Mo Chaudry - How to scale up your small business

How to Scale-Up Your Small Business


Mo Chaudry is an entrepreneur, property investor, leisure investor and sports manager. He is Chairman of M Club Spa and Fitness chain, owner of the UK’s most successful Waterpark, Water World Leisure Group in Stoke-on-Trent, owner of Adventure Mini Golf and manager of World’s Strongest Man, Eddie Hall. Recently, he joined the Pulse Group as a majority shareholder following a significant investment in the business and currently sits on the board of directors as Chairman.

Given his wealth of experience starting and growing businesses, we caught up with Mo to find out his top tips for start-ups in the leisure industry looking to take their business to the next level.

How do you identify whether the market is ready for you to scale up?

Firstly, not every business is scalable, nor should every business be scaled. For example, Waterworld is not scalable. The ROI would not be achieved as the capital costs are significant. However, what you can do is focus on reinvestment in the business and achieve good sustainable profits, adding ancillary facilities to add value. Focus on other parts of the business portfolio that are scalable.

Obviously carrying out market research/feasibility assessments is important for most businesses that want to scale. This will assess your target market and locations. On the other hand, if you have the resource, ambition and skill set then you can create your own trends by following your instincts. Generally, if you build it, people will come. We are building our second mini indoor golf concept at the Waterworld site, so we will see if my assertions are right.

When is the right time for a small business in the leisure industry to seek funding for growth?

You need to know your business proposition first before you seek funding and try to expand. An entrepreneur needs to have a strong handle on the type of business they want to be in. A simple business plan is essential as well as a passion and determination to make it work.

I would always recommend starting small, learning from your experiences and not over-borrowing. Funding will not be available unless you have a business plan and a clear, concise understanding of how you are going to make your business work. The funder will not back you unless you can provide a convincing case. Usually, you can always start with a limited budget particularly if you are looking to provide a service such as personal training or setting up a small gym.

More importantly though, you must understand and develop your USP alongside gaining an understanding of things like property leases, the local market and rents. Being able to negotiate a good property deal at the right location is important. Failure to get this right could jeopardise your business sustainability. We have seen many large-scale operators in all industries disappear because they have been tied up in long term and expensive leases.

How do you handle it when things don’t go according to plan? Do you ever need to change your business proposition when you expand?

This is when you actually learn. Even the best-executed plans will sometimes go wrong. Your success will be measured by how you react to these circumstances and ultimately, it will determine your success in the end. You must not be afraid to take chances and challenge situations to learn and grow.

The business proposition is a continuously changing beast; one can never stand still. In one of my businesses, we are about to start on a new leisure development and we have gone through numerous changes and amendments to get the right formula. The result is totally different to when we started to look at the concept three years ago.

What are the biggest challenges, in your opinion, facing start-ups who want to scale up?

In my opinion, a start-up should not look to scale up. The start-up needs to have trading history before you seek funding unless you have a patent or have invented something. Often external funding will be required from financial institutions and they will not provide funding unless they can see a viable business with some track record of success.

I know some early stage businesses have ambition to grow rapidly but I would tread very carefully in such situations as an investor or an operator. There are new lines of funding available, like Crowdfunding, but it also means giving up valuable equity to do so which might come back to haunt you if the business becomes very successful.

An alternative would be to partner with a business associate or an angel investor. It is always better to get funding support from your own network and get softer funding terms. Any funding that is publicly available will always be more expensive. If you have a USP then private equity could be a possibility. Private equity will usually want a quick return, but they will also add expertise and mentoring support which you would not get via traditional funding.

Overall, resist borrowing, create your own positive cash flow and build up reserves. Nearly always it is the businesses that have high gearing that go bust, so be careful.

How do you grow your team? What’s the key to finding the right people?

You will find the right people will find you. If you are doing good things, people will hear about it naturally and they will want to be part of your journey. Usually the best recruitments happen by word of mouth or networking and getting to know other people. We don’t usually use agencies.

How do you know when to take a risk or when to walk away?

Instinct! It is as simple as that. Too many people over think things and rely too much on financials. They over analyse. Virtually anything is workable if you have the determination and the will to make it happen and execute difficult decisions.

I bought Waterworld aqua park nearly 20 years ago based on a sixth sense. I closed the deal in 24 hours but I had also previously walked away from it due to the price not being right. You will know when the deal is right. Have confidence in your instincts. Do not rely too much on other opinions. Usually the professionals i.e. lawyers and accountants are great when you have agreed the deal but I have never relied on my professional team to help me decide whether I should buy a business or not.

Mo Chaudry - Learn how to scale your small business

Posted in Interviews, The Fitness Network.