything themselves – even areas they are not skilled in.
“Reaching the next level of growth involves re-inventing the business. We encourage leaders to develop the tools to build a team, and trust those people to provide excellence in their field. The founder needs to move away from the day-to-day and take a strategic, visionary role.”
Contrary to popular belief, John doesn’t believe availability of funding is a barrier in itself. Instead, he sees the need to bring experienced, well-connected people into businesses with next level potential. Unfortunately, these individuals are in short supply.
“Scotland is awash with investment capital but for start-ups that have passed the first phase, their current investors won’t necessarily be able to provide it. Having the right board is therefore very important, especially an experienced chairman who can effectively open his or her ‘black book’ to the business. You can’t raise the right money without the right people.”
The good news is that as more Scottish businesses start to scale up and founders sell their stakes and exit, these experienced entrepreneurs will likely ‘recycle’ their skills and connections by supporting younger up-and-coming ventures – helping them to pass the final barrier.
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Article Credit: Dominic Jeff, The Scotsman