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The one secret to expanding your business without imploding

In this three-part series we explore the insights and themes shared by Mike Mcgee and Sir William Sargent's, founders of Framestore, at their presentation at August 2014's Startup Grind London (opens in new tab).

It feels like every month we read about a startup that's suddenly exploded into a million or billion pound venture. We read about startups implementing extremely aggressive expansion strategies (we're looking at you Uber), we see venture capitalists throwing billions of dollars at startups... but is such rapid growth sustainable? At August 2014's Startup Grind London, Mike Mcgee and Sir William Sargent, two of Framestore's founders, spoke about their struggle maintaining the balance between expansion and managing their business.

Expansion pros

There is a natural drive in entrepreneurial people to push toward greater challenges. Once you've established your product and business as a viable enterprise you should look to expand and grow the business. When asked about their biggest mistakes in business, Mike replied that he wished they'd had more confidence in the enterprise and in themselves, borrowed more money, and got a bigger premise.

Sir William echoed Mike's sentiment: "opportunities that we lost because we couldn't escalate the ideas to the part of the company that could support or fund it." Because Mike and Sir William played the game so cautiously it meant that they lost out on potential revenue, revenue which could have been gained if they'd expanded more aggressively.

Obviously the benefits of rapid expansion are increased revenue, greater market share, and handling larger projects. But another, often ignored, advantage of rapid expansion is the kind of people it attracts. Periods of expansion are periods of intense creativity, trying new things, and learning; three things that attract success driven people.

Expansion lows

However once Framestore began expanding they struggled with issues that were (arguably) more severe than being unable to take on an extra client. Sir William noted some of their expansion troubles: "When you get to 200 people you hit a management barrier, you need HR and teams. Somebody said it happens when it gets to 450 people, but that time I was ready, I wasn't going to make the mistakes everybody else made... and we made every one of them."

When going through an expansion process your business needs to ensure it can afford it, and has the necessary infrastructure to deal with the influx of new staff, revenue, and information. Before focusing your business on growing you may also want to consider the impact the disruption will have on existing customers, workflow processes, and your personal life.

Another insight from Sir William and Mike that was particularly powerful was the effect expansion has on company culture. As a business grows from startup to SME, business processes become rigid and defined, staff settle into roles that they are comfortable with, and new staff may see the larger company size and feel disposable. "There are known points where you run into issues of; how d'you keep energy going, how d'you keep innovation going, how d'you keep people feeling like they're a part of a team," Sir William shared.

How to effectively implement the solution will vary from business to business, but what needs to happen is clear. In order to keep the energy, feeling of community, and innovation of a startup, your business needs to formalise and elucidate its company culture and work according to those values.

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Yin and Yang, Jedi/Sith, expansion and manageability, two diametric opposites, both essential to success. Despite Mike regretting that they didn't take out larger loans to expand faster early on, he admitted that they may not have been able to handle growing their company so quickly.

"Growing your business" isn't a single process, it's a series of interlocking processes. The processes themselves vary from business to business and it can be difficult to know what needs to happen before the next step of growth. Sir William explained that businesses grow "a little bit at a time", "It's amazing how it's a load of little steps"

Mike and Sir William revealed one of Framestore's strengths was their ultimate goal of becoming a global company, but they understood that it would be a slow process. The word they oft repeated was "balance". Balance between expansion and keeping your enterprise manageable, balance resources between new markets and strengthening current markets, and balance between investing in infrastructure and increasing revenue.

Despite the time it took for Framestore to be at the level it is today, Sir William reflected on the company's journey: "We could have taken bigger risks, if you look back at our history we've been cautious," he then added "your success is based on what you manage to avoid."

In part one (opens in new tab) of the series we talk about how to utilise technology to stay relevant, and in part three (opens in new tab) demonstrate why networking is essential, even in your own business.

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