Getting your business set up for growth

Is your business structure fit for purpose?

Have you explored options available to support investment?

Do you have the right people in the right positions to help manage stable growth?

Taking a great business idea and turning it into a commercially successful enterprise can be complex. That said, there are some key areas to focus on that will prove invaluable.

And remember, you’re not alone.

More than half of businesses taking part in Highland & Island’s and Scottish Enterprise’s entrepreneurship support programme have their main business units in the area: evidence, if it were needed, of how entrepreneurial the business community is here.

So how do you grow your business from that Eureka moment into something more substantial?

The right structure

Often, businesses develop naturally.

When starting out, the focus is often on getting cash in the door and working out the best business model.

During this period, the owner will not have a lot of time to think about the future, and may understandably overlook the practicalities required for stable growth.

Yet, if a business wants to expand, there comes a time when it needs to be put on a more professional footing (without losing sight of what has made the it successful to date!)

Part of this is putting in place appropriate legal structures.

The best route to access funding

As part of this growth strategy, there comes a time where businesses need more investment.

Personal funds, or bank finance, are sometimes available, both of which allow the entrepreneur to keep ownership. Often, however, those options are not available.

In that situation, what can the owner do?

One alternative is to bring in external investment, likely from so-called angel investors: individuals who provide capital for a business start-up, usually in exchange for convertible debt or ownership equity.

In addition to providing short-term growth funding, angel investors can be called upon to provide further funding as the business continues to grow. They can also bring management expertise, operational experience, credibility and contacts.

Depending on the circumstances, angel investors can be flexible in terms of the degree of control they might exercise over the business.

Another alternative is to explore funding from the public sector, an area in which our firm has particularly strong expertise. In the past 18 months, we have helped to secure almost £9 million of public funding for businesses based in Scotland.

The right people

For continued growth, a business will need the right people: in other words, staff who are capable of meeting and supporting the demands of working in a larger business who will ultimately help the business achieve its goals and objectives.

That often means bringing more people on board, or up-skilling the existing workforce.

It follows then, that having experienced support to help deal with the inevitable increase in employment law issues that a larger workforce will bring is important too.

Many businesses in the Highlands and Islands are run by families, and these organisations have their own specific issues; for example, succession and the involvement of family members in the company.

There will come a time when a founder considers the possibility of his or her children becoming more involved in the business in the longer term, and family succession may turn out to be a real possibility.

That said, there is no certainty that the most appropriate successors will be amongst a founder’s children. Family business owners, therefore, need to consider the introduction of external expertise at all levels of the business, and also focus on how to attract additional staff while retaining and motivating their existing workforce.

In conclusion, there are three main questions to consider to ensure your fledgling business is fit for purpose now, and in the future.

• Is your structure the right one for growth? - For example, if you are a sole trader, would you be better to incorporate or go into partnership?

• How will you fund any growth? - Investing more means that you may need to take out loans or bring in outside investors or look for other sources of financing.

• Do you have the right people working in and managing your business? - Being open to external expertise and belonging to a business club or network to learn from others’ experiences can be very beneficial.

An earlier version of this article appeared in the Press and Journal’s Leader magazine on 31 May 2017.