How can a business grow without compromising on the quality that’s got it this far? This is one of the biggest conundrums facing founders and CEOs, and one that demands careful thought and a strategic approach.
Sustainable growth means more than just new-client acquisition, sales and revenue; business founders need to invest in the entire ecosystem of their organisation, from hiring the right leaders, to choosing the best technology fit. Entrepreneurs who scale successfully will invest targeted time and cash right across their organisation.
Balance is the watchword here. After all, quality and growth are not mutually exclusive; but to scale smart, you need a strategy. Business owners who scale effectively will, in tandem with a strategic CFO, define the notion of quality against the backdrop of relentless customer focus. Ideally, this will be accompanied by a focus on sound financial discipline and an appreciation of exactly how to balance growth with sustainability.
In short, scaling a business isn’t about growing fast – it’s about growing strategically. And that’s what’s meant by scaling smart.
Client acquisition and retention: a fine balance
No business can exist without sales. But although, in theory, acquiring new clients brings in extra revenue, how long a client actually stays with a company is what matters most. In other words, scaling smart is predicated on a founder’s ability to retain clients or customers who are already onboard. After all, research suggests that increasing customer retention rates by just 5% can supercharge profits by anything from 25% upwards. Customer experience is crucial here. “You can win a thousand new clients,” says one insider, “but if you’re losing just as many, you’re just busy fools.”
And it always helps to fall back on one enduring truth: happy customers are among a company’s best marketing assets. Not only are they far easier to retain, but acquiring new clients through referrals is also a far cheaper way to grow sales and revenue.
Strategic investments: talent, leadership, technology and processes
First, focus on the basics. Companies that invest in the structures underpinning growth will help make that growth sustainable. Those structures include your leadership and culture, your team, the right technology and automation and, most importantly, excellent customer service. Chasing new customers to drive sales and revenue growth might seem like the obvious first step, but when founders follow this approach, they risk missing out on growing the right elements of the business, jeopardising long-term sustainable growth.
Talent and leadership
Hiring the right CFO is a prerequisite for preparing for future growth, enabling founders to confidently implement the strategic planning, financial cost-control and cash-flow measures that support growth. In many cases, a company’s success in scaling smart depends not just on a strategic CFO, but on the success of the CFO/CEO relationship. In fact, that dynamic is often a company’s most important relationship, and one on which its success at scaling smart depends. CFOs are now at the heart of enterprise-value creation, and no organisation looking to grow sustainably should be without one.
Outside of finance, leadership is just as important as talent when it comes to strategic investment. Why? Because hiring people who can think strategically, innovate and make decisions often leads to increased productivity in an organisation. In short, it’s all about the ability to inspire a shared vision and mission across the enterprise workforce.
Technology and process automation
Automating certain processes and repetitive tasks allows teams to focus on value, so getting the technology right is a crucial building block to scaling smart. By automating processes, businesses can achieve predictable outcomes and free up human employees to focus on strategic decision-making.
So, it's no surprise that companies embracing automation experience significantly faster enterprise growth. And while it may be comforting for CEOs to know there are systems in place that can run without them, the real value of streamlining operations with tools like Slack and Asana – a tool 85% of Fortune 100 companies use – is that employees have more time to innovate and focus on customers.
Customer experience and customer focus
When an organisation needs to invest directly in customer acquisition and new sales, gaining insights into the preferences and behaviours of existing customers is a must. This kind of analysis is essential when it comes to understanding patterns in customer behaviour, so companies can focus on the right segment to target and the most productive allocation of resources.
This can all be achieved through technology. Vast quantities of data and customer-data analysis are now available, not just from regular customer surveys – something all growth-centric companies should conduct – but also through tools such as Google Analytics.
Scale with an exit strategy
Considering the fact that any organisation’s single most important KPI is its enterprise value, growing a company as if planning to sell it makes for more efficient operations and a higher value. And that’s the case even if founders have absolutely no intention of selling.
Why? Because evidence of the growth momentum of an enterprise is what excites and drives potential investors or buyers the most. Recurring revenue streams provide some predictability of future income, especially in subscription and licensing models such as software, infrastructure or cloud-as-a-service models. And if a company is actively evidencing growth momentum, that’s evidence of scaling smart, regardless of whether the business is for sale or not.
What’s more, there’s an additional benefit to operating with an exit-strategy mindset: because potential investors and buyers like to see operational independence in an organisation, this approach spawns leadership structures and decision-making processes that are not reliant on a company’s founder. As mentioned earlier, a company with systems in place that run without the CEO are more easily scalable.
Don’t be just busy fools
The main aim here is to scale a business while keeping existing customers happy and making sure new customers stick. Founders don’t need to sacrifice quality to scale as long as they take a considered, strategic and balanced approach to growth in tandem with a trusted, strategically-minded CFO. Careful nurturing of every facet of an organisation, coupled with smart investment decisions on client acquisition, technology, personnel and processes will lead to long-term sustained growth.
As most CFOs will tell you, it’s a marathon, not a 100-metre sprint.
