How do you get more scale-ups? Answer: Encourage and support more successful start-ups; but why bother?
It’s a £1.2 trillion question for the UK economy because that’s what scale-ups contribute every year, some 50% of the small and medium-sized enterprise (SME) economy.
And yet they are just 1% of UK companies.
The north-east has been an incredible contributor to that £1.2trn, including the eponymous Wood Group. Its transition by Sir Ian Wood from a traditional fishing business into a global energy services group is probably the best example; the stuff of legends.
But what does it take to move a start-up to a scale-up, that most rare breed of SME?
It’s a complex question but I think it boils down to a few key ingredients – love, passion, knowledge and people.
The key ingredients for turning a start-up into a scale-up
- You have to love doing what you do
- Drive your business with a passion.
- You need knowledge, both of your customer and their need
- Your employees have to share your love and dedication for the business
Back in the myths of time, when I built Sports Division, I had the privilege of meeting the founder of Nike, Phil Knight.When he started out, his sales team members were called “ekins”, because they had to know Nike from back to front.
But his sales guys were not just sellers, they were also data collectors – always asking questions and contributing to Nike’s development. Many of them shared Phil’s passion.
It showed and sometimes quite obviously, with many of the team having the Nike swoosh tattooed on their bodies.
So a question to business owners – do your employees share your passion?
Trust me, it’s an ongoing challenge to deliver that. There is a theory, grounded in a lot of evidence, that after your first 50 employees you need to renew and refresh your business and that connection with employees. You need to repeat and refresh again for every 50 employees added.
My dad, my absolute hero, taught me to always know what the nearest employee to the customer knew and, equally, to always meet the last employee at the door.
My dad, my absolute hero, taught me to always know what the nearest employee to the customer knew and, equally, to always meet the last employee at the door.”
Staying connected when you have 35,000 employees across 60 countries, as Wood Group does, is another matter – but it is still possible.
Bob Keiller, another star turn out of Aberdeen, told me when he ran Wood Group he set aside an hour every Monday morning to personally sign birthday cards for any employee celebrating that week.
Clearly, there are ways.
But there are other critical elements to building a successful SME or scaling up.
Support network ‘critical’ for firms scaling up
One of the most important, in my opinion, is having a peer-to-peer network of support.
Our foundation (The Hunter Foundation) now runs three programmes – Pre-Scale-Up, Scale-Up and ScaleUp2.0.
And, yes, we educate cohorts deeply in key elements of growing a business.
But you know what? The fact is, cohort members learn more from one another than they do from us.
And our programmes merely touch the sides of the latent demand there should be from Scotland’s growing army of start-ups and SMEs that have the will and energy to try to be the next big company for Scotland. That’s where I think government should be doing more.
But on government support let me make one thing clear – businesses should never depend on that help, Successful entrepreneurs build businesses with or without it.
Of course, that is not to say it doesn’t have a critical role to play.
Scottish Edge success
Scottish Edge is a classic example of a high energy team delivering unparalleled support to potential high growth start-ups, and it could not do it without government support.
Twenty-six Edge winners have taken part in our scale-up programmes to date.
Collectively, they have a turnover of more than £300 million and employ 1,451 people – not bad for the odd £50,000 or £100,000 loan(70%) and grant (30%). Moreover, they account for one-third of the Scottish National Investment Bank’s invested businesses.
But Edge works because it’s not just about money. It is much more about building a network of connectivity for the entrepreneur, giving them access to advice, support and indeed a shoulder to cry on.
Starting and scaling a business is a scary and lonely thing to do and that’s why peer support is the best thing you can ever have on your journey.
But bringing your team with you is equally important, as is recruiting against your weaknesses. The most successful entrepreneurs I know have won out because they have recruited people better than them in areas of their own weakness.
Share the fun, heartache, achievements and goals with your team and, of course, share the rewards.”
Know your strengths and recruit to your weaknesses, but not as shadows of yourself.
Building your start-up, SME or scale-up will be the hardest thing you will ever do.
But it will also be one of the most rewarding things you will ever do in your life. Share the fun, heartache, achievements and goals with your team and, of course, share the rewards.