How do you break through the £1 million turnover barrier? It’s one of those perennial questions asked by entrepreneurs on which everyone you talk to has a view, which to be honest is of little use unless they have actually done it and experienced all the highs and lows. I have built a few companies past £1m turnover and thought it was worth reflecting on lessons learnt over a cup of tea.
Firstly, let’s put this into context, according to BiS, at the start of 2012 there were an estimated 4.8 million UK private sector businesses; almost all of these businesses (99.2%) were small (0 to 49 employees) and only 30,000 (0.6%) were medium-sized (50 to 249 employees).
So, if you make a reasonable assumption that a majority of the companies in the 0-50 employee bracket turnover <£1m, and that it hasn’t moved much as a percentage in the last 10 years, most start-ups don’t make it past £1m turnover and therefore fail to achieve life changing capital value creation (assuming that’s one of the goals you are aiming for).
So, here are a few of the key things I have learnt across a number of my business ventures and that of friends and colleagues that worked in tipping turnover past £1m.
Getting the right people on the bus, with a common/clear vision of where you are going and all sitting in the right seats. Sounds simple, but, assuming you do have the right senior people already (attitude, values, skills, vision, etc) take out a pen and write down on a piece of paper (old school) the core thing you deliver that clients truly value above your competition. Then work out the 3-5 core, deep skills required to do this and put them in a matrix down the left hand side column; next, across the top row, write the names of your key senior people; now, rank each person against the core skills and see if it all fits.
It’s got a lot to do with focus
You have limited time, money and people to do things, so the more focus you have, the more traction you get in a chosen direction. Strip away all the distractions (“shiny new things” as a good friend of mine says) and focus on the core proposition/market. There is a caveat to this, in order to find out what your core proposition is in the early growth phase of your business, you have to “do a little and learn a lot, fast”. My personal approach is to find niches in your market that you know you can serve really well, quickly build a proposition and go and test/pilot it with clients.
Working mostly on, not in the business
It’s an old adage but in my experience entirely true. You can’t (and shouldn’t) stop coaching your people on solving complex problems and contributing to innovation/operations/finance, etc. However, spending 100% of your time doing this isn’t going to get you to £1m turnover. A simple question to ask yourself is what percentage of my working month is spent focusing outwards into the market versus inwards on the business.
Clear, compelling, market tested proposition
Sitting at your desk writing a business plan has its place and is critically important i.e. the act of writing something down should make you think hard about what you are planning to do. However, you must get feedback from potential customers about what you are offering, at what price and what the financial benefits are to them.
Reputation and confidence building
Building a reputation for high quality delivery is the best way in a services business of creating a buzz about your company by “word of mouth” marketing and referrals.
There is simply no short-cut to breaking the £1m barrier, lots of determination, tenacity, call it what you will, you just need to stick at it, constantly learning and adapting as you go based on market feedback. However, there is a world of difference between evolving a sound business proposition and flogging a dead horse, so, remain open minded and take account of feedback from people you respect
And lastly, there is no silver bullet, so, if you are looking for the one thing that will hit the growth boost button, stop looking!
By Mike Lander, co-founder and director of Ensoul