Scale-Ups: Managing reputations in a changing marketplace was held in partnership with Angel Academe. The panel comprised of Sarah Shilling (CMO, Unlimited Group), Rachel Jones (CEO, SnapDragon), Charlie Davies (co-Founder and CEO, TravelTime), Mel Varley (Investor & Advisor, Angel Academe) and Tim Lines (Director, Nelson Bostock Unlimited). They discussed how scale-ups are managing their brand reputation through the current pandemic, and what the coming months look like for these businesses.
A very challenging climate for scale-ups
The last six weeks have presented scale-ups and start-ups, as-well-as society as a whole, with rapidly changing markets and prospects. Some lucky firms have found their business models to fit perfectly with the new climate. However, others are either struggling or rapidly trying to adapt.
To some extent, scale-ups face the same challenges as other more established businesses. The balance must be sought between proactive and compassionate customer communications and being seen as merely contributing to the noise. We’ve also seen the sector adopting brutal cost management exercises. It’s challenging to ensure such measures have little impact on scale-ups’ functionality or their attractiveness to investors. Like some of their bigger counterparts, scale-ups are having to recognise that we live in a time of unprecedented uncertainty. Even more so when you consider the long-running Brexit saga. This uncertainty is forcing scale-ups to modify their planning. This is in terms of timing (accepting that aspirations may be feasible but not in the timeframe previously envisaged) or sometimes direction (a more profound realisation that future demand may look quite different from assumptions of the business model).
“You need to make sure that you are still the same business that you were before but that you’re ready for the new normal, although there is lots of discussion about precisely what that means.”
Charlie Davies, TravelTime
However, there are some significant differences too, both positive and negative. On one hand, start-ups, and scale-ups, by their recency, have less resilience in the form of cash reserves. We’ve seen some start-ups delay raising funds as they deal with the current situation. However, there is still an appetite among the VC community to invest in the right opportunity:
“Entrepreneurs are still coming forwards, even now and there is the money to invest in them. A recent survey of our network of investors found that 75% of them were cautiously open to investing. However, valuations may indeed be lower right now”
Mel Varley, Investor & Advisor, Angel Academe
However, on the other hand, in many instances, we have seen both start-ups and scale-ups eclipse large businesses for their speed to innovate and their ability to pinpoint a solution to a single challenge individuals and organisations are facing: Uber Eats was praised early in the outbreak for rapidly flexing its business model by waiving fees to small restaurants; Pesky Fish had to move from delivering to restaurants to delivering directly to customers, and Stitched had to replace its normal factory facilities for producing bespoke curtains to hiring an army of home-based workers to do so.
“There’s been an unprecedented impact on not just employees but the whole value chain. Some businesses have halved their business costs within weeks, while others have had to pivot. Those that are most agile will do best.”
Mel Varley, Investor & Advisor, Angel Academe
Scale-up communication right now must focus on the basics
It’s tempting to say the rules no longer apply during a crisis. How many times have we heard the word “unprecedented” in recent weeks? In reality, though, the normal rules do apply: understand your customers, be true to them, to yourselves and your long-term goal. Similarly, while there is a natural inclination to hunker down and wait until it’s over, driven by misjudging the mood, or making a misstep, businesses need to communicate even more in a crisis. The key point is to make sure you have something useful to say and say it.
“There’s no playbook for this. No-one saw this coming. Given that, brands have no option but to go back to core principles. They must understand the world around them, the context and think about how their audiences are impacted by COVID-19”
Tim Lines, Nelson Bostock Unlimited
“For investors, it’s the same as it is for consumers. The businesses that are communicating and engaging more effectively are the ones we’re more likely to follow through on and respect. Many B2B businesses I invest in are spending more time and money on retention right now rather than on acquisition.”
Mel Varley, Investor & Advisor, Angel Academe
Authenticity is even more important when it has a natural link to either your brand positioning or product offering. Moreover, if you operate in markets where opportunists have been exploiting the vulnerability of consumers:
“If you find you have fakes in your supply chain you need to be honest with your suppliers and customers. We’re often helping people realign supply chains. While fakes may feel embarrassing, there is nothing to be ashamed of. It happens to the best of us: it’s just so important to be honest”
Rachel Jones, SnapDragon
Finally, be helpful. Where appropriate, make your product, thinking or expertise available to others. However, it’s important to note that we are not talking about those businesses who are essentially using COVID-19 to be seen to be doing something nice when leveraging the crisis to offer a freemium entry route to their subscription models. We’ve seen a genuine uptick in acts of kindness between people. Brands have a part to play here as well. But this is provided their motivation is to be part of the solution, not to cynically highjack consumer sentiment.
Planning for scale-ups: the next three months and after
Everyone accepts that planning for the future is incredibly difficult at the best of times, let alone in the midst of the greatest global health crisis in living memory. And yet, businesses have to plan. Scale-ups face challenges because of their position in the lifecycle. They aren’t starting out or established businesses. The scale-up phase is all about progression, direction and momentum. Scale-ups must remain upbeat if they are to avoid being impacted by an inability to plan. Then, they must express confidence about the future, even in unforeseen situations and complicated trading conditions. All we are talking about is a delay to your plans, not cancelling them:
“We have to live with optimism. We have to look up and out – and seek opportunity – there needs to be consistency of excellence. Don’t just dream in English – look beyond these shores for opportunities and exports, new things you can do – as well as for potential threats. I recently watched Kinky Boots on the iPlayer, which is all about how a shoemaker in Northampton diversified creatively – and it’s a great example. Many of us are right here, facing adversity. But we need optimism right now, and every day, to ensure progress.”
Rachel Jones, SnapDragon
The watchwords for today are traits such as agility, flexibility and adaptability. Survival of the fittest doesn’t mean the strongest should survive. It means that those who are best suited to the environment and can rapidly adapt will survive. This has never been more apt. Scale-ups should have plans in place. However, they must review them frequently in the light of the best available evidence-based understanding. Not just of what is happening, but why it is and what that says about changing consumer needs:
“I’m sure that all of our plans in the next three months will change and will look different from what you had planned to execute. Shortening the feedback loop is critical at the moment, but not to the point where it feels scatty or reactive to your team.”
Charlie Davies, TravelTime
This flexibility needs also to extend beyond the walls of the Zoom calls with your team. Scale-ups cannot afford to be proud right now. They need to be able to acknowledge where they need help and advice and seek it out, though appropriate networks (such as Enterprise Alumni), and, of course, be receptive to requests from others that they share their expertise too. The trick here is to seek out the best advice, use it to make plans, but to make those plans as resilient, self-contained and flexible as possible. The clearer the vision for the brand, the easier it is to keep in mind as you progress:
“Try to be as independent and self-sufficient as possible and not be reliant on what others, even the Government, say. Wherever possible make your plans as internally focused. Make them as dependent on what you can do, or want to do, as you can.”
Charlie Davies, TravelTime
“Businesses must adapt in the short-term and be ready to get going again as soon as the crisis passes. We can’t be unprepared or three months behind. Part of this is to avoid making rash decisions in the short-term. Instead, ensure that your choices can flex to the realities of today. but are true to business’ longer-term vision.”
Tim Lines, Nelson Bostock Unlimited
In summary. While the current climate is uniquely challenging for scale-ups, as it is for everyone else, they must ride it out. They must remain true to the longer-term vision they had when they first started their business. They can achieve this by adopting short-term flex strategies to mitigate some of 2020’s unique challenges.
What next?
This article was written by Nick Chiarelli, Head of Trends at Unlimited Group, and originally appeared on the Unlimited Group news page. See the recent work we’ve been doing to support our clients’ reputations throughout the crisis here.