Scaling Business through Scalerators - It’s a Marathon, Not a Sprint
Most accelerators and incubators are set up to last for three months. This timeframe is imported from programs aimed at identifying high-potential technology startups teams and ideas, to help crystallize their problem-solution and/or product market fit, for a subsequent funding event.
Scaling business is a crucial phase for any company, and there are many interventions required for a company to scale 2X-10X. The right mindset, ability to have a global perspective, commitment to the scalerator program, and connects with partners, investors and service providers that go a long way in achieving hyper-growth.
In 2017, I was part of a Wadhwani Foundation outreach to discuss two types of hypothesis with 200+ small-scale companies, industry associations, government bodies, retired bureaucrats, consultants, and senior entrepreneurs spread pan-India across several industries.
Hypothesis 1: Would enabling business growth in SMEs lead to job growth? (The answer was a resounding yes!)
Hypothesis 2: Has anyone in India deployed the accelerator/scalerator model (usually aimed at startups), for small businesses as well? If yes, how was the experience? (The answer is that while the model has been conceptualized, it hasn't been deployed at scale)
Since early 2018, the Wadhwani Foundation (WF) has launched a scalerator (scale-accelerator) program, "WF Venture ScaleUp" aimed at enabling business growth and which includes a no. of Vertical or Industry specific cohorts comprising of growth-oriented companies with at least $1M in revenue, in three sectors: manufacturing (auto components / light engineering), consumer packaged goods (CPG) & technology-enabled businesses (IT & ITeS).
The response and acceptance to the program from founder-entrepreneurs of small businesses has been tremendous. However, it is essential to put the structure and duration of a scalerator program into perspective.
The need to RESTRUCTURE: There is a common misconception on what constitutes a Scalerator. Several players have relegated this to a real-estate play. Either real-estate owners seek to monetize their existing asset, or third party grants are used to create new physical infrastructure as ‘visible’ efforts to help entrepreneurs. This focus on real-estate is one of the reasons for a handful of successful accelerators/scalerators in India. Physical infrastructure is available aplenty & can be easily rented out. What entrepreneurs want is threefold:
a) access to management best practices
b) mentoring from senior entrepreneurs or functional experts, and
c) consultants & service providers who deploy management best practices or provide tools that help increase business efficiency.
The need to redefine DURATION: Most accelerators and incubators are set up to last for three months. This timeframe is imported from programs aimed at identifying high-potential technology startups teams and ideas, to help crystallize their problem-solution and/or product market fit, for a subsequent funding event. However, the context is different for small-scale businesses.
There are 63 million MSMEs in India vs. a 100 thousand startups. Companies in the ’small’ segment have been around for 5 to 15+ years, have reached sustainable scale with several customers, implying problem-solution & product-market fit is not an issue, and are instead facing real business problems preventing scale.
Motivated entrepreneurs running small businesses need a sustained intervention over 12-24 months, while not impacting the running of their operations. This allows time for new habit-forming behavior to develop and to run one or more OODA (observe-orient-decide-act) decision loops with appropriate mentoring. In other words, these entrepreneurs are in it for the long haul. It's a marathon, not a sprint! There has to be a clear-cut agenda for the first three months and then the next nine months.
During the first three months:
• De-construct the business, evaluate historical performance, complete a baseline and a business health check
• Get inspired via mentors and senior entrepreneurs
• Construct the strategic business plan incl. vision, mission, goals; conduct functional workshops and personalized 1:1 sessions in cash, customer, capacity; identify near-term and medium-term goals, and actions that can lead to the achievement of these goals
Also, as part of the scalerator program, we identify motivated high-potential entrepreneurs, to continue to hand-hold over the next nine months which are crucial for these identified companies, where:
• Some of them will start paid projects with a chosen consultant, e.g. a SME may hire a strategy consultant to advise on the sales process, business plan creation, customer profitability analysis, goal-setting, etc.
• Others may identify gaps that need either tools or service providers, e.g. digital marketing, ERP, legal, chartered accountants among others
• Some others may reach a path in their growth journey where they run into special situations they haven't faced before, e.g. JV with a foreign partner, M&As etc.
To grow, a company needs to fix its ‘weakest link,’ which changes with time. Thus, the continuous availability of mentors, who are either senior entrepreneurs or subject matter experts, ensures availability of timely well-intentioned advice. It still is the entrepreneurs’ call whether they choose to act on such advice - just the fact that it is available is an amazing confidence booster.
Moreover, sustained interactions between companies who are growing serve as excellent peer networking, best practices sharing and collaboration platform, leading to an incredibly positive pressure to succeed.
Finally, during the last twelve months, we expect to find the business more stable, and the entrepreneur more confident. Habits have been nurtured and formed, business metrics are tracked, with business plans being executed and iterated upon. The learning model and decision-making ability of the entrepreneurs is strengthened via interaction with mentors, with several curated relationships in place and many more available on a need-basis. Larger businesses have formalized these relationships via an advisory board.
At this stage, we expect to find the entrepreneur reaching out for precise advice. We also see entrepreneurs who have been part of the scalerator ‘paying forward’ by enrolling in mentoring programs in their city, to mentor either younger students interested in entrepreneurship or early-stage entrepreneurs struggling with issues they have already solved.
In conclusion, a true Scalerator, aimed at small businesses should focus on the ‘softer’ aspects of management skills and best practices, and truly invest time & partner with companies over 12-24 months, i.e. during a significant phase of their growth journey as an entrepreneur.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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