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Posted By CAPITA

How partnering can help solve the biggest challenges faced by start-ups

 

 

Capita is today launching a new proposition through our corporate venturing business unit, Capita Scaling Partner, that enables start-ups to think and act like a big company at a very early stage in their development.

As the Enterprise Research Centre has shown, half of all start-ups in the UK fold within three years. Yet many of these are sound business concepts founded by exceptional people. Unfortunately, the reality of being a small business is tough. Building your reputation and being taken seriously takes a long time, and unless you quickly build scale you find yourself cutting corners on quality to preserve precious funding.

Our own research identified some of the biggest challenges a start-up faces – challenges that we can address:

1. Being taken seriously by decision makers

Big companies struggle to do business with small businesses, fundamentally because you’re seen as riskier to deal with. Unless you have personal connections, you’ll be lucky to get a meeting with the person who is capable of actually making a decision to do business with you. And then comes the really painful bit; they only want to ‘start slow’ to see how it goes, and will send you a one-sided contract that you have little choice but to accept. Time is extremely precious for a start-up – you need to get in the room with the decision makers first time every time, and you need to be able to punch well above your weight. Partnering with a large company like Capita Scaling Partner solves this problem, giving you access to our network of senior trusted client partners and enabling you to approach big businesses on an equal footing. We don’t just make introductions, we work side by side with you to close those deals with our clients.

2. Achieving critical scale

How do you reach millions of consumers or land those big B2B deals with your unknown brand and unknown offering; achieving that critical point where you can survive as a going concern? It can be very expensive to market direct to consumers. The start-up world is littered with examples of large capital raises, diluting founders considerably, just for the funding to be poured into digital marketing. This approach to acquiring customers is expensive, with low hit rates for reaching the desired targets. Capita interacts with 45 million consumers every day. We can help solve this issue by giving you access to our large-scale distribution platforms into big corporates, government, and our existing sale channels direct to consumers.

3. Getting funded at a reasonable price

It’s a catch 22; you need funding to drive sales, but without any major sales you get a poor valuation. If you raise your series A capital too early, expect to be diluted considerably. In an ideal world you’ll have landed some material deals that provide sticky revenue, have reached profitability, have first class customer reviews, a solid pipeline, and a credible plan for managing cost and quality as you grow. Getting a good valuation is about:

  • showing great performance to date
  • having a bullet-proof forward business plan
  • finding an investor who understands your market and can add value to your business.

By strengthening your business plan and actively helping to lock down blue chip clients, we will ensure you get the best valuation for your next capital raise.

4. Maintaining quality and edge as you grow

If you’ve had some success achieving sales, be careful not to neglect the quality of delivery – you don’t want a reputation as a company who sells the dream and delivers the nightmare. Building a quality brand is extremely important if you want to scale. But how can you grow your operations quick enough to allow you to maintain your quality and unique edge in the market, while you scale rapidly? This is a challenge that is a lot easier to get right if you plan your delivery strategy as early as possible – once you’re off to the races it becomes much harder to implement a major change to the way you’ve structured your business. Which parts of your business administration should be in house and should grow with you as you scale? Which bits can be outsourced to experienced third parties who are better placed to do that work at scale? How do you create the space to innovate and improve your offering as the market develops? How do you recruit and motivate quality people? How do you reduce the business’s reliance on you as the founder? All these questions should be addressed in your business architecture. We can help with this by drawing on Capita’s years of experience delivering large-scale business operations in a high growth environment, as well as our network of scale suppliers.

5. Listening to feedback

No one gets everything right, first time, every time. Listening to feedback from customers (and other stakeholders such as employees, investors and suppliers) and building this into your continuous development cycle is critical. And if you’re a small company, you need to listen and adapt fast. A consistent stream of unaddressed negative feedback in the early days or, worse still, no way to measure feedback, is a sure-fire way to die young. By providing access to the right contacts in our client network, we can help to ensure you have open customer conversations, triage feedback effectively, and incorporate the necessary improvements into your business.

Capita Scaling Partner

Scaling up to become a successful, sustainable business requires more than just a passive financial investment. Our dedicated corporate venturing unit, Capita Scaling Partner, has been created as a platform to secure tangible growth for start-ups.

We sit side by side with our partner start-ups, pitching their proposition to our own client base, allowing them to speak to decision makers immediately.  Our start-up partners are empowered to think big and act big, while retaining their own brand, culture, identity, agility and negotiating terms with clients and suppliers on an equal footing.

We’d love to hear from innovative digital companies that our disrupting our core markets and need help to scale, early stage investors who want to maximise the value of their portfolio and buyers of SMEs.

If you want to know more please get in touch with me on john.downes@capita.co.uk.

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