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Expansion

“Trial and error, expert advice, and looking to the future”

Hear from four dynamic UK scale-ups as they share their thoughts on expansion.

Explore catalysts to expansion for start-ups, find out who entrepreneurs turn to for advice as they expand and discover challenges our companies have overcome as they’ve grown.

Find out how our High Growth & Entrepreneurs Team can help you with your expansion needs.

Watch what our entrepreneurs had to say and read the interviews below.

What was the catalyst to expansion in your business?

Anthony Eskinazi, Founder & CEO, JustPark
Back in 2006, when JustPark started and we were called Park at my House, the concept was about connecting homeowners with empty driveways, to drivers needing somewhere to park. As time has gone on, we realised that driveways alone wasn’t a big enough opportunity. If you think about where driveways are, they’re just Zone 2, Zone 3 in London and the outskirts, but not necessarily where the peak of demand is, and so we expanded and we started looking at churches, schools and other tertiary sectors with unutilised parking supply, then we expanded further to hotels, to commercial car parks, now to commercial offices, to undeveloped land, and so over time we’re not just looking at that small niche of a driveway. We’re now saying any piece of unutilised real estate that can be used for parking, get it onto our marketplace and connect the pent up demand for cheap, affordable, convenient parking with all of this unutilised real estate across the country.

Polly McMaster, CEO, The Fold
The first stage of expansion was really going from the seed of an idea and then building that up into a viable business, so identifying a group of customers and actually being able to get a product to them, so that was everything from ‘How are we going to do our marketing?’, ‘How are we actually going to make our dresses?’, ‘Where are we going to manufacture them?’ and really that was just about a lot of networking and a lot of trial and error, and those first few years are quite scrappy when you’re trying to figure everything out and you’ll test one thing and it doesn’t work and then you’ll test something else and that unlocks a bit of an opportunity and that’s where you can follow that lead and really build from it and keep building up what you’re doing.

Paul Turton, MD, Pact
The catalyst for expansion was 18 months ago we entered the office coffee market and we launched our brand Pact Coffee for Business, so since that time the expansion has taken on 700 new customers and we’ve had to move to this fantastic new facility here in Haslemere which we call The Roastery.

Steven Dring, Co-Founder, Growing Underground
The catalyst to expansion in our business at Growing Underground was the demand from the customers. First of all, we tested the market, but when that demand was consistently there, we realised there was the opportunity and the need for us to expand and scale up.

Who would you turn to for help with your expansion plan?

Anthony Eskinazi, Founder & CEO and Oren Peleg, Executive Chairman, JustPark
Anthony: When thinking about where to expand, how to expand, what verticals to look into, a lot of it is, especially in the early days, gut instinct, you’re looking at where is the problem, I’m a driver myself, where do I find it a real challenge to find a convenient parking space, and then when you’re walking down the street you just see there’s a driveway here, there’s a church, there’s a school, or you’re parking in a hotel and you see 75% of the bays empty and so when you’re running a business you’re always looking for opportunities and parking being a utility which as a driver I use, I park every single day, the opportunities are just literally right in front of me. A lot of it initially is gut instinct and then as you mature as a business, as you grow, as you have more people to do the required research, your gut develops from experience, and you should always trust it, but when you’ve also got research and data to back it up, such as looking at new opportunities, be it the airport, the parking sector, or working with hotel chains or the large parking operators, a lot of that can eventually be done with research as well.

Oren: I think one of the interesting observations I’ve made as someone who’s come from more traditional industry into the tech ecosystem, is classically it used to be analyse a market, quantify it and then define a strategy. One of the things that I’ve found very interesting about the tech ecosystem especially when you’re trying to create new markets, is there is no analysis, you really need to experiment, but I think what I’ve observed especially building on what Anthony says is as a business starts to mature, you start to effectively get data points that then start to merge both worlds and merging both worlds becomes important because some analysis and disciplines are helpful, because I think the tech ecosystem, and good companies within the tech ecosystem, are blessed with so many opportunities and actually one of the biggest risks is that you don’t prioritise and you don’t focus, because you then start to dilute your effort and dilute your capital, so I think what we’re finding now at JustPark is we’re both experimenting a lot, if they work, we build on it, if it doesn’t we stop it, but we’re also trying to embellish that with analysis, where we can gather the data, to help us prioritise and focus, whether it’s within a vertical which clients you should go for, or which verticals we should be targeting given their size or given a deeper understanding of their pinch points and the issues they’re trying to solve. Now I think the observation is we’re merging both techniques in terms of designing our expansion plan.

