Fast-growing companies (especially startups) typically are so focused on growth of any kind that they run the danger of becoming unbalanced as they get larger. Processes become broken or ill-defined, critical items fall through the cracks, and the company is less efficient even though they may have more resources. Instead of achieving scale efficiencies, the startup becomes more and more complex and less and less nimble.
“For CFOs of high-growth tech companies, the key is managing growth and balancing growth and profitability.
What I mean there is it is easy with the CFO hat to play the role of the heavy. But it’s the wrong perspective to have in a high-growth environment. Yet on the other side, it’s wrong to let it be all about growth and nothing else.
The challenge for the CFO is balancing growth with profitability. How to ensure that we’re making the right investment and maximizing for the long term, and telling that story to investors who will support the long-term path and understand why we’re choosing to make these investments while we haven’t yet achieved profitability in the short term.
In a high-growth environment, lead with customers and don’t lead with finance. What I mean by that is, if I show up with my business leaders, the CEO and COO, leading with a finance agenda, it isn’t likely to get a lot of receptivity. Whereas if I approach them with a customer-first orientation—what is the right thing to do with customers—and center myself in that view, it aligns me with the rest of the business team and from there I can bridge to financial imperatives.”
Read the full article: