It's time to ask yourself what kind of business you want to be.
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No matter how clear your vision at the beginning of your startup journey, at some point you will need to ask yourself again, what kind of business do you want to run?
There are two options for a startup, one is to cement as a boutique business and the second is to scale to sell. Each requires a different growth strategy.
Even if you don’t plan to sell, evaluating your business from the perspective of a future buyer or investor is a great exercise and general sense-check.
It will help you make sure your business is going in the right direction and nail down some of the issues that you might have glossed over or put on the back burner.
In 2012 I founded Brilliant Basics after identifying an opportunity for a global design studio in London that could move fast to create value for clients and startup partners. Our core proposition from the get-go was to achieve brilliance from getting the basics right.
Five years later we were acquired by Infosys, a global leader in technology services and consulting. It’s a company I have personally admired since I was a young boy growing up in India, and one that I knew could help us scale globally and help us become the shapers of brilliant ideas into real valuable digital products and experiences.
For a design studio, to be acquired within five years is exceptionally fast. Within our industry the usual period is around seven or eight years. Not realising that Brilliant Basics would be a great success story within just three years, I began getting offers from companies but the time didn’t feel right to be acquired.
But in 2016 we questioned ourselves as to what kind of business we wanted to be, and decided unanimously our direction would be scaled business not boutique lifestyle brand.
We learned vital lessons along the way and looking back I would do things very differently. It’s very hard to raise capital in the services sector so if acquisition is a goal, it’s important to find the right investors early on to scale your business. You need around 100 people or so to become an attractive prospect for potential buyers in this sector.
A second vital area is to get your branding and marketing right. Hire a good PR agency as early as you can. Your business needs to be appearing in the trade press, winning accolades and awards, and your people commenting on pressing issues and future trends.
Your social will also help further tell your story and also show how you deal with clients and customers, if you are a customer-facing business.
It sounds obvious but knowing your core proposition inside out is essential for growth. You may be surprised to find your direction has changed in response to demand, the talent you have hired or because you’ve tried to be a few too many things to too many people.
Take the time to define what business you are really in, and to make sure that the leadership is fully on board.
Now is also a good time to make sure you have management succession in place should you as the owner decide to exit the company once a sale has been made. It’s common for startup owners to be involved in every single aspect of daily operations.
Even if you plan to stay with the business, scaling means you cannot continue to have a say in everything. Too many owner-managed businesses fail to grow if the founder can’t successfully communicate the overall vision to staff and delegate effectively.
Similarly relationships need to be created and nurtured through the business, and cannot rely on just one individual’s contacts and expertise. The hardest businesses to sell are those that demonstrably rely on the owner.
In our sector there are three things outside a defined core offering and a sound branding and marketing strategy that make companies attractive to a potential buyer.
Firstly a business is only as good as its people. Your people need to be very good at what they do, and have experience in running the business in line with the strategy of a potential acquirer.
The second vital pillar of any offering is industry knowledge and a potential acquisition needs to demonstrate solid know-how of the sectors the buyer operates within. In our case this was expertise in design and experience in the financial services sector and fintech space, which made us a good fit.
Finally geographical diversification is important. We experimented with multiple global locations including London, Dubai, Singapore and Hong Kong, which made us a more attractive acquisition.
It’s also important to find the right cultural fit, and this will also guide some of the points above, such as having a knowledge of and demonstrable experience in the buyers’ sector.
We had several offers before we were acquired and what really excited us was that Infosys was looking to acquire us to make a transformative impact to their own business. Along with our desire to grow our footprint and enhance our capabilities, it seemed like the perfect match.
And really don’t forget to consider how you will communicate about a potential or future acquisition with your teams.
Timing is everything. We communicated with the leadership team first, then with everybody once the terms were signed. It’s important to get the right forum too, so that everybody has a chance to ask questions and understand the reasons for the sale and the impact it will have.
And last but not least, don’t fear failure - it will be a journey of up and down so try to enjoy the ride.