British business is not short of enthusiasm; somewhere between half and three-quarters of a million startups are launched in the UK every year. Sadly, there is also no shortage of failure. According to the latest government statistics, a fifth of those startups are likely to collapse within their first year, with 3 in 5 not making to year four.
That’s grim.
What’s wrong?
Part of the problem is that many businesses simply do not scale. In fact, only 8,000 businesses have scaled to the point that they employ more than 250 people. In the UK, 75% of businesses only employ the founder(s), with many starting out without an exit in mind.
Usually, an entrepreneur comes up with a great idea—perhaps they’ve spotted a gap in the market or an issue they are able to solve effectively—and they develop their product(s) and put it out in the market, expecting organic growth. They see some revenue but only enough to tread water, so they remain a small business and make it their day job.
Then there’s a knowledge gap; know-how is important to navigate legal, compliance, and fiscal management, for example. Or there’s often no one holding the entrepreneur’s hand; a good coach or mentor will both hold the long-term plans to account as well as help maintain a sense of perspective that can otherwise get lost. And then there’s sometimes just a lack of ambition; some entrepreneurs are simply attracted to the idea of self-employment and all the flexibility that offers. Scaling and selling is hard work and contains an element of risk that some entrepreneurs don’t want to engage in.
What needs to change?
More entrepreneurs need to shift from seeing their business as a lifestyle choice. Yes, the flexibility and freedom of being your own boss is great. But how about the flexibility and freedom that comes with having sold a business for eye-watering amounts of cash?
Scaling and selling needs to be on the horizon from the outset to spot and capitalise on the right opportunities. Rather than a company being an extension of the founder, it should be a product that can grow with the marketplace and be sold when the right opportunity comes along.
We need real role models (not the TV variety) to share their stories and experiences. We need to hear from people who have quietly walked a successful path to prosperity and now keep a low profile enjoying their wealth.
If you’re an entrepreneur looking to scale and sell your business, my top tip is to try to imagine what the business will look like in 10 years. Try to detach yourself when you evaluate your idea. You want to see what it could look like even if you weren’t involved.
What will the market look like in 10 years from now? Is the opportunity big enough? Which roles need filling to make the business work? What will the competition look like? How will technology impact your business over the next decade?
By shifting your thinking into the longer term, you create a goal. It then becomes far easier to orient your business decisions around reaching that goal.
