To effectively grow a business, it is crucial to have good financial practices and the appropriate tools and systems in place. Adopting good financial hygiene practices can aid financial planning, project future outcomes, and understanding cash flow.
On the other hand, the right tools and systems can assist in maintaining a streamlined and efficient back-office tech stack, which will help propel your company forward.
Recently CFO Services, Hudson Bova, and Kimia Hamidi, Head of Savings at Ramp, shared valuable insights on scaling a business. They emphasized the importance of building a strong foundation and cultivating sustainable growth rather than prioritizing growth at all costs.
Establishing sound systems before scaling and prioritizing profitability and sustainability in your business practices is critical.
make your systems communicate to each other.
Does your business have internal systems that communicate with each other? If not, it’s vital that they do. According to Kimia, inter-system communication is crucial for your tech stack because it allows you to automate processes as your business expands.
“If you’re still manually sending work and it’s not being automated, then you’re at a disadvantage,” said Kimia.
As your company grows, keeping up with manual tasks becomes increasingly difficult. That’s why automation is so essential. Don’t let time-consuming tasks slow you down.
“Ensure that your systems talk to each other,” Kimia advised. “Invest the time and effort upfront to scale the system out.”
You won’t have to play the middleman role with automated communication between systems. This will give you more freedom to focus on other business areas.
build your systems massively before you grow scale
Investing in a strong tech stack may initially seem costly, but the long-term benefits are worth it. Starting with a scalable system while your company is still small will save you from having to overhaul your systems later and keep up with business growth.
A piece of advice for founders from Hudson: start building a solid tech stack today. If you’re unsure where your tech stack stands, ask yourself about your backend systems, data collection methods, and operating procedures.
Many founders overlook the fact that the systems they implement when their company is small may not be suitable for future growth. To avoid the need for reactive course correction, be proactive and replace outdated systems now.
Hudson recommends starting early to make the transition smoother. By putting in the work today, your business will thrive tomorrow.
put all the information in one place
As a founder, you are constantly bombarded with demands on your time and attention. Your team always requires information, direction, or a final decision from you. To streamline this process, centralizing information is crucial.
According to Kimia, you are always directing information. When you need answers, you want to be able to go to one place to get the switchboard of information you need to run your business.
Instead of wasting your time and your team’s time searching for answers in multiple tools, create a central source of information for easy access.
Kimia suggests going to a central source of information, whether it be a tool or an expert who understands the question, to get the answers you need. Speed and urgency are critical, so don’t let a complex system slow you down.
By simplifying your source of information, you empower your team to work more independently and save time and mental energy.
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find out where money is going.
As your company grows, keeping track of your spending becomes increasingly tricky. To avoid overpaying for unused tools, it’s essential to monitor where, how, and why you’re spending money on them.
As Kimia pointed out, many founders only realize they have too many tools they barely use at the end of the month. To make efficient changes to your budget, it’s crucial to understand where your costs are going.
Take a hard look at the tools you’re paying for and ask yourself if you need them all. Identify which ones aren’t being used to their full potential. Kimia suggests renegotiating contracts with vendors to ensure fair pricing, aligned terms, and transparency.
The key to intelligent spending is visibility. When you know what you’re spending money on and why, it’s easier to identify areas where you can cut unnecessary expenses.
avoid chasing growth at any costs
In a flourishing market, many companies prioritize growth at all costs. However, profitability and sustainability should be top priorities in a less stable market instead of scaling.
Hudson notes that the growth-at-all-cost mindset is no longer prevalent, and founders should prioritize profitability, unit economics, and capital efficiency. If you’re a VC-backed company, you’ll need to show trends in your business during both great and challenging times.
Start tracking critical KPIs and ensure you’re within the top quartile or top half of companies your size. If you’re not, find the right strategy to correct the course.
related: the 14 must-have startup tools in 2023
Remember, growth at all costs isn’t always worth the price. If you want to know more about scaling sustainably in a turbulent market, Talk to Countick experts. As your company grows, keeping track of your spending becomes increasingly tricky.
