-
Seven things you need to know to turn a start-up into a scale-up
May 31, 2017 Editor 0
Entrepreneurs at mLab East Africa, Nairobi, Kenya. Supported by the World Bank Group’s infoDev program, this business incubation center provides support to local start-ups. Photo Credit: © infoDev/World Bank About 12 years ago, one of my World Bank Group colleagues told me that his team had just launched an incubation program and I should join the unit. “Incubation?” I asked. “What does that mean?” I’ve always believed that a strong domestic private sector is the key to a sustainable development path for developing countries. So I decided to make the leap and, fast forward 12 years, terms like SMEs, start-ups, incubation, acceleration, and business development services have become part of my daily vocabulary.
Over the past 10 years, I’ve had the chance to meet many entrepreneurs, policymakers, and investors. I saw them succeed, and I saw them fail. Most importantly, from their experiences, I learned a few important lessons.
1) Growth aspirations
We should never forget to distinguish between entrepreneurs who have a small business to sustain their families — necessity entrepreneurs — and those who have ambitions to become market leaders — opportunity entrepreneurs. Why? Because they are driven by different incentives, face different challenges, and have different chances to scale their companies.2) The lifecycle of an enterprise
The lifecycle of an enterprise refers to different stages that define the evolution of a business — from idea to prototype, from initial sales to profitability, expansion, and growth. This sounds very linear but it is, in fact, a roller coaster. And unfortunately, as opposed to real roller coasters, which are usually pretty safe, many firms fall off the ride and, among those who stay on, most don’t grow. In OECD countries, out of 100 firms that start, only seven actually grow.Your project or program can target either segment of entrepreneurs but you need to be clear about which one you are targeting so you can manage effectively your — and your stakeholders’— expectations.
3) Unconscious incompetence
How do you know what will unlock the company’s ability to grow? How does the entrepreneur know what the company needs to scale?The challenge with approaches that wait for the entrepreneur to identify the problem and ask for assistance — the business development services model — is what psychologists call “unconscious incompetence.” Basically, you don’t always know what you don’t know. Think about it: what do entrepreneurs always answer if you ask them what they need? …finance! How about customers?! How about management and processes? I’m not saying finance is not needed, but it is an over-stated need …or perhaps as marketing professionals would say – a “want,” not a “need.”
A comprehensive diagnostic of the enterprise would identify the correct pain point. In many cases, the “need” is actually not finance, but rather “profitability” and “growth.” It may be external finance, or it may be more customers or higher efficiency that gets you there.
Related Posts
Illuminating the developing world’s “invisible” consumers
Kenyan scientists release five new canning bean varieties after sixty-year wait
The secret life of a World Bank actuary
SMEs are good business for Kenya’s growing banking sector
Using Technology to Advance Human Rights in Kenya
An investment ecosystem: Piecing together the interventions needed for a dynamic textile and apparel cluster in Kenya
Categories: World Bank PSD
Tags: entrepreneurs, kenya, scale-up, start-up
No one size fits all! Lessons from legume–cereal rotations in smallholder farms Incentivizing equality: Investment-led development as a win-win for all
Subscribe to our stories
Recent Posts
- SL Crowd Green Solutions September 21, 2020
- Digital transformation in the banking sector: surveys exploration and analytics August 3, 2020
- Why Let Others Disrupt You? Take the Smart Self-Disruption Journey! August 3, 2020
- 5 Tips for Crowdfunding During the Pandemic August 3, 2020
- innovation + africa; +639 new citations August 3, 2020
Categories
Archives
Popular Post-All time
- A review on biomass-based... 0.9k views
- Can blockchain disrupt ge... 697 views
- Prize-winning projects pr... 692 views
- Apply Now: $500,000 for Y... 612 views
- Test Your Value Propositi... 537 views