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This post is part of a series of posts designed to throw the covers off the start-up to scale-up process, sharing real world lessons from that very journey by Haatch partner Simon Penson.
To read the series from the beginning click here.
In part one of this series I wrote about the importance of both consistency of delivery and velocity as being the two critical characteristics for start-up success.
But here’s the real secret; those two things combine to create THE most important element in every success story – MOMENTUM.
To begin with it is something that occurs in abundance, naturally.
While you are in the initial phase of growth and have discovered market fit, can tell your compelling story of the future and are chasing the dream of becoming the best in the world at your small initial target, you ride on a magic carpet of energy and will power.
Such a force of nature will often propel the best founders and entrepreneurs to growth for some time – until you are well on your way to achieving the dream of becoming ‘the best at what you do.’
But as with all energy it can only last in its current form for so long before it disapates and takes on another form.
It’s at this point that many, many companies experience ‘flatlining’ – a desperately frustrating period where growth is mysteriously absent.
Why? There simply is no momentum.
Finding your momentum, again.
When you’re deep in the challenges of this phase it can be very hard to see the wood for the trees. You will likely have spent the last year or so before it with your head down, selling/hiring/growing in any way you can as people clamber to get a piece of your service or product offering.
And so understanding why growth eventually slows, or stops, can be difficult to understand. It happens however for a very simple reason; you have simply begun to mature as a business and need new avenues to grow into.
It means finding a new way to produce MOMENTUM. And to figure out how let’s break down what this actually means.
You see, to create momentum you simply have to add MASS and VELOCITY as is often written scientifically as:
P = M+V.
But what does this mean in the context of a growing business? Simply that you have reached the point where you need to add further products or services to your offering and on a continuous test and learn basis to ensure velocity.
My own experience
For me that painful, momentum-less era lasted many months and was difficult to solve. It wasn’t that straightforward to ‘fix’. And here’s why.
We (Zazzle Media) had grown significantly over the first two years as we found our market fit and became one of the first (and best) at online ‘content marketing’. We knew we were great at it and remained passionate about continuing to be so.
The challenge was that we believed the market would continue to grow significantly – and yet it stalled – while we continued to push to find further growth.
Of course, it never appeared and so we had a choice to make:
- Launch into further service areas that our customers also needed and would trust us to deliver.
- Look for a sale or strategic partnership opportunity where those services were already offered and optimised to deliver effectively and efficiently.
Option one would ensure we retained full autonomy and control, but it wasn’t without significant investment risk. Adding a new team, service or product set requires up-front investment and can create further growth issues with perfecting the delivery of it to the customer.
It also asks serious questions of your brand positioning and because we had worked so hard to establish ourselves as THE best solution for ‘content marketing’, selling in as specialists ‘focused on doing one thing brilliantly’ it made such an option very difficult.
This early positioning was itself a great lesson is forward planning. If your ambitions are great then make sure you give yourself room to grow laterally!
Partnerships and sale
And so that left us with one truly viable option. It was too early to ‘sell’ but a merger or partnership offered a way to have our cake and eat it. And it’s certainly an option you should explore.
Having had several approaches from interested parties for acquisition we instead looked a little more strategically at the opportunity and decided to look for a partner that extended our ‘compelling story of the future’ and made sense from both sides.
In our specific case we found just that and as a result we got to grow into two offices, expand our headcount past 150 and add in all of the key missing services we needed to grow and begin the lucrative process of upsell and cross selling our existing client base.
The result? We created the largest independent business of our kind in the UK – and were acquired for our efforts just 14 months later for a multiple that far exceeded what was possible alone.
The process of gaining extra products and services from our ‘merger’ meant we could introduce new options for existing clients and as a result their accounts grew, creating an extra avenue of revenue that simply was not available to us before the move.
And in doing so we found that critical MOMENTUM in that we gained mass (people, products and services) and a new-found sense of energy and velocity from the suite of offerings we now had at our disposal.
At the beginning of the start-up journey you have to work doubly hard to produce it yourself. There is a saying that for every 10 units of effort you might produce one unit of result, but with momentum behind you like this you find that, eventually, you produce 10 units for every single unit of effort.
And as legendary business coach Tony Robbins once expertly pointed out:
“People who succeed have momentum. The more they succeed, the more they want to succeed and the more ways they find ways to succeed.”
Want to read more posts from this series? You can find them all via the links below. And if you’re a start up founder looking for funding or an investor looking to invest alongside us please get in touch.