I am amazed at how many great new businesses are being started at the moment. Some will win and some will lose however it may not be the business idea that ensures success! Gone are the days of starting up the new corner shop; these new entrepreneurs are building businesses which plan to take on national or global markets. With this in mind these businesses need to prepare to grow! Following are some of the key points that I learnt whilst being part of a successful high growth business.
1. You will not succeed without a clear Mission, Vision and Values!
This obviously sounds very text booky but often these new businesses lose their way due to the fact the mission, vision and values are in the head of the entrepreneur and not known and lived by their rapidly growing team. This can be a real impediment to growth as at some stage your great customer experience will drop off as new team members do not treat your customers like you do. One advantage these businesses have is that the entrepreneur is often the leader and will demonstrate these values every day and provide a good example. This is often something established businesses lack.
2. Without a good financial model you may make decisions that have lasting impacts on your cashflow!
Without a simple financial model that provides 3 years visability and has the ability for key numbers to be tweaked for sensitivity, you will be flying blind. Having a model also helps with:
– Cashflow management
– Bank funding
– Investor valuations
– Priorities
– Discipline
– Capacity planning and early warning
I think of businesses deciding whether to do free delivery or not. It obviously sounds good but can the business model afford it or are you just setting up a great business that will never turn a profit. Often a simple business model can be put together in 1 to 2 days so it is not as daunting as you think.
3. You need to systemise whatever you can!
Nowadays there are many business tools out there that are very cost effective and scalable that businesses can often use initially for free. Tools like CRM’s and cloud based accounting packages are easy to come by, and if used from the start, can build a good discipline in the business that allows it to quickly scale. You need to remember that it may be fine whilst you keep all the key contacts and discussions in your head to start with, but as soon as you grow your team you are going to need better customer visibility. Before you systemise a process check that it is adding value before putting too much effort into it. Also do not just do technology for technology sake!
4. Monitor your customer experience and employee culture!
It is no secret that happy employees go a long way to ensuring happy customers. To start with your business will have a small team with everyone rolling their sleeves up to make things happen. Customers are looked after like they are royalty! This may work whilst you have 5 customers then 20 then 100 but what about when your team is serving 20,000 customers a day! How do you make sure your growing team and business is still providing that great level of service? This is where it is really important to monitor this! It may be some simple surveys at the right time to start with and eventually moving to some sort of Net promoter score system. Obviously it is no use doing this unless someone is monitoring it and taking actions to rectify issues and acknowledge the special efforts. Ideally as you grow you can improve service via improved systems and expanded services. Also there are some quite nifty Apps that monitor employee engagement which can also give you a live feed on how the team is feeling.
5. Do not forget your suppliers!
As a business grows rapidly they often end up totally focused on the customer which is tremendous! A word of warning, it is often the suppliers that will dictate your success as well! They will control your margins, costs, inventory availability, cashflow via payment terms and also potentially markets you can setup in. You need to treat your suppliers with respect and build these relationships because often they have the ability to improve your profitability or cashflow with the stroke of a pen! They also have a huge bearing on customer experience if you cannot be price competitive or cannot get inventory at the right times.
6. Do not lose focus on your core business!
The beauty of these new businesses is they have been started by someone having a novel idea! This usually means that they have an entrepreneurial mindset and other ideas will follow. This is a great advantage to the business however make sure you “do not lose focus on the core business”. I make this statement as often it will be the core business that drives profitability and cashflow and also funds the new ideas. You need to very quickly work out a way of managing these ideas, prioritising them and testing them. Get buy in from the team so you get a well rounded view on its potential success or failure before you spend a lot of time or money.
7. Ensure your business is setup properly early on!
New businesses often lack funds so have to prioritise accordingly. This often means insurance, intellectual property and bookkeeping is neglected. My suggestion is when you start the business try and set aside enough funds to get this right. Trademarks can often be done by yourself quite cheaply, there are some cost effective insurance programs which a good broker can set you up with and bookkeeping can be done very cheaply on an hourly rate. Ideally a bookkeeper can set your financials up in a useful format. They can then keep things up to date from the start. These can then be used to update your financial model and also take your team on the financial journey of the business. This will also save you a lot of time down the track, improves credibility and speed with investors and will reduce stress by things being up to date. It also creates discipline so that as the business grows you always show enough appreciation for the financials and teach your team the same level of understanding.
I could keep going however these are some key points I think businesses need to focus on to ensure they grow successfully! The last point I make is to get the right team around you at an executive level when you can afford it. Your team will be your greatest asset!
3PF is an experienced outsourced finance team who for the last 5 years ran the Finance team and sat on the Executive team for the Winning Group (Appliances Online & Winning Appliances). The 3PF team have had great success in assisting businesses setup for success. If you would like to utilise 3PF’s exceptional commercial experience please do not hesitate to contact us for a chat.