Growth means managing resources (e.g. product development, inbound and outbound marketing, production) that are necessary to make business dreams happen. This path is full of pitfalls. Some can focus on sales performance and end up with no margins left. Others can focus on revenues and margins, but end up forgetting to manage client receivables, which damages the company’s liquidity. Others can get excited with the many funding options offered by banks to finance growth and over leverage the company based on optimistic assumptions. A bad financing round or M&A deal might happen whenever the leader does not understand the economics of its business and how they are compared to peers and benchmark businesses, whether offline or digital.
Considering Financial Efficiency during growth is key to develop entrepreneurs and team dreams. The founder and C level agenda must consider and develop many aspects of financial efficiency priorities:
- Planning growth;
- Assessing growth efficiency: fixed assets and working capital;
- Assessing and prioritizing investment projects;
- Planning financing and funding needs;
- Planning M&A deals.
In order to change the team’s mindset into a more productive one it is essential to focus on such issues:
- Aligning and fostering focus on cash flow productivity;
- Making leaders accountable while growing the business (goals, budget, auditing);
- Unifying performance metrics (standards and language) and opening space for fairer evaluation, feedback and variable compensation system.
