Top 10 tips for scale ups

This week we hosted a mini-conference for the Bank’s portfolio companies (and others) on the topic of scaling up and attracting investment to fuel that growth. Our chairman, Willie Watt , introduced the session, during which delegates heard from a number of different investors – including Matt Anstead from Cairngorm Capital Partners LLP and Richard Pugh of BGF – and scale-up consultant and mentor Shane Corstorphine . We also heard from David Hunt , Creative Director at Emperor , and the Bank's CIO Mark Munro and Executive Director Andrew Clapp . A wealth of wisdom was imparted so we’ve had a go at listing the Top 10 pieces of advice from our assembled experts.

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1.????? Progression, not aggression. A common misconception among firms raising funds is that they need to show potential investors “really aggressive” business plans. Don’t get hung up on that. You’ll need to demonstrate vision, ambition, and execution, yes. But aggression? Not so much.

2.????? Right people, right skills. Businesses scaling-up rapidly need fast-growing teams. A good manager of five people isn’t necessarily a good manager of 20 people. Someone who leads a team of 20 today, might not be equipped to oversee 100 people next year. These skills – especially the move from “manager” to “manager of managers” – aren’t intrinsic. They’re learned and they take time to fine tune. A great Chief People Officer is absolutely critical to scaling up successfully.

3.????? Be “perpetually paranoid” about the competition.? Money is global, so being one of the best businesses in Scotland isn’t enough. You’re competing for capital with the best-in-class from around the world, so you need to be benchmarking your business against them.

4.????? Don’t be downbeat about downturns. Investing is a cyclical endeavour and you can’t control those cycles. But you can put yourself in the best possible position for the moment that investors’ risk appetite returns, which it will inevitably.

5.????? Don’t worry about people stealing your ideas. Scaling-up is only 5% about the idea and 95% about its execution. You need a laser-like focus on delivery. That doesn’t always come naturally to founders so they might need a second-in-command who is all about the execution.

6.????? Avoid “shotgun” weddings. Raising money from the right backers involves a lengthy getting-to-know-you process. Don’t expect investors to commit themselves to you overnight and don’t commit to them too soon either. Advisers are there for the transaction, investors are there for the journey. Choose them accordingly.

7.????? Understand investor imperatives and fish in deep pools. It is an investor’s job to make you think they’re going to invest right up until the point when they don’t. A pool of five potential investors isn’t nearly deep enough. Many will convince you they love your business, until one day they tell you they won’t be investing in it. Keep 30 investors in your sights, to land two or three great catches.

8.????? Go back to the future. Every investor will look at what’s been achieved to date before they look forward to what might be possible in the future. It’s not just about financials; you need to demonstrate an ability to follow through on recruitment plans, develop new products, access new markets or pivot quickly to capitalise on opportunities. The clues to your future will be in your backstory.?

9.????? What’s the story? Your narrative – and your ability to communicate it in a compelling way – will be key to having investors hanging on your every word. So tell great stories but make them honest. Don’t hide stuff, lie, or fail to disclose important information. Investors see a lot of businesses and every one has its challenges. They would rather be told the unvarnished truth up front, than stumble upon skeletons in closets later.

10. Finally, and crucially – keep going. Stick with it. If you want to scale up, you cannot give up.

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