Over the last couple of months I have had a small rush of clients who looking for funding to grow their businesses.
I am not aware of any particular economic or business reason driving that and perhaps it is just one of those things, but it has got me thinking again about two particular themes I see recurring in such businesses. One relates to the beginning, one to the end.
Do you have the foundations in place? It seems obvious but many businesses do not. I see a lot of successful businesses who are understandably getting on with the day job, making the sales, bringing in the cash but some of the more mundane aspects of life have perhaps not had the focus they might deserve. That might be around organisation and administration (do you have written contracts of employment for all your staff? Do you know where your company registers are located?) or, in some cases, more fundamental issues (so, which of your companies actually owns the all-important branding or IP? Should you not have that key contract in writing?).
Typical lawyer stuff I hear you say (and you are correct) but these things can almost always be addressed and it is better that you do that yourself, on the front foot, than wait for an external funder or investor to ask the question. That can result in delay, costs and a loss of credibility.
Jump to the end? Clear and logical thinking is required when planning growth but personally I think it is more important to jump to the end - ask yourself what it is you are really looking for at the end of the day? What is required by the business and by you? What will be most fulfilling for you and your family? What sort of legacy do you want to leave? Heady stuff perhaps, but the answers should colour the type of growth you pursue and how you pursue it. Too often clients have not really found the time to come away from the rush of the business and think about this.
I will use a recent, and refreshing example; a business owner has grown his business from start-up to a substantial local business and I have no doubt that it has been an exciting and challenging journey along the way. It has all been about growth - sales, people, customers and, of course, profit. However, this gentleman has taken time to step back from the desk and ask himself what he is really looking to achieve over the coming years. That honest assessment has resulted in him realising that he is not now looking to grow beyond these borders - the business is more than capable but it is not what he is looking for in life. And who can argue with that?!
But the story does not stop there. This does not mean the business will not grow. Quite the reverse. The advisers' job is then to engage with the client in assessing whether that business can still be allowed to grow to the next level and beyond, whilst achieving the owner's objectives. When does the owner wish to exit? Is the next level of management in place? Do you need to exit at all - can a team be employed, and incentivised, to go on that growth journey whilst you retain ownership? Should you perhaps challenge yourself to at least start the next level of growth (which often better attracts an investor or buyer)?
Whatever growth route you follow, I firmly believe you are more likely to get it "right" if you think about the beginning and the end first. It makes the middle part of growth a lot easier.
Robert Burns, Partner, Burness Paull
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