Polly McMaster, CEO, The Fold
For advice when we’re looking at things like expanding, I’ve always taken the approach of find somebody who’s done something similar and then ask them their advice, because probably they’ve learnt some things along the way and it would be great if we can learn from their successes and try and avoid some of the mistakes they might have made. So going in, networking with other entrepreneurs or business leaders, find out what they learnt, what they would do differently, what successes that they had, and then try and take those learnings and then adapt it to the context of The Fold.

Steven Dring, Co-Founder, Growing Underground
We turn to numerous people for help when it comes to expanding. It’s always a case of wrapping experts around you who have that expertise in certain fields, whether its logistics, marketing, sales and funding. We use different experts at different time and different mentors at different times. It all depends on what’s necessary and what stage we’re at, but for expansion, mainly around financials, logistics and then also people with that market knowledge and that market experience.

We also turn to mentors, entrepreneurs who have already scaled up businesses in this space, those guys know all the pitfalls, they know all of the challenges and they’re always helpful of fellow entrepreneurs who are trying to scale a business.

What are your plans for future expansion?

Anthony Eskinazi, Founder & CEO and Oren Peleg, Executive Chairman, JustPark
Anthony: Having run JustPark now for 12 years, the question of international expansion has been at the forefront of my mind for a long period of time, and every time I‘ve started thinking about it a new opportunity, and a much easier opportunity, has presented itself in the UK market and we’ve identified we’ve still got only a fraction of the market share we want here. This is a market where we’ve got great brand awareness.

To expand internationally, with the languages, with additional resources, who knows what’s going to happen with the Brexit vote, etc. There’s a lot of uncertainty - does it just make more sense to capitalise on what we have already in the UK market and build it into a very big business? - and we’ve estimated we can make this business materially larger, ten times the size it is right now, just in the UK market and probably with a lot less friction.

But the international opportunity is huge, and making the right call, not going too early, but also not leaving it too late where the market can consolidate and actually the barriers to entry can get so big and so hard and so expensive that actually that market becomes uneconomical, without raising ridiculous amounts of capital. So international expansion is on the agenda, which locality, which country, which continent, is some research we’re undertaking.

Thankfully there’s some incumbents in each of these markets and we’ve been able to track their progress, see what they’re good at, what they’re not good at, they’ve planted some seeds in the market in terms of consumer awareness, in terms of building relationships with some of the partners we’d have to connect with. When I started JustPark in the UK we had to do all of that groundwork ourselves. When you’re first mover it’s an advantage, but also it’s a disadvantage, because a lot of the time, especially initially when it’s helping drivers park in people’s driveways, etc, you have to do all of that education as well, which is expensive and time-consuming, whereas thankfully in Europe and beyond a lot of our competition will have done that already and then ultimately it’s about having the best product, having the best marketing and executing it really efficiently.

Oren: I think maybe it’s my role as Chairman, I think I’m obsessed with four things when it comes to our international plans.

The first one is prioritising, is really trying to figure out which markets make the most amount of sense, so that we do not overstretch ourselves, but whatever we do, we get right.

The second one is trying to plan for it, because international expansion does add a lot of complexity to the business, so trying, within reason, to understand that complexity upfront and plan for it is really important.

The third thing, and this is really important, is localisation. One of the things I’ve learnt managing international businesses, and often in the businesses that I’ve transformed, the mistakes that were made by my predecessors was that they didn’t localise. They had a winning formula in one market and then they went and just tried to replicate it without deeply understanding, or at least designing a process which would allow them to understand, how that product needs to be adapted, because every market has its difference, cultural differences, structural differences, and it’s getting us to think through that.

And then the final one is what does all that mean in terms of funding and in terms of bandwidth, because I don’t want to get caught out short of capital. We’re going to make mistakes, so we have to have enough bandwidth both managerially and from a funding point of view, to make those mistakes, but still proceed and not get ourselves into trouble. And those are really the four things that I’m really focused on.

