In our most recent guest blog, Shaun Millican, Head of Technology Sector & Business Advisory Partner at Johnston Carmichael, takes a look into the need for strong leadership when scaling a startup.

Beyond the start-up phase a company will look to grow and scale-up. It would be a mistake to think that scaling is easy. Getting to a position where you are ready to scale was hard, scaling your business will be no less difficult and will place different demands on the founders and wider team.

I recall when JC opened our office in Edinburgh: the start-up phase was exciting, fast-paced and incredibly challenging as we sought to establish ourselves in a new market. As we gained traction, we naively thought the next stage would be easier. We were in for a shock! Building teams, maintaining focus on our priorities, keeping everyone aligned to those objectives, establishing new processes, maintaining quality and all the while continuing to deliver growth was, and continues to be, incredibly challenging.

At this stage, founders will often be challenged as to whether they are the right people to lead the next phase of the journey. Our view is that founders are often uniquely well placed to continue to lead through the next stage:

• They are entrepreneurial and that commitment to innovation is still necessary;
• They are passionate advocates for the business and the people;
• The wider team look up to them and want to deliver success for them;
• The start-up phase has made them incredibly resilient to withstand challenging times and an ability to adapt to the unexpected twists and turns that scaling will present;
• Founders are usually aligned to the interests of investors through their shareholding;
• They have a deep knowledge of the company, its products and target market.

One of the most enjoyable parts of working within the JC Tech Team is getting to meet so many founders at the outset of their entrepreneurial journey. Their passion and excitement shines through and as advisers it is inspiring to see. What is also incredibly gratifying is to see founders grow as leaders through the ups and downs of the journey and witness how they engage and empower their teams.

Clearly founders also need to have developed other leadership attributes, but for us the critical point is whether the founder is committed to scaling and being responsible for driving it, because that commitment is a critical success factor. 

One example would be Chris McCann, co-founder and CEO of Current Health. I first met Chris when the company had just been formed and was immediately impressed not just with his idea and vision but also with his ability to make good decisions, quickly and his natural empathy to other people. It is no surprise to see him lead his company through a significant Series B investment round and establishing a leading position in remote healthcare monitoring. Chris has always been committed to building a business of scale and this has informed his thinking throughout his journey thus far. There is no one better to continue leading his company through the next stage of the journey and beyond.

But I could also cite other examples, where the founder has decided they are not the right person to continue leading the next stage and a new CEO has been recruited to lead the next phase. David Farquhar, CEO of Intelligent Growth Solutions, is doing a tremendous job leading that business and has put together a world class team that he has aligned behind an inclusive culture and ambitious goals. His experience and insight of scaling businesses are proving invaluable.

I believe that founders can, and in most cases should continue to lead their businesses beyond the start up phase, but that they need to be committed to delivering the agreed scaling strategy.

Where founders are not the right people to continue leading, it needs to be handled sensitively and without the implication that they have somehow failed. The founder shouldn’t be punished for making the right decision for them and their business. Equity positions should be protected, and as far as possible tax positions protected on areas such as share options and business asset disposal relief.