Earlier this month at the British Chambers of Commerce Annual Conference, Prime Minister David Cameron announced plans for a new Help to Grow funding scheme to help 500 of the nation’s fastest-growing companies expand their business, commenting:
“We need to think strategically about helping those small firms over the 'valley of death' funding gap so they can become medium firms, and the medium firms can become larger firms.”
However, finding finance is unlikely to be the only challenge these companies face as they scale up their operations.
“As start-ups grow, it can be easy for the entrepreneurial spirit that made it so successful in the first place to wane,” admits Chartered Institute of Professional Development (CIPD) researcher Claire McCartney.
“The danger is that sense of team spirit is lost, amongst a spectrum of personalities, roles, responsibilities and formality,” agrees Freeagent’s Roan Lavery.
So what can SMEs do to preserve their start-up mentality?
Listening to customers and local communities
When starting out, small business owners often have to take on many different roles, handling everything from sourcing suppliers to customer service. This proximity to customers and other stakeholders means founders can easily gauge how individuals feel about the business and identify where improvements could be made.
As the workforce grows, the proximity between owners and customers naturally declines, and it can be more difficult for feedback to filter through to those who make major decisions for the firm. Growing companies may need to find new ways to ensure they understand the shifting needs of their customers and continue to build strong relationships within local communities, such as ‘back to the floor’ days or feedback sessions with customer service staff.
CIPD researcher Claire MacCartney affirms:
“The largest organisations can retain an innovative edge if they pay close attention to attracting, retaining, engaging and developing the right talent.”
The CIPD recommends fostering a culture of ‘intrapreneurialism’, where employees within a large organisation are actively encouraged to put forward innovative ideas or seek out new opportunities. For this approach to function effectively, firms must provide open communication channels for ideas to reach management and demonstrate willingness to invest resources in attempts to innovate. It’s vital to understand that not every idea will find success, understanding when to pull a pilot scheme that isn’t going to plan and avoiding a culture of blame if ideas don’t realise their potential.
Shutterstock Senior Vice President of Technology Dan McCormick also suggests keeping team sizes small, with a variety of roles in each team to allow independent experimentation, while Freeagent’s Roan Lavery stresses the virtues of informal company events to encourage communication.
Learn from SME business partners
Looking to gain a fresh perspective, many larger businesses like Aviva, PepsiCo and Cisco have embraced opportunities to work with small business partners or acquire promising start-ups. The key here, says Harvard Business School’s Shikhar Ghosh, is to allow the smaller firm to maintain their autonomy and avoid forcing them to comply with company procedures, at the risk of stifling creativity.
Business owners, what are your thoughts on the best way to preserve an entrepreneurial mindset? Share your tips with Aldermore’s SME community on Twitter.
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