Balancing the CEO hunger - time to raise or time to ground in?

We've all seen the economy change quite drastically over recent years. Companies moving towards having a profit-focused mindset. Even start-ups have started to lean into the ‘let's go for profit’ or ‘let's break even’ approach, all to preserve the market during the disruption.

However, this safe approach stops growth and keeps companies stagnant. So what I’m asking is now the time to change that? Is it time to get back out there? To start fundraising again? To get back into the markets? It’s always going to be a bit of a gut decision, but I know we can’t get too comfortable. After all, the goal is to always grow and growth happens at the edge of your comfort zone.

What’s happening in the markets?

After a crazy COVID market to the overall ups and downturns of the market, which has meant almost 12 years of craziness happening in the space of just five years, I want to know how is everybody else in the industry. How are other start-ups fairing? Where is the wind blowing for them?

And most importantly, how are they trying to navigate their way through it? Maybe raising funds is not on the cards but the question that comes to mind, is when are we going to be ready to go back into the game of the hustle and will it ever go back to being the same? Part of me feels hungry to get back out there and hungry to start making things happen, but it's the speed of the market, right that matters most.

You can’t run a 100m sprint if everyone else is running the 800m.

Limited Capital

Our markets are running slower and the customers themselves are taking longer to make decisions, they're not as impulsive. They can’t be. They're having to watch their budgets, alongside the entire world as they shift to micro-management spending. Moving into people watching what they're spending. All of this makes it even harder to speed up the conversion rates. And so for me, I’m wondering, how do you turn that growth tank back on? How do you invest in ways to get in front of your customers with limited capital? How aggressive do you go?

Before when I'd go and raise money, it was impressive to hit $2 million in revenue in your first 24 - 36 months. That was huge, and the speed at which you cross $1 or $2 million in annual reoccurring revenue was a huge benchmark and a strong signal to investors you were worth banking on. It was a strength to see how fast the company would grow.

But now they want to look at the foundation of the business. With investors thinking, ‘OK, how does this stable revenue become consistently predictable? Because we want to make sure customers are sticking with this business and that they're there despite the changing markets’.

On top of that, there’s a rapidly changing working climate, with so many people that have gone freelance building independent businesses. These players are impacting the market considerably, especially with software solutions, changing needs, and usage patterns.

Balancing the Hunger

Despite these conditions, I know as a founder, I'll always be hungry to get going.

I'm always going to be that founder who wants to get back in there and raise. Raising money is a high for me. I love being able to do that because I know cash in the business fuels all. The true art is being patient enough to make sure you have all your growth tanks on and that you understand the economics of your business and the markets before stepping into the fray. This is key, so you don't end up taking a big hit financially whilst giving away a chunk of the business that ultimately isn't going to help you hit your growth targets.

Beyond that, it’s about listening to what’s happening in other businesses. Word on the ground is that there's pretty flat growth all around. With a lot of companies just netting out on net subscriber growth. They're kind of pacing, and not hitting their normal, higher growth. Whether that’s a usual 10-20% month-over-month growth, it’s just not happening.

It gets you to the point where you may want to raise money to go faster, but you can only go as fast as the market will want to adopt what's going on. I go back and forth on this, where I want to get there quickly, but I'm needed to balance my hunger with the market’s hunger.

Why Raise?

Another reason why to think about raising is in regards to hiring. When you can raise money, then you have the capital to hire more talent. Hiring new talent means new blood in the business and will keep sparking the foundation of purpose in the business.

It allows people to talk about why we're on this mission, about what's going on and it helps move people out of starvation mode. Most teams have probably leaned themselves out by now. The fluctuating market causes founders to question what’s and who is needed. So most teams are at the stage of sticking through it but this also means they’re in survival mode.

Or maybe the company is running more efficiently than it ever has before, but it's so lean that it's just a lot of work on the individuals that are left in the business. So it's a hard line to tread because you're finally leaning into being a profitable business but you also want to invest in bringing more talent in so you can continue to grow and ensure your team doesn’t burn out. As well as keeping the feeling of growth in the business.

Stepping Back In

This is the big thing for me right now. This feeling that the company has new energy to it. With a few changes that aren’t just about the market, but also how to manage the change in team size. Our changes at SalonScale have forced us to lean in, have hard critical conversations, and build a big foundation of trust.

We had to as a team in this last little bit, really cut out what we didn’t need and have open, clear conversations to make sure everybody was on the same page. And so I feel, in these moments, this is the moment where you get the glue, you get the grit in your business and team that scales you out to the next stage.

For me, a big turning point was having to go back into the business myself. Back into selling to customers, finding new ways of reaching them, figuring out the inefficiencies of the business, and then creating new strategies to grow again.

Sometimes as a founder in this climate, you have to go back in to build, so you can go back out understanding where your business is at right now. An unexpected benefit of this practice was I was able to find my joy again. From talking with our customers, I got to be on the front lines of seeing how the staff is working, seeing what we're doing, and how we can be a collaborative team to get us through, to hit our profit targets, and whatever the business objectives are.

But more than that, I've had to have honest raw conversations and I now feel more connected to the team than ever. More connected to our purpose and the value of the business. I'm not going to lie, my thoughts do linger on that growth, on when I can get back out there, but that’s because I know that will lead to the next big things and the big projects.

However, I know we’ll be ready for them.

Strong Foundations are Key

As an entrepreneur, you will always have a million ideas, all the time and you will want to act on them. There’s an extreme impatience to us, and in markets like this, it takes some time to recalibrate your patience to this different frequency. To learn a new pace with new timings and then how to build on those. To build an even stronger foundation so that as we get closer to things being back on track and the market starts to lift again, you will have that foundation that you know will scale out.

A founder has to invest time in networking to find new funds, and bringing new investors into their circle to keep them interested in the company. If you're working on the business mode, you can always go out and focus on this, but that’s the whole thing right now. Many founders, myself included, have had to cut the amount of attention we can put on who's thinking about investing in us and planting those seeds. So after this working in the business period comes to a natural end, it will likely shift things and start sparking up the need to network and ultimately raise.

So my final questions to leave you with…

Are investors and CEO's aligned on this? Are we experiencing the same timelines? Are we finding that CEO's are starting to hold back from looking for investment? And are they stuck in their businesses right now?

And are investors who are sitting on cash that they haven't deployed, are they trying to push into those businesses that are leaning toward structurally building like AAA profitable business before they think about a high-skill, high-growth company?

I’d love your thoughts on this, and for my fellow CEO's, where are you at? Investors, where are you heading?