Louise McCoy is Commercial Managing Director of Small Business Lending at Start Up Loans. The programme, backed by the government, provides support and loans to new and early-stage businesses throughout the UK who might struggle to access finance (up to £25k) elsewhere.
The Start Up Loans programme sits within the British Business Bank, the UK government’s economic development bank. Despite its name, the programme helps businesses to both start and grow, with first loans available within the first three years of operation and second loans within the first five years.
With government backing, our programme has funded more than 105,000 businesses since 2012. As well as loans, we provide expertise, mentoring, support and access to free resources to help business owners fulfil their ambitions.
While many of the businesses we fund don’t necessarily have scaleup ambitions – which is understandable, as they may be in a sector that doesn’t lend itself to scaling up, or they may have other reasons for not doing so – it’s important to know that we are here for those that do.
Given Start Up Loans’ focus on making sure funding goes outside of London and the South-East – and nearly 70% does – there is a lot of opportunity for economic growth across the whole of the UK.
According to the most recent statistics, there are 5.47m small businesses in the UK, but 4.1m of these businesses have no employees. This means there is a large untapped potential in terms of job creation if they were to consider growing and taking on staff – if each one employed just three people, the UK would be looking at 12.3 million jobs created.
Start Up Loans has a track record of being an early supporter of successful scaleups. Notable examples include Castore, a sportswear company which has rapidly grown, and consumer brands DASH Water, Oddbox and JimJams.
Three considerations for scaling your business
Always manage your cash flow
A significant step towards scaling up is managing your cash flow. Aiming for a positive cash flow should increase the amount of money coming in compared to the amount going out. You should plan and forecast your cash flow to help avoid running out of cash and carefully plan investments, such as buying new equipment so you have the cash reserves to fund them.
Our guide to building business resilience contains more information around suppliers and payments, but we know as businesses grow, cash can become tighter. Practically, it’s important to agree on payment terms in advance and invoice as soon as you’ve delivered a service or product.
Hire staff with specialist skills, or outsource some functions
Hiring the right staff to cope with business growth means you can bring in specialist skills and share some of these duties, so that you can focus on scaling your business.
Start-up owners tend to handle a variety of tasks in the early stages of their business, such as bookkeeping and marketing. Figure out the roles or tasks you need help with, along with the skills your business would benefit from and either hire or outsource accordingly.
Delegating these tasks to others, either inside or outside the business, such as using an accountant or a marketing specialist, can leave you free to concentrate on the parts of the business you are best at.
Develop new markets
Businesses can scale by selling to different markets. As you’ve done the hard work developing your product or service, looking for new markets to sell to can pay dividends. These can be geographic, such as opening a new shop or restaurant, or a different demographic, such as targeting a younger market.
Research other markets to see where your business may attract customers. Consider researching consumer demand to see if you can adapt your business to trends. For example, creating more sustainable products could win new customers – over a third (34%) of consumers now look for brands with sustainable credentials, according to Deloitte.
These three considerations are just part of what’s needed to turn a start-up business into a scale-up business. There’s much more to it, clearly, and both the Start Up Loans website and the British Business Bank’s finance hub have a wealth of resources to help you on your scaleup journey. The prize for UK communities and the economy if more businesses take the leap is potentially huge.