One of the things that distinguishes EFM and its team of outsourced Finance Directors (FDs) and other Finance professionals is its focus on business growth.
And by identifying opportunities to improve Finance systems, processes, and management, we help small and medium enterprises (SMEs) balance that growth with profitability – as the former is no good without the latter.
Here’s the advice we give to businesses in growth mode – and how we support them through it.
Nail the basics, focus on the funding
To grow your company successfully, profitably, and sustainably, you must get the basics right – and this means, firstly, having a sound financial strategy, encompassing planning, knowing what makes you money, and having the right processes in place.
On one level, this is about understanding the limitations and opportunities the business can pursue with current or new resources, and then sourcing the cash it needs to achieve growth – whether internally or, if needed, externally.
Investors, for example, may be an option, but they are rarely cheaper than other sources, such as supplier finance – maximising trade credit, and getting customers to pay quickly – and grants and term-type debt.
Optimise your customers, current and future
Secondly, your strategy must home in on your customers – how to grow and retain them by selling them what they want, not necessarily what you currently have on offer.
Which new markets and customers could prove both profitable and growth-friendly for you? What new products or services would you need to deliver to effectively penetrate those markets and drive that growth? What would that cost, and what would be the return?
And given that it can often cost much more to onboard a new customer than it can to increase spend from a current one, what changes and innovations do you need to invest in (improved customer service? Loyalty incentives? More flexible payment terms?) to deepen and broaden your relationship with your existing book, and grow long-term partnerships?
Selling products and services profitably to the right audiences, and knowing which ones make you the money, is crucial – after all, profit turns to cash, and cash funds growth.
This stage informs pretty much everything else, so if you need help to get on top of it, seek it!
Envision, communicate, engage
It’s absolutely critical that the whole business understands your vision for growth and how you plan to get there.
We call this “alignment”, but it’s really no more than making sure people understand why they’re doing what they’re doing, what the expectations are around how they should do it differently (or not) to serve the purposes of the growth plan, what growth as a successful outcome looks like for the business, and – critically – what’s in it for them!
Clear communication of a well-thought-out plan is what will make the difference here. Indeed, clarity of communication has been shown to increase productivity by up to 25%, simply because everybody’s on the same page – and productivity is one thing you’ll definitely need more of when your business is in growth mode.
Don’t just rely on email, either. Communicate with smaller groups face-to-face; you can tailor the complexity and detail to suit the audience, and they’ll engage more readily if they see the process as a two-way street where their own opinions and ideas are valued.
Major on talent
Businesses are human endeavours, and growth can only be achieved by having the right people in place.
You need to employ, nurture and retain talent to both propel and support growth. (In fact, having the right people in place is fundamental to the success of the business full stop, as the 23% of UK startups that failed in 2022 because they didn’t would tell you.)
But it’s also vital you reward talent correctly. Recent research, for example, indicates that the five most popular SME employee benefits are health care and fitness provision, flexible workplace arrangements, paid leave, professional development, and profit-sharing.
Your growth planning needs to take into account what combination of these or other benefits is both most appealing to potential recruits and most financially viable.
Remember, though, that talent needn’t necessarily be in-house only, and you needn’t necessarily foot a full-time salary-and-benefits bill for it. Look at Finance, for example: you can outsource it to a partner that can provide best-in-class talent, highly experienced in growth, scale and exits, and all for a fraction of the cost of a full time consultant or an advisory firm.
Scale, don’t strain
It’s sometimes easy to forget, when your business’s Finance systems and processes have run successfully to date, that growth will put them under increased pressure – and so you need to be sure they’re set up to cope.
Disconnected systems that previously worked tolerably well with some manual help to bridge the gap between them – payroll, invoicing, cash flow management, banking, and others – can, in a period of growth, grind to a near-halt, as the manual processes become overwhelmed. And nothing kills growth like a go-slow.
Understanding and improving infrastructure, systems, and processes to keep step with your business’s growth is down to forecasting the uplift in activity they’ll be expected to deal with, and what the impact of this will be on workflows.
But it’s also about anticipating the change in data requirements that growth is likely to precipitate. You may need more intel on stock levels, for example, sharper analytics on which customers or products make you most money, or deeper insight into fixed and variable costs and their effects.
Perhaps you might even need support for your first foray into foreign exchange markets and other means of protecting the business against coming interest rate rises and other risks.
Once again, then, it all comes down to forward planning.
How EFM can help
EFM can help with all these priorities to ensure you have the right strategy, infrastructure, systems, and processes in place to generate profits, and will advise you on reinvestment into your business to ensure sustained growth.
For more information on how EFM can help business growth, get in touch today.