An ‘ecosystem’ is widely used to describe an area where entrepreneurs “hang out.” But what exactly is it? And how can an ecosystem help you build your business?
California's Silicon Valley is a great example of a well-functioning entrepreneurial ecosystem on a macro level. It has a well-developed venture capital base, a large pool of well-educated talent, especially in technical fields, and a range of government and non-government programmes fostering new ventures and providing information and support to entrepreneurs.
Invigorate has outlined a structured ecosystem framework based off the World Economic Forum's definition* for businesses to use when looking to grow. It applies to any sector or stage of growth.
Governmental Policy & Regulatory Frameworks
Keeping akin of the latest political movements that affect your business are key. It’s important to map out the relevant stakeholders that could affect major outcomes. There are three ways that businesses can respond to these influences and it's worth thinking through how you would like to react.
1. Confrontation – it takes big clout to sway opinion, as well as time and effort
2. Participation - joining industry groups and interest groups can ensure that you or a trusted source as input into legislation affecting your business
3. Anticipation – if you can forecast emerging issues, adjust / change business practices to accommodate them
Management & Infrastructure
It’s key to align the strategic intent of the management team with growth objectives and the manner in which the business needs to run. To lay the foundations for growth, a business needs a visionary leader, an experienced executive team with strong domain expertise to put in place different processes across the business to make operations robust and scalable, and specialist employees. While these elements are vital, there is freedom in how a team is structure - this can be hierarchical or flat. There are a variety of different examples of growth businesses adopting either structure successfully.
A business needs strong financial foundations to sustain organic growth before seeking additional funding. Starting a new business is the easy part but finding the proper product-market fit and continuing to learn from customers is a real challenge. Words of wisdom by Sharmadean Reid MBE, founder and CEO Beauty Stack ‘Stay small for as long as possible. Because we raised all this money, and because it meant that funds believed in us, I felt a lot of pressure to grow the company…’
There are many different types of funding available, including loans, equity financing or grants. It's crucial to understand what the implications of each of the funding sources mean for your business in terms of raising funds now and in the future for subsequent funding raises.
“As Brexit unfolds, there are challenges and opportunities for SMEs, but businesses always need to address cash flow and plan for the future,” says Andrea Reynolds, CEO of Swoop, a platform which simplifies and speeds-up access to loans, grants and equity funding for SMEs to start up, scale up and finance for growth.
Human Capital & Workforce
Many founders state their biggest challenge is finding the experienced talent to help grow a business. But it's crucial to build an experienced team, rather deploy quality individuals who are subject matter experts in your business rather bodies to fill spaces. It will save you time and money in the long run. Use flexi workforce tactics so that as your workforce demands change, you have more agility. Hire ‘as per your needs’ and be able to onboard quickly and effectively is key.
Education & Training
It goes without saying that education and training is vital. In growth businesses, this is not prioritised enough. Growing businesses often need to hire quickly but don’t take enough time to give training outside ‘on the job’ training. Upskilling new employees can save months of wasted productivity.
Mentors, Advisors & Support Systems
Identify mentors and advisors that can aid growth. They can provide a solid support system for growing businesses as they not only can provide ‘know-how’ but also help identify the right customers to target, the right contact people within larger corporates and key suppliers. They are also useful in identifying other useful people to link up with in your ecosystem who can help progress your business. A bird-eye view approach and seeing the biggest picture is often very difficult.
Appreciate the importance of culture. A strong culture will identify a business, and employees tend to enjoy work when their needs and values are consistent with those in the workplace. Fostering a good company culture is obvious but in reality very hard to do. With a fast-growing young company, the leadership team really does dictate the outcome. Laszlo Bock, the former Senior Vice President of People Operations at Google, highlights its approach in his book, Work Rules: “All it takes is a belief that people are fundamentally good - have the courage to treat your people like owners instead of machines. Machines do their jobs; owners do whatever is needed to make their companies and teams successful.”
Stay in tune with the latest ideas and talent that comes from local universities. Tapping into the local university scene can be more beneficial for your business than you think - with innovative solutions and talented human capital. It’s worth making sure you are at the next graduate fair.
Local & Global Markets
The local market should be big enough but don’t forget about bearing adjacent markets in mind as you develop your product. Keeping people’s local needs at the heart of cross border expansion is key as one solution for one country may not be relevant to others.
Small business should seek collaborative corporates that see their vision and have experience in working with up & coming businesses, otherwise a potential partnership can be difficult: different time scales or an inability to move at the same pace often becomes a challenge. The culture of the two businesses are also in stark contrast: one stable and driven by process, the other opportunistic and often ‘learning by doing’.
Why not attend some of our events to hear more insights that are useful for your business? www.invigorateplatform.com/events
*For more information about the ecosystem framework and concepts, visit the World Economic Forum: Entrepreneurial Ecosystems