Anthony: A key reason why we haven’t yet expanded internationally is because the opportunity here in the UK is enormous, and I’ve never felt that we’ve captured enough of the market, or even achieved close to our potential in what we can do here in the UK.

I think when it comes to expansion, a key thing to think about, especially when you’re going internationally, to be honest even in your own market, is build or buy? Do you go out, depending obviously on the stage of your company, to look at the competition in the market, and say actually it makes sense to acquire a business, they’ve built up some market share, some awareness, they’ve got a team, obviously they’ll have an HQ, etc. or do you start from scratch and compete with them, believe in your own product, etc? And you’ve then got the decision do you run it from your own country or do you build an office in some of the countries you want to target? And that’s a huge decision to make, there’s not a right or wrong answer, it’s obviously dependent on each business and also the personnel and the experience that you have in your home country, and it’s something which we’re considering both and I guess it’s watch this space!

Oren: One recommendation I would make to founders is if you believe that international expansion is on the agenda, as much as possible, within reason, factor it into your planning. I’ll give you an example, if you’ve got two candidates for a certain role, and they’re as capable as each other, but one has international experience, you may want to consider taking that person because it buys you optionality. One of the challenges we face at JustPark is that we are, as we stand today, a pretty Anglo-Saxon organisation. I don’t think we are international enough in our make-up, and that’s something we’re going to have to address over the coming twelve months to de-risk our international expansion. We just need broader perspectives, more experience, if we want to localise, it will help us, we need local languages, there’s a whole raft of issues and complexity that comes with international expansion that really does impact the make-up and need of your people.

Polly McMaster, CEO, The Fold
In terms of scaling up, we’re at quite an exciting phase at the moment where we’ve really got a lovely core to the business and starting to get some nice brand awareness and a really strong group of loyal customers who love what we do. So the opportunity now is to say how can we take that broader and further? And there’s a couple of different ways for us that we’ve started to unlock that. One of the key things has been going internationally, so we’re already very, very international as a business. About 40 to 50 % of our sales come from outside of the UK, and the US in particular has been a really exciting market for us. And that’s really finding a group of customers who are similar to our customers that we very first started with, who are giving us that opportunity and that appetite to say The Fold could really be relevant for them as well.

In terms of product expansion and business expansion, we’re also always looking at how can we really give her something new as well. So we’re reaching more customers, and then we’re trying to find new ways of also reaching the same customer, but with new product and new ideas to keep her excited about the brand.

When we were considering expanding further, so the brand had got to a size where we really had a strong core to the business, there are a number of things that we really looked at to make sure that we weren’t either going to jeopardise the business that we had or that we could on the positive side really unlock new opportunities, and that came from looking at how could we go after a new market, so what’s going to be our marketing approach, what’s going to be our product approach, trying to understand that customer and whether there was already some appetite there, so we were just tapping into somewhat we were already seeing and then working out how to grow that even bigger.

As a small business, when you’re growing, you also need to be very careful that the things that you’re growing don’t jeopardise and the wheels don’t start falling off elsewhere. So, when we were looking at expanding internationally, for example, what we were trying to leverage were the things that we were already doing well in the business and serving our current market, but then taking that to a new market, but very much in the same way. So, one of our marketing strategies, for example, is ending out catalogues to our customers to really showcase the product, so when we went to the US, we just adopted very much the same strategy but to a US audience, and that was a way of us taking slightly less risk, but still being able to be quite ambitious about how we were going to capture a new market.

Paul Turton, MD, Pact
There are two core areas of plans we have for future expansion. Firstly, from an office coffee perspective, our business to business side, we’re going to be spending an awful lot more on marketing and be adding sales people, who’ll be aggressively going in there and promoting our fantastic coffee product.

But also from a consumer perspective, our website’s been in operation now for four years and we’re due a re-platforming, so we’ll be relaunching our website later this year with an entirely new look and feel and user experience about it. So, they’re our plans for growth for this year.

Steven Dring, Co-Founder, Growing Underground
Plans for future expansion within Growing Underground and the larger business as well is to take this into a multiple site operation, not just in the UK, but globally as well.

How would you summarise your challenges with expansion?

