# Advisors must play a bigger role in unlocking scale up potential Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-06-15 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Scale-up Support: Overcoming the Funding and Skills Gap Meta Description: Discover how Scale Up Capital is bridging the funding and skills gap for businesses looking to scale up in the UK economy. URL: https://financedigest.com/advisors-must-play-a-bigger-role-in-unlocking-scale-up-potentialhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/advisors-1736838278848-compressed.jpg) _By **Simon Philips,** CEO, Scale Up Capital_ As we look to recover from the pandemic and the economy starts to flourish again, we must ensure that small and medium businesses are properly supported. They are the backbone of the economy in terms of job creation, economic growth, innovation, and diversity. The UK benefits from a strong entrepreneurial culture, but many businesses stumble or plateau during their scale up phase, which is why, according to the OECD, the country ranks 3rd in the [world for start-ups](https://www.financedigest.com/apple-hostshigh-tech-start-ups-from-worlds-number-one-university-business-incubator.html "Apple hostshigh-tech start-ups from world’s number one university business incubator") but only 13th for scale-ups. [Studies by Enterprise Research have shown that only 6% of UK companies with more than ten employees at the start of a three year](https://www.financedigest.com/europe-facing-its-worst-drought-in-500-years-study.html "Europe facing its worst drought in 500 years – study") period grow at more than 20% per annum over that period, and only 2% of start-ups grow to a revenue of over £1 million by the end of the three years. This failure to scale-up more companies means we are leaving prosperity and jobs on the table, and many worthwhile [businesses are not fulfilling their full potential](https://www.financedigest.com/businesses-are-not-reaching-full-e-commerce-potential.html "Businesses Are Not Reaching Full E-commerce Potential"). Many organisations have to make this difficult scale-up transition while being underfunded, because they fall in the [funding gap between venture capital](https://www.financedigest.com/galois-capital-flagship-fund-to-close-after-ftx-losses.html "Galois Capital flagship fund to close after FTX losses") and private equity. Private equity [investors look for more mature and profitable](https://www.financedigest.com/aviva-boosts-investor-payouts-after-profit-beat.html "Aviva boosts investor payouts after profit beat") businesses that can be acquired with leverage, while venture capital investors are looking for big hits and hypergrowth moonshots. The result is that an emerging business with revenues of £1-£10 million, growing at 10-25% per annum and reinvesting all its profits to [fund its growth will struggle to raise](https://www.financedigest.com/nissan-pushes-partner-renault-to-sell-down-stake-may-raise-funds-source.html "Nissan pushes partner Renault to sell down stake, may raise funds -source") money from either the PE or VC community. Despite many [small businesses](https://www.financedigest.com/5-reasons-why-you-need-to-step-into-your-ceo-role-as-a-small-business-owner.html "5 Reasons why you need to step into your CEO role as a small business owner") falling into this funding gap, there are an increasing number of specialist scale-up investors like ScaleUp Capital who focus precisely on funding these types of companies. ![Simon Philips](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/simon-philips-450x675-1736838278817-compressed.jpg) Simon Philips But [small businesses](https://www.financedigest.com/5-common-tax-mistakes-small-businesses-make-in-australia.html "5 Common Tax Mistakes Small Businesses Make in Australia") at the start of their scale-up phase require more than just funding: they need skills, support, expertise and a methodology. Research by Crunchbase shows that 83% of founders are doing it for the first time. Many founders are subject matter experts who know their product and [market inside-out but have never scaled a business](https://www.financedigest.com/the-valuable-role-ecommerce-social-media-marketing-will-play-in-keeping-businesses-afloat-during-lockdown.html "The valuable role Ecommerce/Social Media marketing will play in keeping businesses afloat during lockdown") before. [Founders who have done it three or four times before are twice to four times more likely to succeed](https://www.financedigest.com/how-founders-of-british-startups-can-still-succeed-against-the-brexit-and-covid-odds.html "How founders of British startups can still succeed against the Brexit and COVID odds"). Therefore, alongside the funding gap there is a [skills](https://www.financedigest.com/utilising-digital-tools-to-close-the-finance-and-accounting-skills-gap.html "Utilising digital tools to close the finance and accounting skills gap") gap. The scale-up phase is a tough challenge. These are the difficult adolescent [years in the life of a business](https://www.financedigest.com/london-ranked-as-europes-most-attractive-city-for-businesses-and-employees-for-second-year-running.html "London ranked as Europe’s most attractive city for businesses and employees for second year running"), during which it will undergo more change than during any other period. It will [need to transition from a founder pulling all the levers to being run by a well-rounded management](https://www.financedigest.com/why-a-modern-organisation-needs-an-agile-approach-to-software-asset-management.html "Why a modern organisation needs an agile approach to software asset management") team.  