The fast-growth company sector is a vital component of the UK economy, from start-ups through to more established entrepreneurial businesses. In an increasingly competitive environment, such companies need to capitalise on opportunities now more than ever. Brian Henderson, head of PwC's fast-growth company programme and a private business specialist, advises the early-stage entrepreneur on cultivating the skills and making the choices that will best serve your enterprise.
How do I get inside an investor's head?
When you're speaking to banks - or any other lenders or investors - you have to convince them that you've thought things through in detail. If you go to them with an idea but no business plan with supportable projections, the discussions are likely to be very short. Courting investors and lenders means convincing them of a vision that's grounded in facts and figures.
Learn to articulate the strength of your idea to multiple audiences and in a variety of situations. Investors will be looking for clear sight of risk as well as opportunity, so demonstrating how your strategy will minimise the former and maximise the latter is essential.
Private equity or venture capital audiences will be interested in how quickly an idea can be scaled, both nationally and across borders. They want to know what further investment will be needed to take the business to each subsequent stage. And, remember, what works in the UK may not work in another territory.
Finally, investors will inevitably be keen to have a clear exit strategy, which means they want to know when they can get a payback on the risk they're taking.
What's the best route into new markets?
Before you enter a new market, you need the financing to expand and to have any existing enterprise running as near to clockwork as possible. You don't want growth and expansion to be a risk to your existing business. There are several options available, all of which need careful consideration of risk and impact, based on your specific company's scenario.
One lower-risk option for new market entry is to find a strategic partner already established in that territory. This more tentative approach allows you to test the waters, and there are several scenarios where capital input would be modest or, in the case of mutual interest, zero. Of course, you will be sacrificing control and are likely to get significantly reduced payback on any uptick in sales and profits.
Another approach is to set up your own office. It's a good idea to do this in a territory where you already have a significant client that needs support. Setting up in the same city means you have work in that location from day one and you can use that business to release a new wave of contracts and relationships. Without that first client, it can be difficult.
Acquiring an existing business is the third option. Buying 100% of a company that is complementary to yours represents the quickest way to enter a new market. If you have the funds, the research, the clients and the plan, this could be the way to go. Just make sure it's the right business, at the right price, with the right cultural fit. Things may add up on paper but, post-acquisition, people, systems and culture must be compatible if it's going to work.
How can I get my new product in front of big buyers?
At the beginning, it's a numbers game for all but the best-connected start-ups and SMEs. If you are naturally resilient and full of energy, you have an advantage here. Meet as many people as you can and stay in touch with those whom you think may be useful.
Go to networking events. These are not just for start-ups. Big companies spend time and effort reaching out to businesses and communities to build relationships, keep up with the latest ideas and keep tabs on new companies that they may wish to work with or acquire in the future.
Mine your own network. If you are going to have non-executive directors, choose ones with knowledge of your sector and their own network of contacts within it. These people should be able to shorten your journey. The same should be true of well-chosen angel investors, mentors and the right professional advisers.
Finally, be brave. Cold calling doesn't come naturally to everyone, but there are businesses trading today that are based on a single brave call. Develop a thick(ish) skin and get out there. It's not easy, but if you wanted an easy life you wouldn't be an entrepreneur.