Every successful business outgrows the foundation it was built on. As a company expands, growth brings more complexity and managing core operations becomes its own challenge. I am navigating this path as Chief Business Officer at Infobip, a classic bootstrapped company that has grown from a family business in a garage to a global cloud communications company with $1.75 billion in revenue last year. Along the way, I’ve learned many lessons that can help young companies build a solid foundation and set up for long-term success. Here are five of them.
Get organized. In business school they teach you, “Go slow to go fast.” Do the work to build highly organized, data-driven systems. This will help you navigate volatility. Investing in collecting data, generating models, and considering scenarios will give you the tools you need to manage surprises—and there will be many. In our early days, we negotiated every deal in isolation. This proved inefficient as we made more sales and lost money on price fluctuations in the cost of our goods. Creating a dynamic pricing model enabled us to predict the optimal real-time price for every new customer, and we saved a lot of money.
Ensure your finance and sales teams work as partners. Sales teams in early businesses are focused on nurturing customer relationships and closing deals. That is crucial in the early stages of growth. But as a company progresses, it’s important to evaluate how sales teams are negotiating and ensure they have a longer-term perspective. For example, if your sales team is using generous rebates to close deals, financial managers can help assess how and when those rebates are offered to ensure sales teams aren’t sacrificing revenue. It might be worth updating sales processes in ways that can refocus on profitability while creating more sustainable strategies.
Make the shift from growth-at-all-costs to becoming profitable early. The entire business environment is shifting, and the days of endless growth without profitability are over. Instead, make it a goal to become self-sustaining while growing the core business. Knowing how to allocate capital is one of the most important skills a company can develop to achieve this goal. It’s especially important now that money is more expensive. Companies that have the financial systems in place to enable them to look across the whole business and assess options for freeing up and re-allocating capital are going to be better positioned to innovate.
Your finance and HR department are powerful drivers of growth. Taking a strategic approach to finance and HR can help founders make better business decisions and shift from short-term sales to long-term value. It’s easy to make the mistake of seeing these roles as mere compliance functions. Your finance department can help ensure that resources are allocated effectively, and that CEOs have the data they need for informed decision-making. And HR can only recruit the best hires when they have a deep knowledge of the business, products and services, and the gaps that are holding back full execution of strategy. An expansive view of these positions unlocks the potential to help manage revenue challenges and solve human capital problems that demand an expansive view of growth.
Build connections between teams early. Prosperous businesses have a mindset of shared success across teams and functions. Leaders should thoroughly understand all aspects of the business and participate in cross-functional teams. This helps build trust and create a cohesive culture that keeps everyone aligned with your company’s strategy and helps eliminate unnecessary bureaucracy, which can be a drag on early growth. The longer you wait, the more siloed teams become and the harder it is to communicate and collaborate around shared values.
No matter what you’re selling, these lessons will help you create winning teams and an organizational structure that can help a promising startup become a profitable enterprise.