Processes need to be professionalised, systems need to be installed, and the product or [service often needs](https://www.financedigest.com/top-5-seo-services-you-need-to-succeed-in-2022.html "Top 5 SEO Services You Need To Succeed In 2022") to be upgraded to be made robust and scalable. Scale-ups need an injection of methodology, governance and expertise from external scaling [experts to ensure they avoid](https://www.financedigest.com/selling-advice-five-expert-tips-on-how-to-avoid-gazundering-when-selling-your-home-to-save-you-money.html "Selling advice: Five expert tips on how to avoid gazundering when selling your home to save you money") the missteps that can so easily take the wind out of their sales. Accountants are often the first to spot when a [business is entering its scale-up phase and facing big](https://www.financedigest.com/smishing-is-a-new-virus-plaguing-big-business-conversational-commerce-to-the-rescue.html "‘Smishing’ is a new ‘virus’ plaguing big business – Conversational Commerce to the rescue!") new challenges. There are three areas in particular where [accountants and advisors](https://www.financedigest.com/reckon-one-builds-momentum-with-strong-backing-from-accountants-joining-the-cloud-advisor-programme.html "Reckon One builds momentum with strong backing from accountants joining the Cloud Advisor Programme") can help: **Find the sweet spot and focus on it** – emerging [businesses are often solving too many different problems for too many different types](https://www.financedigest.com/types-of-business-partnership.html "Types of business partnership") of customers. The trick is to [laser in on the very best user cases where the product or service really nails the problem and is better than most alternatives in the market](https://www.financedigest.com/the-aesthetic-lasers-market-to-gasp-through-innovation-based-growth.html "The Aesthetic Lasers Market to gasp through innovation-based growth").  Find that sweet spot product-market fit and focus on it. **Work on customer acquisition before the marketing –** don’t invest in scaling the [sales and marketing](https://www.financedigest.com/sales-of-electric-bicycle-motors-market-to-record-exponential-growth-during-2017-2025.html "Sales of Electric Bicycle Motors Market to Record Exponential Growth During 2017 – 2025") until the unit economics are strong enough. It is key to optimise before you scale to [avoid a lot of wasted time and money](https://www.financedigest.com/mistakes-to-avoid-while-choosing-a-private-money-lender.html "Mistakes To Avoid While Choosing a Private Money Lender"). [Keep working](https://www.financedigest.com/keeping-your-team-connected-and-beating-work-from-home-fatigue-in-lockdown.html "Keeping your team connected and beating work from home fatigue in lockdown") on customer acquisition until the Customer Acquisition Cost (CAC) is low enough and keep working on Average Order Value (AOV) and retention until the Lifetime Value (LTV) is high enough. Once the ratio of LTV/CAC is strong, then go for it and scale up. **Is the** [market large enough –](https://www.financedigest.com/healthcare-informatics-market-scope-and-opportunities-analysis-2021-2031.html "Healthcare Informatics Market Scope and Opportunities Analysis 2021 – 2031") make sure the prize is big enough. [Small businesses](https://www.financedigest.com/pakistan-floods-add-to-pain-for-struggling-small-businesses.html "Pakistan floods add to pain for struggling small businesses") can go all-in without making sure that there is a large enough market and before their processes and product are truly scalable. Work out the Total Addressable Market (TAM) bottom up, not top down – ask yourself what [problem are we solving](https://www.financedigest.com/british-start-up-reveals-the-secret-to-solving-the-problem-of-identity-fraud.html "British start up reveals the secret to solving the problem of identity fraud") for what user case, how many companies have this exact user case and problem, and what will each pay to solve it. Get the selling and [implementation processes ready to operate at scale](https://www.financedigest.com/mifid-ii-why-you-should-not-scale-back-your-implementation-efforts.html "MIFID II: WHY YOU SHOULD NOT SCALE BACK YOUR IMPLEMENTATION EFFORTS"). At ScaleUp Capital, we have helped many successful companies reach scale and profitability, and we would like to [see more investors](https://www.financedigest.com/analysis-weary-investors-see-little-respite-to-fed-hike-gloom.html "Analysis-Weary investors see little respite to Fed hike gloom") involved in this exciting part of the market. Plugging the funding and skills gaps that are limiting these businesses is vital for the economy, and hopefully more [investors like us will start to realize the potential](https://www.financedigest.com/virgin-orbit-says-space-startup-in-talks-with-potential-investors.html "Virgin Orbit says space startup in talks with potential investors") of scale up companies. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---