Transitioning from a startup to a much larger company requires a well-planned growth strategy that enables the company to achieve rapid results with minimal risk. However, some strategies are braver 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 US, India and Australia, and more than 100 employees, the company has staffed the financial services industry for 30 years with temporary staff to help consumers recover, for example through campaigns such as PPI (payment protection insurance ) and mortgage negotiators during the pandemic.
However, what was a wildly successful model in the UK couldn’t just be transplanted to other areas, a lesson the company learned the hard way, as founder Richard Stevens explains.
He says: “When we launched in the US, we hadn’t fully understood the diversity and complexity of the different state regulations, tax and labor laws across the country compared to those in the UK. And when we moved to India, we realized It quickly became apparent to us that the competition to attract candidates was much more intense than we had seen in other areas.”
The company had recognized the need to identify the expansion challenges early on, be flexible in their approach and strategy implementation, and seek external input from ‘local’ expertise.
However, Momenta’s foray into the Australian market in 2017 was a challenge that was not resolved locally. That was to create a temporary staffing solution for banks and insurers to help them stay compliant and correct consumers for the country’s most significant regulations and sanctions to date; the Royal Commission on Misconduct in the Banking, Pension and Financial Services Sectors.
Hiring a local hiring manager may have been the obvious strategy. However, Australia’s domestic contingent labor market for financial services was immature and underdeveloped. This situation prompted one of Momenta’s senior team members to move to Australia to establish and implement Momenta’s culture, operational style and customer service principles.
The ambitious move paid off and Momenta Australia became the fastest growing division of the company with a turnover of £100 million. Stevens adds: “You have to be persistent in your strategy, but also willing to learn quickly and adapt tactically.”
On the way to retirement savings
Seven Principles provides a service to U.S. veterans leaving the military by assisting with the U.S. Department of Veterans Affairs process for original, new, enhancement, and occupation claims. Founder Chas Sampson’s personal experience as a veteran and former appraiser for the U.S. Department of Veteran Affairs inspired him to start the company in 2014 and use his 401k retirement savings to do so.
Sampson says, “It was the fastest way to get the capital I needed to fund the business. I have invested $30,000 of my 401k in Seven Principles and $20,000 personal savings. I was a federal employee at the time, so accessing my money through the Thrift Savings Plan (TSP) was an easy process. You state your reason for using the money, and the website then shows the penalty for getting the money and the timeline of the refund.
It is a strategy that involves both risks and rewards. The greatest risk is the repayment of borrowed funds and associated fines. Another risk is the impact that redemption can have on cash flow.
However, Sampson has 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 allowed 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 minimize his tax liability, offset specific penalties and maximize his working capital. He says entrepreneurs who want to emulate him should do their due diligence. “As borrowing costs will continue to mount and be paid off in the future, make sure you can use 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 digitize their compliance processes. These are delivered through a single portal that streamlines the employee and administrator experience, consolidates compliance data in one place to reduce the risk of breaches, and lower compliance costs.
In December 2021, the company, which employs more than 100 people, was listed on the AIM section of the London Stock Exchange to raise funds for growth and to promote its message of compliance transformation, integrity and good governance.
Dodd says, “Executing an IPO and maintaining listed status is costly and time consuming. Entrepreneurs thinking about going down this road should be clear about using their publicly traded status to attract talent, foster thought leadership, and open up new channels for marketing and sales. Otherwise it will be an expensive way to raise capital.”
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