The correct way to grow a software business (An insight from 20+ years in M&A)

One of the most important observations I’ve seen with software companies is that, when they look at growth, they tend to fall into the same pattern of wanting MORE:

“We could grow fast if we had MORE:

? More sales people

? More software

? More investment

? More marketing

? More developers

? More cash

? More clients

Essentially they want the same business but just MORE.?

I find this rarely works and typically makes things worse. They consequently are hunting for the wrong answer. If the company does not work at its current size with what it does and has now, making it bigger will not improve things.?

If anything, it can get worse. The business becomes more complicated and harder to manage with a higher cost base.

There are often missing elements that may need supporting (maybe temporarily), but the best strategy is to maximise what you already have. Make your business work efficiently as a first step.?

Making things more efficient so they can go faster is actually something I’ve done since I was a child......

You see, as a boy, I was fascinated by a go-kart that my Father had made for my brother and I.? There were several hills in the area that we would race down at ever-increasing speeds. The steepest and longest of which was Plumberow Mount, rumoured to be the burial place of King Canute.

Once I had built up the courage to release myself down this steep, grassy hill I wanted to make the kart run faster and for a longer amount of time.? My first discovery was the large mound at the very top of Plumberow Mount called the “Pimple”, which could be used as a launching pad. This was even steeper than the main hill and in retrospect seems more suicidal than adventurous, but my friend Stephen was adamant that I should try it.?

After a few false starts, I had a successful run, which took me down the hill, out of the park, across the road, and into a ditch. I proudly emerged afterward pulling the Go-kart behind me to offer Stephen a ride. His answer? “Do you think I’m mad?”.

My next thought was to grease the wheels and make them run more freely. I spent the next three hours chasing little ball bearings all over my parent's garage with my hands in a pot of grease.? Who knew that these wheels would have so many little ball bearings!

My testing track became the nearest hill to where I lived as it was not far and the “track” pavement was not affected by the weather. I then decided that if I had more weight on the kart I would go faster.? So I recruited (by force) my younger brother to act as ballast, and convinced Stephen to join in too, who was prepared to climb aboard so long as we didn’t attempt the ‘Pimple Mount suicide run’. After a few attempts, I discovered that if we all leaned forward we could take nearly 2 seconds off the run.

The extra weight on board was OK until… you needed to stop. The normal practice of putting the flat of your shoe down didn't work when you had another ten stone sitting behind you. This was painfully brought to my attention when some local lads blocked our path and I ran over my leg. Fortunately, at that age, I could always walk away.? However, it deterred my ideas of adding more weight and I decided that aerodynamics was the best way to go. So I lay face down on the kart with my hands on a piece of wood that was fixed to the front axle for steering. It wasn’t a fool-proof strategy. I was now hurtling down the hill head-first using my hands to steer, my nose inches from the wheels.

What is the point of this trip down memory lane??

We are all different people.? Our personalities affect what we choose to do with our lives, and so they feed down into our businesses. I’ve always been driven to make things better, faster, and more efficient—this trait I have carried through to my adult life and my work in mergers and acquisitions.?

Now I make a career of streamlining businesses and maximising their value. What I have learned in the software sector is that you don't start by wanting to add more. You first make what you have more efficient and productive.??

If you have a small development, marketing, and sales team that’s not productive, adding more is not necessarily going to make your company more successful and can actually do the opposite.??

Get all that you can out of all that you have.

All the best,

Mark Edwards

P.S. Whenever you’re ready…here are 4 ways I can help you:

1. Increase the growth of your software business.

Out Smart can help dramatically increase the growth of your software business using principles grounded in cognitive behavioural science, and not myth or hearsay.?

Find more info here: www.outsmartstrategy.com?

2. Sell/Acquire a software business

Boss Equity can help you if you want to sell or acquire a software business. We’re the mergers & acquisitions company for when you’re sick of M&A guys. www.bossequity.com?

3. Listen to my BOSS-it podcast

My weekly podcast reveals the insider tips, techniques, and concepts to help you grow your software business. It’s an over-the-shoulder peek at a conversation between me (an experienced international M&A specialist) and a wide range of talented and experienced executives.

Listen to the episodes here: https://open.spotify.com/show/7DRT28b890hv8Hh6TfLjqI?

4. Be a guest on the BOSS-it podcast.

If you have an interesting story to tell and work in the software industry, message me on LinkedIn. You may well be my next podcast guest :)