Top tips for building a successful business

With us nearing the end of a challenging 2012 it’s a good time for any ambitious business to regroup and consider its plans for growth next year. So what can other businesses at different stages of development learn from Peter Gradwell, who in March this year announced plans to grow his business by four times its present size over four years?

Starting out? Get commercial!

Peter strongly recommends realising the commercial potential of an idea as quickly as possible. But this doesn’t mean growing too fast – rather find a way of first selling your product or service to a small number of customers who can endorse your business, and your specific way of doing business.

“Don’t be overly consumed by immediately ploughing all your effort into trying to generate an enormous customer list,” says Peter. “Instead concentrate on delivering the very best service you can to a core of customers and learn what it takes to keep them happy. I taught myself how to design websites while at university, and initially sold this expertise to other people that I knew. Now web design has come in leaps and bounds since the mid-90s, but if you can identify a small but fruitful initial market for your idea then you’re starting in the right place.”

Seeking finance? Don’t relinquish all your control

The latter part of 2012 has seen some welcome news for SMEs in particular, with some of the major banks announcing the availability of greater funds for business loans. But sourcing sufficient funding for expansion through 2013 will continue to be a hurdle for many. So where should ambitious businesses start?

Peter comments: “There are many different sources of funding available out there these days – but except in exceptional circumstances I would suggest your bank should always be your first port of call. By sticking to a traditional bank loan you retain full control of your enterprise, something (in the early stages of an enterprise at least) is particularly important.”

Every business needs to be ready for rejection if the business plan contains too many elements of risk – but this shouldn’t be a deterrent: “Just last month, the UK’s six major banks announced plans for a new funding route via community development finance institutions. While it might not be the ‘silver bullet’ for SME investment that everyone is hoping for, it signals that things are slowly starting to change and the drought of funds might not last forever. But of course, this doesn’t negate the need to have a watertight business proposal.

But what of other funding sources that are starting to get more popular, such as crowdsourcing and even angel investment?

“The traditional bank loan route isn’t for everyone. Crowdsourcing, for instance, offers an interesting approach – albeit one that I think is restricted, for now at least, to those products or services that are simple and well-proven enough to appeal to a large number of small investors.

“In the case of angel investors, I think it’s a case of having the right sort of business – a single, high worth individual wouldn’t have been right for me as it they would have got in the way of my thinking about what I wanted from the business.”

Peter also believes that timing is crucial: “You want to be seeking investment at the right time. In my view you want to have given your business a really solid set of foundations, building it to a point where the benefits of investment are really clear to you – and can be just as clear to the person you want to invest in you.”

Thinking of stepping back? Make sure you keep the right knowledge at the top

In any successful company there can be a temptation to step back once the business is in a healthy state and has a clear roadmap for growth – indeed this may be the strategy of some senior management. But Peter warns to think carefully before doing this – not least because you might lose the very knowledge that got your business to that strong position.

“Gradwell was successful in securing private equity funding from Altitude Partners earlier this year – with all the hard work that me and my team had put into the business in its earlier years, I felt that the time had come for us to seek a more rapid expansion.

“But right now I’m not seeking to step back and let my passion for technology and desire to deliver the very best for my customers disappear from the top of the business – both remain as important now as they did when I first started out. Having core technical knowledge, as well as commercial acumen, anchored to the top of the business is vital.”

 

Published on freshbusinessthinking.com: full article

2012-11-09T11:53:34+00:00

About the Author:

Leave A Comment

Request a quote