Scale-ups And How To Become One In 2020

Five years ago, the amazing ball of focused commercial energy that is Sherry Coutu was commissioned to write the Scale-up Report for central government. Reading that document changed my life.

The results were stark and I quote, “Competitive advantage does not go to nations that focus on creating companies, it goes to nations that focus on scaling companies. Scale-up companies drive economic growth, job creation and long-term productivity.” For clarity the OECD defines a ‘scale-up’ as a company with an average annualized return of at least 20% for three consecutive years, with at least 10 employees at the beginning of that period.

I’m passionate about supporting business growth and my own company mission is ‘growing the nation by improving sales performance’, so after I read that report and met with Irene Graham, the CEO of the newly formed Scale-up Institute in London, me and my team went to work. We doubled down, changed our focus and I’m proud to say that in the five years since, my organisation has become part of the eco-system that supports and enables aspiring entrepreneurs scale-up. I already knew that scaling a sales operation is one of the key challenges to growth and that we had an evidence based methodology to help create a scalable Sales Engine for any business, we just needed to stop phaffing about and focus relentlessly on supporting this part of the business landscape.

On Tuesday 12th November this year, I was invited back up to the Scale-up Institute’s five year update at The National Gallery in London, to hear firsthand the impact of the work of all the supporters of Scale-up. Not surprisingly the results are tangible and positive.

The number of scale-ups per 100K of population has grown by 3.7% (or 1,300 businesses in real terms). Scale-ups are more evenly spread across the country (of course there are more in the South and Southeast, but there are no more black spots. Hurrah!) Scale-ups are not all Tech businesses. Warranted most scale-ups do use technology to leverage productivity and increase their competitive advantage but there is a balanced mix of scale-ups across sectors. Scale-ups have grown on average by 35% in the last five years, compared to 9% in UK GDP growth over the same period. Scale-ups create employment, employing 3.4M more people than five years ago and 56% offer work experience, apprenticeships and internships.

And get this…

…the 5.7 million SMEs in the UK contribute £1.9trn to GDP BUT scale-ups which represent 0.6% of that that number, contribute a MAHOOSIVE £1.3trn!!

If only I could include a well-deserved fist pump emoji into this article as there’s no doubt, scale-ups are vitally important for our economic growth and stability.

So if you’re reading this, and you’re thinking that 2020 could be your year to scale up, then your first action should be to reach out to Scale-up North East www.scaleupnortheast.co.uk. They’re amazing and they’ll tailor a package of support to meet your individual company’s needs.

Then after you’ve done that, grab a cup of Christmas Eggnog, sit down and answer my six fundamental core scale-up questions.

1. What is your UDP? (Your company’s Unique Differentiating Proposition). It needs to be market defendable, proven and clearly defined. Without one, you’ll be left competing on price alone and by the way, it’s not ‘your people’, ‘your level of service’, or any of your other USPs.

2. Who’s your Target Client Avatar? And why do they buy from you? If you’re selling B2C, this will be your end-user/consumer persona, but if you sell B2B this is your target customer’s company, followed by the individual buyer or buyers? Remember the customers that have got you to where you are, may not be the next generation of customers you need to scale-up.

3. What is your Sales Methodology? Different types of customers, markets and sectors require a different sales approach. Gone are the days of hiring armies of sales reps, sticking them in Ford Sierra’s and expecting them to bring home the dough. You must build a Sales Engine, which often includes multiple sales methodologies, that allows your customers to buy from you in the way that they want.

4. What’s your Sales Engine Index? What activity delivers what sales output? Until you know this you cannot set accurate sales targets or set metrics to measure sales effectiveness. Within every business lies a sales algorithm. Work out yours and it becomes a simple mathematical equation of increasing input to increase output.

5. What’s your Pipeline Gestation period? Your pipeline lead time determines the working capital needed in order to grow. Most people guess this and vastly underestimate it, leading to a lack of finance and cashflow nightmares.

6. And finally, Resourced how? This final question leads into what kind of sales and marketing structure you will need in order to grow. Answer these six core questions and you’ll have the basic understanding of what will be required to grow your own Sales Engine.