Updated April 2023
Business growth can feel like those ships traveling through space in your favorite sci-fi blockbuster. The faster you go, the brighter and more exhilarating it is. But there’s a downside as well, of course, where any stumble or hiccup as you push the laws of corporate physics could send you off-course toward the wrong galaxy far, far away. And that’s not great.
While something like hypergrowth is a classic good problem to have, it’s still problematic, whether you’re a startup, small business, or larger, more-established company suddenly swimming in uncharted waters. That’s precisely why Embark has assembled seven critical questions CFOs can use to build an effective growth strategy for an organization. Use them to establish a sense of direction and purpose, helping you balance the potential perils of rapid growth while keeping smiles on your stakeholders’ faces.
1. Where Is the Enterprise Heading?
Start with your endgame as you develop your growth strategy, especially if you’ve been experiencing an extended period of hypergrowth. Like it or not, all good things must come to an end, so your galactic growth will slow at some point. Look to the end point of your growth streak and make decisions based on what you think your enterprise will likely look like at that time.
For instance, if you have 25 employees right now but can foresee having 250 workers when your growth rate slows, don’t make decisions or expand your business plan based on 50 – or even 100 – employees. Granted, you don’t have a crystal ball so there’ll inevitably be some haziness around that endpoint. However, using a combination of data, analytics, and common sense, do your best to see where you might be in one, two, or five years once growth plateaus.
In this case, buying new systems scalable to 100 employees won’t do much good if you end up with 250 employees just a year or two down the road. Ideally, your forecasting and strategy should accommodate those future states as well as any intermediate points. This includes technology, staffing, internal processes, and a variety of other operational decisions and business needs.
Sure, adequate investment capital and cash flow are obviously issues for many organizations in the early stages of high growth – especially new businesses – and can limit those decisions. But, at the very least, your management team should keep a broader, forward-looking perspective in mind as you hunker down on strategic planning.
2. What Will Drive Growth?
Speaking of capital, the money to fuel your company’s growth isn’t going to magically appear out of nowhere. You have some big decisions to make, aiming for a transactional source of working capital from M&A or investors or, alternatively, relying on more organic growth and market share expansion. The route you choose will inform several business strategies, so choose wisely and be deliberate with your planning.
Outside investors or M&A require a host of planning points, including an often complex due diligence process, greater reporting and compliance requirements, and several other processes that are likely unfamiliar and sometimes overwhelming. We’ve discussed these topics at length in the past, so use our previous guidance to help navigate these turbulent waters and, when things get especially perplexing, your experts here at Embark are only a short contact form away.
Of course, organic growth requires meticulous planning as well, just from a different angle. Your operations are fueling your growth, which means they’re probably quite self-contained and, thus, more susceptible to mistakes in many ways. Going back to the previous question, short-sided, short-term-based decision-making can have long-term detrimental effects.
Likewise, organic growth also depends on a finite number of customers, so identify and pursue segments that can provide enough fuel to not only drive your current growth, but also lay the groundwork for future sustainable growth. A blue ocean strategy, for instance, leads you to open waters without competitive clutter. Such a technique is easier said than done, however, harkening back to the need for meticulous strategizing when relying on organic growth.
3. What Will Support the Growth?
How you allocate your resources, particularly in an organic growth model, is another critical decision on your plate. Essential components of your operations like technology, marketing, accounting, and several others depend on that capital, so you must decide if you’ll handle them in-house or outsource them. Those foundational decisions will have long-lasting repercussions on your organization once rapid growth is behind you and you’re aiming for something more sustainable.
In a perfect world, you’d have the resources and expertise to absorb each of these essential components in-house without sacrificing efficiency or effectiveness but, as you know, this isn’t a perfect world. Social media prowess targeting key demographics, an engaging customer experience, a fleshed-out receivables strategy, a flexible supply chain that can bend on a whim but not break – they’re all essential in today’s digitally-driven, often volatile marketplace. Unfortunately, they don’t always have a seat at the business model high table.
Therefore, you must know your limitations and find a balance between cost efficiency and performance. The thought of a brilliant team of marketers and accountants sitting just down the hall might be tempting, but that brilliance comes at a cost.
Sure, once your business matures and settles into a tempered and predictable revenue growth pattern, in-house accounting is probably a very sound decision. During rapid growth, though, diluting your resources, time, and attention by establishing a squad of elite in-house accountants could do more harm than good.
