A recent article in Entreprenuer Magazine by a CFO of a startup offered some key advice on how entrepreneurs need to think about growing efficiently (i.e., scaling). While the advice was targeted for tech startups, it could definitely be applied to small businesses here in the San Francisco Bay Area.
The CFO is crucial to helping the CEO / Founder / Owner in guiding sales growth faster than operating costs are growing. As any experienced entrepreneur or business owner can verify, this is incredibly hard to do.
The author delineated five key points below to think about. Some key quotes are illustrating each of the key points are also highlighted below.
Vision
“Vision” and “strategy” are often overused are often poorly understood in terms of a staffing process and budget.
“It’s critical to have an overall and cohesive vision for all of the important staffing, systems and process decisions that you implement. The impact these decisions will have must be kept in mind for the implementation of your overall business strategy.”
People
“It’s essential that you evaluate staffing plans for the next 12-18 months on a constant basis.”
Regularly reviewing staffing plans is crucial as labor costs are usually the single largest cost expense for any size company and especially for small businesses and startups (especially in the San Francisco Bay Area).
Systems
Accounting and finance systems and processes are often close to non-existent in startups and small businesses. Yet, as the company grows, these areas grow even more important in order to manage sales, costs, profits, and cash flow.
“Similar to your staffing plan, you have to have a plan for all of your internal systems that will cover the next several years…. You also need to have an overall plan for all internal accounting and finance systems. The key part of the plan is to ensure that all other internal systems across all departments will integrate well with all accounting and finance systems.”
Culture
Culture generates lots of lip service in Silicon Valley, but often poor, actual results. An effective company culture does not happen by itself and takes careful planning and execution.
“Adapting to the everchanging needs of a growing startup requires a certain amount of pivoting and modifying along the way -- culture being no exception. Maintaining a values-driven work culture becomes increasingly difficult the more you grow. Stay true to your core values and culture as you grow, and make sure that everyone on your team understands that building for scale is an essential part of your success plan.”
Scalability
Too little thought and planning is put into how to more effective grow. Just saying growth is important is not enough. Understanding and improving the underlying processes and execution on growth strategies is crucial.
“In order to increase the probability of success and minimize future blockers to supporting the growth of the company, you must obsess about scale! Remember that decisions that are made in the early days can have a far reaching impact in the future.“