The quality of Ashden Award winners work means that many of them scale up quickly. This is great news in terms of their impact, but can also bring real challenges and risks. Luckily, an Ashden Award is just the first step for our winners – through our Liveable Cities programme, our alumni network and masterclasses, we help them to learn from each other and build new partnerships and collaborations. That’s why we decided to focus our most recent masterclass on meeting these challenges.
Our trainers were Chris Tchen and Jeffrey Beyer from Carbon Limiting Technologies, who are delivery partners for the UK Government Business, Energy and Industrial Strategy (BEIS) incubation programme with years of helping low carbon organisations to deal with the growing pains of scaling up.
We had a wide range of participants from businesses, social enterprises and charities, across transport, energy and buildings sectors each bringing their own challenges to scaling up. We noted four key lessons that emerged which resonated with most of our winners.
1. Getting your team right
A start up founder does not necessarily make a good CEO! At the start, the founder prioritises fundraising, product development and building the team. But during scale-up other, perhaps more mundane priorities arise such as negotiating with distribution partners or reporting to the board, and these require different skill sets. The same is true for other roles in the organisation – a start-up CTO focuses on innovation, but as the organisation scales up, cost to deliver the product or service becomes key, and again different skills are needed. Honesty about the leadership team and their different skills is essential!
2. Know who you are selling to
For many of our winners, the key customer is not necessarily the end user. It could be a housing association or a property management company, and these businesses will have different decision makers with different properties. These could include the ‘technical buyer’ whose decision is based on product quality, the economic buyer looking at cost, and usually a ‘coach’ – a customer employee who is keen for your product or service to get purchased and will help you to meet the right people within the organisation. To scale up and to reach new markets, you need to identify which organisation in the distribution chain you need to prioritise, and which strategy you need for each type of buyer in that organisation.
3. Professionalising processes (no more post its!)
Enterprises tend to start informally – plans are agreed in pubs, business development is done through LinkedIn and funding often starts off with friends and family. Tools used are Excel, a cheap accounting package and shoe leather. But as organisations scale up, processes need to be formalised. Strong customer services need a good Customer Relationship Management system (CRM) so that you avoid the situation where one of your sales team is trying to sell a new service to a customer who has just had a missed delivery, or faulty product. But it can be difficult to improve all processes at once so it’s essential to prioritise those that are critical to scaling up.
4. Scale up success and financial disaster – how rapid growth can cause failure
Many organisations fail for a mundane reason – poor cashflow management. Customers pay slowly, but you need to pay your suppliers quickly, and revenue takes time to come in after investment in staff and equipment. The faster your growth rate is, the worse this problem becomes. Early warning systems are key, so that you can arrange loan financing early and not when you have a funding crisis (when potential lenders will charge handsomely!).
The leaders of our winner organisations are busy people, but they appreciated taking time out of the office to think strategically about what’s needed to scale up effectively.
“Once again, very useful and time-relevant assistance from the Ashden team” Maggie Hayes, Cosy Homes in Lancashire.
“A huge thank you to you, Ashden, and the presenters for such an informative and enjoyable workshop. The session was the perfect blend of practical and theoretical and has left us with lots of food for thought.” Saskya Huggins, Low Carbon Hub.
To find out more about how Ashden has helped our winners scale up, check out this video we made with 2015 Award winner, Demand Logic.