From a broader point of view, this also speaks to your overall staffing strategy. Rapid growth will require a constant inflow of new talent which, just as in the accounting example, isn’t necessarily best-served in-house. Outside expertise can fill knowledge and talent gaps during rapid growth, providing you with the needed know-how while letting you focus on growing your business. And, yes, Embark and Emerge, our outsourcing accounting service, just happen to be a perfect example of such outside expertise.
Simply put, hypergrowth is an iterative process that requires you to be nimble and, for lack of a better term, roll with the punches. Maybe you best support your growth by outsourcing your accounting but hiring in-house marketers. Or use a SaaS solution for one system but an outright purchase for another. Every company is different and, just as importantly, changes with time. So build on each decision you make, maintain a longer-term view, and don’t box yourself in with short-sightedness.
4. What Fits Within the Budget?
Adding to the previous question, maintaining flexibility and a broader point-of-view is all fine and dandy in theory but, unfortunately, your budget doesn’t provide financial carte blanche on your strategizing. Once again, things like accounting, marketing, technology, and HR play critical roles in your enterprise, but there’s only so much money to go around. You have to pick and choose what to spend on and determine exactly how much you have available for every need, prioritizing some functions over others.
If your team is working 90 hours per week and beginning to look like vampires, investing in and upgrading systems that streamline certain processes might deserve some financial acreage within your budget. Remember, relieving stress on your staff will enhance productivity, the employee experience, and minimize attrition, leaving you with the framework you’ll need to grow in the future. Weigh the importance of every potential expense and maximize what your budget provides to your enterprise.
5. How Will Management Stay Informed?
Ultimately, enduring success that extends past your rapid growth depends on giving your people what they need to be successful, managing with a distinct focus on the team that’s propelling your growth. That highly-attuned brand of people-oriented management relies on accurate, immediate data – financial, performance, employee & customer feedback – to steer your decisions.
Such information stems from systems and processes that meet your current needs while retaining scalability for the future. Between data dashboards, cloud computing, automation technology like RPA, and seemingly countless other innovations, your operational and people data can go where you go, always keeping you apprised of the internal and external variables that impact performance.
6. How Will Management Collect & Analyze Employee Feedback?
We place so much importance on the employee experience and culture at Embark, it’s only fitting to give employee feedback special attention. Your people are the ones on the frontlines of your growth, having a particularly detailed knowledge and familiarity with both your organization’s strengths and pain points. They know what’s working, what’s failing, and are an indispensable source of guidance.
While it’s easy to isolate yourself from those frontlines under the guise of intense pressure and too much to do, the farther you remove yourself from your people, the less you’re in touch with your actual business and any issues impacting it. Therefore, you need a feedback strategy that provides you with authentic, relevant, and immediate insights and metrics from your staff.
That said, we encourage you to do some research on the many feedback solutions out there and see what fits your needs and budget best. Whatever you choose, your employee feedback system should empower your people, giving them an impactful voice that management takes to heart and uses within the decision-making process. When employees feel important and appreciated, the entire enterprise benefits through lower burnout and turnover rates, improved engagement and culture, and greater productivity and innovation.
7. What’s the Competition Doing?
Last but not least, don’t forget what is happening around you. Your growth doesn’t occur in a bubble, the marketplace is dynamic and active with perpetually evolving customer segments and competitors. Build your strategy with a sufficient degree of agility to react to changing demand, customer affinities, and your competition. Depending on your industry, even short periods of rapid growth can entail sudden shifts in the market. Remember fidget spinners and hair metal? Things can change on a dime, and enduring success is built upon flexibility.
As for your competition, an old adage comes to mind – keep your friends close and your enemies closer. At the risk of getting a bit too Sun Tzu on the topic, always maintain an accurate and timely pulse on your competitors. Obviously, you have to understand whom and what you’re vying with to effectively compete but, on the other side of the coin, your competition can also provide invaluable guidance on what not to do. Remember, you don’t have to reinvent the wheel at every turn. Learn from both the successes and failures of other enterprises to streamline and guide your own efforts.
Naturally, every growing business and industry is different, so take your own market and circumstances into account when developing a strategy for the different stages of growth. Yes, these times are exciting and dizzying, perhaps a once-in-a-lifetime phenomenon. However, what goes up must come down, and business won’t always be so dynamic. So leverage the insights you gather from these questions, ask others that might be particular to your own specific needs, and transform your rapid growth into sustainable success. And as always, Embark will be here to lend you our experience and expertise every step of the way.
