Transitioning from a startup to a much larger business requires a well-planned growth strategy that enables the company to achieve fast results with minimum risk. Some strategies, however, are bolder than others, and as these entrepreneurs have shown, fortune can often favor the brave.
Expansion into overseas territories was key to the growth strategy of Momenta Group. Headquartered in London, with offices in the U.S., India and Australia, and more than 100 employees, the firm has spent 30 years staffing the financial services industry with a contingent workforce to remediate consumers, for example, through campaigns such as PPI (payment protection insurance) and mortgage negotiators during the pandemic.
However, what was a hugely successful model in the U.K. couldn’t simply be transplanted to other territories, a lesson that the business learned the hard way, as founder Richard Stevens explains.
He says: “When we launched in the U.S., we hadn’t fully understood the diversity and complexity of the various State regulations, tax and employment laws across the country compared to those in the U.K. And when we moved into India, we quickly realized that the competition around candidate attraction was much fiercer than we’d seen in other territories.”
The company had recognized the need to identify the expansion challenges early, be flexible in their approach and implementation of the strategy, and seek external input from ‘local’ expertise.
However, Momenta’s foray into the Australian market in 2017 was a challenge that hadn’t been resolved locally. That was to create a contingent staffing solution for banks and insurers to help them stay compliant and remediate consumers ahead of the country’s most significant financial services regulation and sanctioning to date; the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Hiring a local recruitment lead may have been the obvious strategy. However, Australia’s domestic contingent labor market for financial services was immature and underdeveloped. This situation led to one of Momenta’s longest-standing team members relocating to Australia to set up and implement Momenta’s culture, operational style and customer service principles.
The ambitious move paid off, and Momenta Australia became the fastest growing division across the £100 million turnover company. Stevens adds: “You need to be persistent with your strategy, but also ready to learn quickly and adapt tactically.”
Going for pension savings
Seven Principles provides a service to U.S. veterans transitioning out of the military by assisting with the United States Department of Veterans Affairs process for original, new, increase, and appeal claims. Founder Chas Sampson’s personal experience as a veteran and former rater for the U.S. Department of Veteran Affairs inspired him to launch the business in 2014 and use his 401k retirement savings to do it.
Sampson says: “It was the quickest way to get the capital I needed to fund the business. I invested $30,000 of my 401k into Seven Principles and personal savings of $20,000. I was a federal employee at the time, so accessing my funds via the Thrift Savings Plan (TSP) was a straightforward process. You articulate your reason for using the funds, and the website then displays the penalty for gaining the funds and the repayment timeline.”
It’s a strategy that carries risks as well as rewards. The most significant risk is paying back any funds loaned and associated penalties. Another risk is the impact that repayment can have on cash flow.
Sampson, however, is in no doubt that the rewards outweigh the risks. “Using my 401k gave me quick access to capital and the ability to scale quickly,” he says. “This enabled us to help more veterans; the more veterans we can help, the better our growth prospects.”
Before accessing his retirement savings, he sought advice from his accountant and financial advisor, who helped him to minimize his tax liability, offset specific penalties, and maximize his business capital. He says that business owners looking to emulate him must do their due diligence. “Since the loan cost will continue accruing and need to be paid off in the future, you must make sure you can utilize these funds quickly to maximize your ROI,” he says.
Founded in 2001 by entrepreneurs Vivek Dodd, Catriona Razic and Anthony Miller, Skillcast provides technology applications and content to help companies to digitize their compliance processes. These are delivered via a single portal that streamlines employee and administrator experience, consolidates compliance data in one place to reduce the risk of breaches, and reduces the cost of compliance.
In December 2021, the company, which employs over 100 people, was listed on the AIM section of the London Stock Exchange to raise funds for growth and promote its message of compliance transformation, integrity, and good governance.
Dodd says: “Executing an IPO and maintaining the listed status is costly and time-consuming. Entrepreneurs thinking about going down this route must be clear about leveraging their listed status to attract talent, drive thought-leadership and open new channels for marketing and sales. Otherwise, it becomes an expensive way to raise capital.”