Operational Efficiency as a Prerequisite to Fundraising

Most entrepreneurs aim to build businesses that can run without them. The extent to which this is possible is a function of the Founder’s personal development – how good is the founder as a communicator, what is his or her ability to delegate and trust their team members and so on.

We do not want to romanticize entrepreneurship. It is a good thing for Founders to acknowledge that there are challenges that come with running a business. This awareness is a good starting place enabling Founders to be more prepared in the journey of Entrepreneurship.

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What outcomes are you looking at?

Stephen R. Covey cites “Begin with the End in Mind” as one of the habits of highly effective people. As an entrepreneur you can practice visualizing success. As you consider what the future holds in the unique circumstances of your business, you actually get the feeling of joy that comes with success and are better equipped to walk into the envisioned future.

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A business cannot grow on shaky ground. We want to build a very healthy foundation for our business. This is what strong operation help you to do. Operational efficiency acts as a strong foundation on which you can build a healthy business.

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What does growth look like?

Growth will mean different things to different businesses but in general it may look something like:

1. More movement – more sales, more locations, more people.
2. More movement implies more policies i.e. more rules about the business e.g. who do we send to a new location? What level of seniority should they be at? There is not a one-cut-for-all when it comes to business – each business is unique.
3. More communication – a larger team, more customers etc. simply imply more communication..
4. More oversight/analytics – your business talks to you through data and as you grow you want to identify trends in your business. When you automate (use a tool), it is easier to have this conversation with the business. With digitalization of businesses, you want to have data/insights about your business coming to you. Applications such as Kuuza come in handy for such processes.
5. More expenses – growth requires that you spend more. As sales grow, so do expenses. As such, it is important to have a way to track this growth in numbers. When you are only one outlet/office, you might be keeping all your records yourself – but what happens when you have more outlets, more offices or even have your business in more cities? You want to have a way to keep a pulse on your numbers.

When fundraising, you want to be sure what you will spend the money on. The thinking that if I had x amount of money will equate to this amount of growth is not necessarily true. The non-funded businesses at times end up doing well than those that had rounds of fundraising.

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When you are not operationally organized, things tend to slip through your fingers. These things could be unpaid invoices or untracked expenses. As a Founder you want to have an intimate knowledge of the numbers within your business.

?Today's Newsletter is inspired by the Presentation of our Guest Speaker on Founders' Conversation - Caitlin Seandel

The recording is available on the YouTube and Facebook pages of SME Founders Association

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