Anthony Eskinazi, Founder & CEO and Oren Peleg, Executive Chairman, JustPark
Anthony: A key challenge for me during the expansion process as growing a team, four years ago I think we were a team of five or six people, we’re now seventy-ish. And the make-up and the requirements of the people you need in those early days are completely different to what you need to a company that’s trying to scale.

If you think of a start up, the start-up company make-up versus a scale up, the level of experience you need, the HR requirements, the Heads of Departments, but you also need to then start thinking about progression plans and how you’re going to develop the team and making sure you’ve got enough juniors and mid-level to do the more simple tasks, and then the mid-levels to train the juniors, the seniors to train the mid-level people, and making sure you’ve got the right processes in place, four years ago ‘process’ was a word you just never used in this business, whereas now it’s really important or otherwise there would be chaos.

So for me a key thing is understanding, first of all getting the right advisors, be that board members, investors or even just going out and trying to get some mentors who have been there, from, depending again what stage you’re at, be that start up, late stage start up, scale up, etc, because there’s a reason why I’ve brought Oren in, and other people onto the management executive team, it’s people who’ve been there, done it, made their mistakes, learnt from them, able to help coach me, but also coach others in the team who haven’t necessarily gone through that fast expansion, that scale up phase before, and it’s critical for our growth and for our future plans that we harness all of that experience.

Oren: One of the reasons I came on board was largely Anthony’s attitude which I thought was really fresh and brave, frankly, because, basically Anthony turned around and said ‘This business has so much potential, but to realise it there are gaps, there are gaps in my capabilities and there are gaps in the team’s capabilities,’ and he said ‘Why don’t you come on board and help me close them?’ and I think that was a very brave move because if you look at where we are today, we’ve upgraded the finance function, we’ve upgraded the marketing function, we’ve upgraded operations, we’ve upgraded our talent management, If you look at the senior team now it’s just geared up for expansion with both capacity and experience and capability, that just didn’t exist before.

But the kernel to that, the spark that started it all off was basically Anthony’s realisation and boldness and bravery to say ‘This needs to change or otherwise we’re not going to make it’ and I would urge many founders that come to the right point, to the point where, that trajectory is about to change, to assess, to make that assessment, as Anthony did, and really think and look around them, and say ‘Do I have what it takes, both as an individual and as a team, to deliver this expansion?’, I think that’s really important.

Polly McMaster, CEO, The Fold
Expansion is a really positive thing for a business but it can also throw up a few challenges. I think there’s operational challenges like making sure that you’ve got the right resources and the infrastructure, so that as you’re adding complexity, the business can actually scale at the same time. Things like distribution or your operating systems, those are all things that could trip you up, so you’ve got to make sure that you’ve got those in place while you’re taking those further steps.,

Paul Turton, MD, Pact
Our challenges with expansion are to remain focused and not be distracted and also concentrate on excellence in execution in everything we do.

Steven Dring, Co-Founder, Growing Underground
Summarising the challenges with expansion, I think it comes down to recruiting the right people, accessing the right financing to take you to scale and also not just recruiting correctly, but also bringing in those experts as well. I think market knowledge, sales, customer knowledge, all of that is built during the period of building the business, but having those key areas of recruitment, the experts around you, and then the funding to finance that scale are the key areas for me.

Additional comments on Expansion

Are there any reasons for not expanding?

Paul Turton, MD, Pact
I think the only time, or the only reason for not expanding, is if you can’t scale up effectively or you can’t operate your business as a going concern profitably. From our perspective we know that we have something unique, we know we have something scalable, we have some real key points of differentiation in the market, which is why we’ve got so much traction with our customer base.

What’s the quickest route to expansion?

Steven Dring, Co-Founder, Growing Underground
I think the quickest route to expansion depends on your business model. With us, the quickest route to expansion was, one, solidifying that break-even point and showing that the financial model stacked up and then at that point it was taking on the relevant funding to allow us to really kick on and expand at that point.

The views and opinions expressed in this content don’t necessarily reflect the views of Barclays Bank UK PLC, nor should they be taken as statements of policy or intent of Barclays Bank UK PLC. Barclays Bank UK PLC takes no responsibility for the veracity of information intimated by a third party and no warranties or undertakings of any kind, whether express or implied, regarding the accuracy or completeness of the information given. Barclays Bank UK PLC takes no liability for the impact of any decisions made based on information contained and views expressed in this video or article.

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