You have an idea. You have a business. You might even actually be making money from that idea. But now here’s the hard part: you want to expand, so you can make more money. But to expand and make more money, you have to spend more money. Can it be done?
Jessica Venning-Bryan, chief marketing officer of Flick Electric Co., says such a challenge can be overcome through smart strategy. “First and foremost, you need a capital strategy that enables the business to maintain momentum,” she explains. “It’s no good grinding to a halt because you’ve run out of cash and can’t move until you raise more. The next sale is always easier than the last so keeping that momentum up is critical. It can mean that it feels like you’re always raising money, but I think it’s a good thing to be spending lots of time engaging with the investment community in the early stages.”
Banqer co-founder Kendall Flutey says something similar. “Those seeking to scale their business first need to define what scale looks like to them,” she explains. “This might seem obvious but there are a bunch of faux scale metrics that can often deceive. Things like raising capital, new team members, and good PR may be contributors or by-products of scale, but often don’t represent scale itself. Decide what scale truly looks like, not just potential symptoms.
“For us, true scale is user growth and to be honest it wasn’t easy to achieve this off the bat. We didn’t set a framework conducive to scale. We had our eyes firmly set on the first acquisition, then the first ten, and so on, but our model broke down as the magnitudes increased. So another way to make it easier to scale business is to have a path to scale from day one. You don’t have to build or implement these systems on day one, but have a plan at least. For example, if you’re a SaaS company it may be having a plan to swap your server stack at 20,000 users as you realise performance will be an issue at that level.”
ARANZ Medical’s Bruce Davey says the biggest challenge for his company is distribution. “It takes money to expand.”
But Flutey says this can be overcome. “Another small gesture that goes a long way to truly scaling is to measure everything,” she explains. “The old saying ‘what gets measured gets done’ rings true. The more you can quantify and measure, the more meaningful data and metrics you’ll have to understand how and why you’re scaling this week. This can help drive more efficient scaling next week and so on. Essentially your journey to growth and true scale should be quantifiable and comprehensible. Not saying the trends will always be in your favour, but you need to be aware of them to correct them.”
ARANZ Medical’s Davey says it all comes down to passion. “Make sure you choose an area you’re passionate about. It’s going to be a lot harder than you think. Make sure you’re passionate about it.”
Venning-Bryan says it’s also about anticipating what may come next. “I think you have to invest ahead of the curve on the team front. Don’t go silly, but like with capital you can’t afford to slow down because you don’t have enough people, or people with the right skills, to execute the plan. It’s tempting when you’re on a shoestring to try and do everything yourself, but it’s often more efficient to hire specialists rather than muddle along doing a bunch of things badly. It produces better results, and frees you up to focus on the big strategic things.”
Flutey believes one thing is more important than everything else. “Above all the best offensive tactic to scale is to have a product that people want to share, and providing them with a mechanism to do so,” she explains. “We do this both in app, and through our static pages. These channels correlate. So if you don’t have a product, idea, or business that is compelling enough for people to share with others, see if this can be addressed first and foremost as this is certainly the cheapest most effective way to scale.”
Sounds like some pretty sage advice for entrepreneurs wishing to scale and take that next step.
Although these three innovators come from very different backgrounds and have very different businesses, they share many of the same traits. To watch the video, download your FREE booklet and get our Innovation Heroes’ ‘Top Tips’ go to innovationcouncil.org.nz.
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