Consider These 10 Strategies When Preparing to Grow Your Company
Startups go through three distinct phases early in their lifecycle: building the product, selling the product and growing into a sustainable company.
Preparing a company for growth requires taking concrete actions in evolving product and service offerings, modifying the pre- and post-sales organization, addressing human resource challenges, streamlining operations and more.
Here are 10 suggestions for companies preparing to cross the growth chasm:
1. Reconsider product offerings
Now that the product is no longer in beta, questions to ask include: How profitable is each product line? Can products that don’t "move the needle" be eliminated to double down on the successful ones? How can the product’s addressable market be increased? How can the average revenue per unit be grown? How can the product sales cycle be shortened to reduce the overall cost of sales? How can post-sales maintenance costs be reduced?
Challenge conventions and consider new blue-ocean opportunities, including ones that would require a mergers and acquisitions to fulfill.
2. Invest in product marketing
As sales ramp up, there will be a diminishing productivity rate, largely because the salesforce is no longer only comprised of the passionate founder. Counteract this by making sales easier.
Consider verticalizing sales and marketing teams based on industry, use cases and/or products. Establish a product-marketing team in charge of writing marketing requirement documents (MRDs) for products, evangelizing products with customers, developing customer advisory boards, creating sales collateral, and simplifying product packaging, messaging, and pricing.
3. Adopt a channel strategy
Channels fuel much needed non-linear growth, but they also introduce risk. While a channel strategy isn’t for everyone, most companies opt for a combined direct and channel approach.
Determine if the channel’s sales team has the DNA and required knowledge to sell the product. Make sure they are adequately motivated to sell the product through a sales performance incentive fund (SPIF), but consider compensating them in other ways, too. Allocate enough pre- and post-sales support. Most importantly, be patient but also very critical of progress.
4. Establish a customer-success team
Upon entering the growth phase, significant attention needs to shift from securing new customers to retaining and upselling to current customers.
If it hasn’t been done already, establish a customer-success team with the goal of maintaining customers for life. Measure and incentivize this team by gross churn and upsell level, or by "net churn," which is the net effect of both.
5. Open channels of communication
Companies entering the growth phase are typically large enough to switch from having two levels of management (for example, vice presidents and directors) to three levels of management (chief officers, VPs and directors), and the staff is increasingly spread out.
Establish a culture of transparency, including quarterly company-wide video calls for reviewing updated plans, opportunities and challenges. Schedule periodic meetings for all groups with all company executives. Each senior executive should spend a significant portion of time on the "frontlines" to obtain an in-person assessment and encourage contact with all employees.
6. Strive for cohesion
As the company grows, individual offices and teams become less aware of what others are doing. However, company-wide unity and cohesion are critical for success.
Verbalize the company’s philosophy, culture and motto, and seek concrete ways to embody them so people can relate, connect and gradually make it their own. Encourage meetings between teams, trips across offices, company-wide events, and whenever possible, relocate people across countries and groups.
7. Empower middle management
Executives in growth-phase companies need to be less focused on leading by themselves and more focused on empowering others to lead with them.
Put in place a strong middle-management team, delegate responsibilities to them and empower them with rights and freedoms. Encourage middle management to be entrepreneurial and take initiative, assume risk and not fear failure.
8. Put goals and key performance indicators in place
Initial startup decisions are often made by intuition, but as the company grows, they must be backed by data collected and monitored regularly across the entire company.
Leaders at every level should define and track key yearly and quarterly goals. Key performance indicator (KPI) attainment should be shared transparently across the organization, and compensation should be tied to them directly.
9. Instill tighter controls
As the company grows, so too does the risk of losing control of approval processes and spending. Allocate resources to document-required procedures and regulations. Instill processes and systems that ensure compliance.
10. Establish a strong human resources team
Recruiting, training, empowering and retaining talent requires lots of thought, effort and attention, and is key for the company’s success. The HR team should be led by an executive who reports directly to the CEO because HR issues are of strategic importance and need to be addressed by a senior person.