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Scale Ups: Managing reputations in a changing marketplace

Our Scale Ups: Managing reputations in a changing marketplace webinar 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) 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 

As has been the case for the rest of society – from individuals, to governments, to corporations, to NGOs – the last six weeks have presented start-ups and scale-ups with rapidly changing markets and prospects. Some lucky ones have found their business models to fit perfectly with the new climate, while others are either struggling or trying to rapidly adapt to the new realities. 

To some extent, scale-ups face the same challenges as other more established businesses. They too, have had to find the right balance between proactive, compassionate, and empathetic customer communication (of the “we’re here to help” variety) with being perceived as merely contributing noise for the sake of it. We’ve also seen the sector having to adopt quite brutal cost management and reduction exercises, while at the same time trying to ensure that such measures impact as little as possible on their functionality and their longer-term attractiveness to the investment community. Like some of their bigger counterparts, scale-ups are having to recognise that we live in a time of unprecedented uncertainty, even more so that that caused by the long-running Brexit saga. This uncertainty is forcing scale-ups to modify their planning, both 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 that have been built into business models). 

“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 virtue of their recency have less resilience in the form of cash reserves. We’ve seen some start-ups delay their fund raise as they deal with the current situation, and to ride out the short-term reduction in their valuation figures, though there is still an appetite to invest in the right opportunity amongst the VC community: 

“Entrepreneurs are still coming forwards, even now and there is the money to invest in them. We did a survey amongst our network of investors just recently and some 75% of them were cautiously open to investing, though it is true that valuations may 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. 

“Clearly there’s been an unprecedented impact on not just employees but on 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 is, of course, tempting to throw away the rule book in times of crisis on the basis that the normal rules no longer apply – how many times have we heard the word “unprecedented” over recent weeks?  In reality, though, the normal rules do apply: understand your customers, be true to them, to yourselves and to your long-term goal. 

Similarly, while there is a natural inclination to hunker down, keep quiet and wait until it all goes away, partly out of fear of misjudging the mood and making a mis-step that will massively impact your brand (Necker Island anybody?), actually, 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, understand the world around them and the context and think about all their audiences and how each of these 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 to your product offering, or if you operate in markets where some opportunists have been prepared to exploit 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 but note, that we are not talking here about those businesses who are essentially using COVID-19 as chance to be seen to be doing something nice when all they are really doing is using the current crisis as a vehicle to offer a freemium route to entry to their subscription models. We’ve seen a genuine uptick in acts of kindness between people and brands too have a part to play, provided that their actions are motivated by a real intent to be a part of the solution rather than to cynically highjack consumer sentiment. 

 Planningfor 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 ahead.  For scale-ups the challenge is compounded by where they are in their lifecycles compared either to start-ups or to more established businesses. The scale-up phase is all about progression, direction and momentum. For scale-ups not to be damaged by an inability to plan ahead at this time, which would be quite understandable given the circumstances, the first requirement is to remain upbeat and express a confidence about the future: even if the current situation was unforeseen, and even if it has made trading conditions difficult for the moment, all we are talking about is a delay to your plans being achieved, not a cancellation: 

“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 there, facing adversity but optimism is needed – 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 never meant the strongest should survive. What it actually meant was that those best suited to their environment and those best able to adapt to a fast-changing environment would survive, and this has never been more apt. Scale-ups should certainly have plans in place, but they must be prepared frequently to review and tweak those plans in the light of the best available evidence-based understanding, not just of what is happening but why, 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 to 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, as self-contained and as flexible as possible. The clearer a vision of the long-term future for your brand you have, the easier it is to keep that in mind as you try to move forwards: 

“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 and dependent just 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 the longer-term vision for your business.” 

 Tim Lines, Nelson Bostock Unlimited 

In summary, while the current climate is uniquely challenging for scale-ups, as it is for the rest of the business community and consumers, they need to ride it out, remaining true to the longer-term vision they had when they first started their business, though being prepared to adopt short-term flex strategies to adapt to some of the unique challenges of 2020. 

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.