Getting a business idea off the ground is only the first obstacle. When scaling up becomes a necessity, you need to generate enough funding to make growing your business a success.
Off the back of our latest webinar, Nailing Growth, where Amanda Rose spoke to three ambitious business leaders, this time we hear from Kim Clarke, Executive — Enterprise at MYOB, who shares insights on everything from surrounding yourself with a supportive network to leveraging the right technology for growth.
Understanding the fundamentals of funding
Money is the make-or-break factor that can determine a business’s success. For many entrepreneurs, particularly those who are standing on the precipice of growth, they may be uncertain about which funding options to pursue. Clark says owners need to sit down and ask themselves a few core questions.
“Once you’ve got to a point where you’ve got the idea and enough proof points to say, ‘This thing’s a goer’, how do you get to the next scale engine?” she says. “How do you actually scale the unit cost of whatever you’re putting out? Are you driving a lower marginal cost for each unit that you’re shipping, so you’ve got some scale engine that’s sitting around it?”
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She advises that you draw on your existing network — from mentors to competitors to successful business owners. Essentially, people who have already been through what you are going through and who will guide your decision-making.
“When you’re talking about scale, this is where the divergent ideas come in. Make sure you’ve got people in your networks [who can answer your questions] — not only around the idea itself, but how to actually go about that scale. You basically need to create a system of work that actually helps you achieve that scale, whether it’s tech, processes or people.”
Avoiding the most common funding pitfall
Entrepreneurs know better than most that making mistakes is an inherent part of scaling up. But Clark says that by bolstering your growth journey with people who believe in your business, you can ride out the impact of those pitfalls.
“Make sure you’ve got a system of people — investors and customers — around you who are going to weather the bumps. For the move through startup to a more established business, that leap is actually quite difficult because you’ve got something to lose. And it’s a really critical moment because you didn’t have anything to lose before.”
Clark says this is the moment when leaders need to clarify: am I in the business or am I on the business? Which is a difficult thing for founders to establish.
“Choose your investors well. Choose your customers well. As you’re moving into that scale phase, as opposed to the startup phase, also make sure you can get on the business enough so that you don’t fall in love with being in it as much. That’s where your success comes from — being in the business and knowing every part of it.
Tech is essential to scale well
Setting up the right systems and processes from the outset is a sure-fire way to reduce the difficulties of scaling up. But it’s easy for entrepreneurs to ignore this in favour of just using whatever is easiest as they manage razor-thin margins. For Clark, however, technology should be an integral part of every business’s growth journey.
“There aren’t many businesses that are looking to scale where technology isn’t playing a reasonable role – it’s a given,” she says. “The most important thing is to work out which processes matter most to that scale.”
Clark adds that this will differ depending on the type of business you run. You need to first understand the problem you’re trying to solve, or the opportunity you’re trying to leverage, and then source the best technology and solutions to help you scale efficiently. Plus, integrating these technologies into your everyday operations means that when it’s time to grow again, you will have partners who can help you digitise even more processes.
“At the end of the day, you want to grow without increasing your marginal unit cost,” Clark says. “That’s a big part of hopefully what will give you more profits off the backend. You may then want to return those to shareholders or reinvest into your business — whatever the outcome you’re actually striving for, it’s around increasing that return.
“So get clear on the problem you’re trying to solve. I’d be gobsmacked if technology wasn’t part of the solution in some way. Then make sure you’re surrounding yourself with partners who actually know how to do that and have done it before.”
You can watch the full webinar, Nailing Growth: Ambitious leaders reflect on their journey from purpose to impact, for even more insights.
MYOB is a leading business platform with a core purpose of helping more businesses in Australia and New Zealand start, survive and succeed. At the heart of MYOB is a customer base of 1.2 million businesses and a network of more than 40,000 accountants, bookkeepers and consultants, for whom MYOB delivers end-to-end business and accounting solutions. MYOB operates across four key segments: Small and Medium Enterprises (SME), Enterprise, Financial Services and Practice.