A guide to the critical stages of business growth from start-up to exit – part one

Navigating the stages of business growth from start-up to exit is both exhilarating and complex. Consilium Chartered Accountants have been helping business owners start, scale and successfully exit companies for over a decade.

In this three-part series, Corporate Finance Director Siobhan Moore takes us through a typical business life cycle from start-up to exit. Siobhan will highlight some key considerations for entrepreneurs, focusing on ideas for value creation at each stage and how to handle the nuances of building a business.

The stages of business growth: start-up and early growth phase

Value creation is the essence of entrepreneurship. It is, therefore, never too early to establish your business strategy where this is concerned. Think of it as the strong foundations on which your business will be built.  

In simple terms, it comes down to product-market fit – the ultimate goal of any startup. This means finding a viable and scalable business model to sustain and grow your company. Some start-ups evolve very quickly, and without much visibility, but time spent understanding who your customers are/might be, what their problems are and how you can create solutions for them, is worthwhile.

The more value entrepreneurs can create for their customers, the more these customers will be willing to pay for the product or service. Consequently, the more loyal they will be to the brand. The more value the business creates for its market, the more it can differentiate itself from competitors, and the more it can grow market share and revenue.

Planning for the stages of business growth

While this can sound overwhelming, a robust business plan – complete with financial projections – is a good starting point. It’s also crucial to think about which relationships are significant in the delivery of the early stages of the business plan – be it customers, suppliers, team members, or advisers.

Working through the key elements of business planning is an ideal opportunity to start thinking about corporate governance and how the business can establish a strong governance environment for future decision-making. Corporate governance refers to a system of rules, practices, or processes put in place to manage and control the operation of a company. Good corporate governance is therefore often talked about in the context of themes such as accountability, fairness, transparency, and independence.

The time invested in creating a corporate governance structure should be proportionate to the early stage of the business. So, while it may come with a grand title, it doesn’t necessarily require a similarly grand level of preparation! It is, however, a worthwhile investment, as this will make the business more attractive to investors.

The stages of business growth: securing funding and investment

Securing funding is one of the most important decisions to be taken in the early days of building a business. With so many different types of funding available – banks, financial institutions, private equity, grants – it’s important to look for a finance option that matches your ambition. In practice, it is easy to get lost in unfamiliar terminology and lengthy application processes.

In many cases, there might be sector-specific non-dilutive options that are worth exploring to avoid giving away equity too early. At this point, it is important to speak to experienced advisors like Consilium who have extensive experience helping business owners navigate the UK funding landscape.

Locking in your best people and planning for growth

In the early stages of business growth, short-term decisions dominate your thinking. However, as a business owner, it is vital to consider how to build and future-proof your core team. High employee turnover can be hugely costly for early-stage businesses, but equally attracting and retaining the most talented employees can be extremely challenging when inevitably the company will struggle to compete with larger employers when it comes to remuneration packages.

Business owners therefore need to get creative and think of ways to incentivise team members to go on the journey with them. For example, Consilium helps business owners think about options available to lock in their best talent, this often takes the form of options like share schemes.

Next time: scaling your business

This has been a whirlwind look at the early stages of business growth. In the second part of the series, Siobhan will look at scaling a business and building sustainable growth.

If you are considering starting a business or are in the early stages of building one, Consilium would like the opportunity to become your trusted advisor. We work with entrepreneurs across Scotland and the UK, helping them to achieve their goals and build great businesses.

For an initial chat or to discuss the points raised in this article, contact Siobhan Moore.

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