Thursday 13 September 2018 10:52 am

British scaleups must leap the confidence gap to achieve growth

It's a well-worn fact that small businesses are the backbone of Britain. It’s also well-known that they have a high failure rate, as four tenths of SMEs fail within five years. Far less well explored are the reasons behind this failure rate.

To better understand the challenges facing these businesses as they attempt to scale, we conducted research with a range of questions about their ambitions, confidences, barriers and concerns.

Our research revealed that the UK’s scaling SMEs felt very confident that they will achieve their growth targets. But when it comes to organising their strategies and specific areas of their business to be ready for that growth, gaps began to appear.

These confidence gaps could fundamentally hamper scaleup companies from achieving their goals.

Startups face numerous challenges when trying to scale, from recruitment, to creating and sustaining the right culture and values, to developing a great customer experience, and handing over responsibilities to others. These are all issues which can be tricky for business founders, who are used to taking the lead and being involved in many aspects of their concerns from day one.

Recruitment in particular proves to be a major source of confidence concern flagged in our findings. While 93 per cent of the businesses we spoke to believed that recruitment was important to their growth plans, three quarters of those same businesses were very concerned about bringing the right people in. And one third were anxious that their recruitment challenge was not being tackled.

Culture proved another sticking point on the road to scaleup success. Some 82 per cent of our scaling businesses were concerned or very concerned about creating the right culture in the business as they grew, but once again a third were worried that this challenge also was not being met in their businesses.

This trend became more defined as we looked into other areas of the business, from creating a clear vision for the organisation to unify around, to the leaders having confidence in their delegation – large numbers were worried about their strategies and abilities to meet these challenges.

As the research feedback went on, it became clear that many of these concerns all have the same root cause.

Ensuring that there was a motivating organising factor or idea behind employee engagement plans, even in small and scaling enterprises, would remove many of these worries.

This organising idea, once set, becomes a central touchstone for businesses and their employees to keep referring back to. It acts as a clear statement and direction for the business, which keeps everyone pointing in the same direction, while critical business focuses – maintaining sales, service delivery and operations – can also be sustained.

The organising idea can then be filtered out through departments. It helps companies to set their customer strategies, HR practices and recruitment process, marketing and communication needs, as well as operational processes. These are all important when it comes to ensuring the company can not only meet and exceed its commercial targets, but also present a thriving and functional business to potential future investors.

While the immediate future has many challenges for scaling companies around Britain, there are clear steps which company founders can take to remove some of their concerns.

Most telling from our research is that they need to focus on ensuring they have absolute transparency on the company’s direction and its goals.

By uniting their employees and stakeholders with a common organising idea, business leaders will ensure that they are set up in the best way possible for success.