What is Scale Up?
To ‘Scale Up’ is to make something larger in size than it used to be, typically applicable to start-up businesses or new product development.
A large national Scale Up report estimates that 1 per cent rise in scale-ups could deliver £225bn towards GDP by 2034.
‘Scale Up’ identifies the importance to the economy on developing a powerful ecosystem where companies seeking to grow, are open to receive the education, support on investment decisions and build communities to succeed.
What does Scale Up mean to a Manufacturer?
Manufacturing Scale Up businesses can reap huge benefits from the agility and cost efficiency of flexible working, but it requires careful organisation and transparency.
To have a chance at becoming a Scale Up manufacturer, the following should be implemented:
- Get systems in place early
- Manage capacity carefully
- Talk to staff and trust them
- Seek expert advice
- Plan, do, check, act
- Test, test, test
- Have visibility of cash flow challenges (generally growth cost’s cash)
- Stay focused and be the best you can
Have a road map to scale your growth. By monitoring your businesses progress you can recognise where your Scale Up is going. The Scale Up Institute, a private sector not-for-profit company, is focused on making the UK the best place in the world to scale up a business and can provide with effect support.
Benefits of Scale Up
Scale Up businesses are widely celebrated as the engine of growth for the UK economy, creating wealth, opportunity and employment in a competitive and dynamic environment.
Here are some of the benefits of having a Scale Up business.
- The rate of cashflow can double over time
- Valuation of your business can increase (up to 10x relative to competitors)
- It can create an exciting journey for stakeholders: employees, customers, and shareholders
- The industry standard profitability can triple as a result
- Pace of growth requires and drives flexible working within employees
- New leaders emerge from the ranks
- Positive energy develops within the business
- It can bring empowerment to staff and develop a can-do attitude to overcoming challenges
- Stimulates new ideas
- Attract new employees
- Opens up new routes to capital loans. From conventional banking; to government backed national schemes; to crowd funding
- Attract investor interest: corporate investors are always looking for rapidly growing businesses (the more equity investment they receive, the faster they grow)
- By the nature of their expected growth rates, scale ups are well placed to attract support from a variety of grant schemes
- Success breeds success: it is likely that other departments, partners and suppliers will want to bask in your glory and thus assist you to get there
Threats to a Scale Up
The biggest threat to a business that wants to Scale Up is having the lack of vision, roadmaps and/or what-if scenario planning, this will result in an incorrect business strategy and failure of becoming a Scale Up manufacturing business.
Other threats include:
- Not communicating the vision successfully to stakeholders (especially employees)
- Not sharing the WIIFM messages within the business – What’s In It For Me? Relating to the benefits of Scale Up
- Juggling multiple projects at once
- Taking on a risk-too-many
- Requiring extra flexibility from staff, not all of whom may be in a position to commit
- Cash flow: the need to invest in infrastructure well before the income benefit kicks-in
- Existing business processes, systems and technologies may hold you back
- Lack of in-house expertise in the “new” things that you need to know
- Finding new partners/suppliers/employees at the speed that you need
- Needing to access new skills often quickly and sometimes only temporarily to give you a “step-up”
If you feel like your manufacturing business has the capacity and will to become a Scale Up business, the Manufacturing Growth Programme can help provide expert support and funding contributions to overcome the threats needed to gain from the benefits.
Copyright © Economic Growth Solutions, 6th June 2018.