Why rapid revenue growth businesses are in danger of failing

Before going any further, it’s important to distinguish between a business with Rapid Untethered Revenue Growth and one which is a Growing Business ready to Scale Up. There is a significant difference between the two and whilst you could say the first one would be a rich man’s problem, that’s not necessarily the case.

Rapid Revenue Growth Businesses are focussing on expanding their revenue quickly, without necessarily having the processes or infrastructure in place to support that growth. These businesses prioritize short-term gains over long-term stability and scalability. If they don’t pause to assess what they need to move to the next phase, the long-term stability of the business will be at risk.

On the other hand, Scale-up businesses balance revenue growth with building a strong foundation for the longer term. This means putting processes and systems in place to ensure that the business will continue to grow and thrive well into the future. Scale-up businesses prioritise scalability over quick revenue gains.

Rapid revenue growth businesses built on sand

Entrepreneurs are often full of ideas – new opportunities, product development, the next shiny thing. They are “deal-makers”, and while some are successful in building fast-growing businesses, sometimes they overlook what they would think as the ‘boring’ stuff – systems, processes and finances. Some don’t take into account the?importance of cash flow?and the working capital they need to keep the business alive while they complete the next deal and a fast-growth business which isn’t built on a solid platform to take it forward is in danger of collapsing before realising its ambitions. If the business expands too quickly, and it is built on sand, it topples over in the first storm or self-explodes because it can’t finance itself.

Scale-up business created with solid foundations

One key aspect of building a strong foundation for a scale-up business is having?strong financial leadership?and management in place. Someone with both commercial and financial leadership skills, your own FD but on flexible terms, a part-time Virtual Finance Director who can provide strategic guidance and insights through financial reporting to support decisions the business owner needs to take.

While systems and processes may not seem important to you now, as a start-up or perhaps university spin-out business, as you build and seek more funding, they will make you attractive to potential investors.

When seeking finance for your scale-up business, be prepared to showcase your financial management expertise and provide detailed financial projections that demonstrate your ability to sustainably grow your business over the long term. To promote this aspect of your scale-up business effectively, it’s important to?highlight the processes and systems?that you have put in place to support sustainable growth. This might include things like streamlined operations, scalable technology infrastructure, and robust financial reporting. These will add value to your business and make you a more attractive proposition to buyers.

Overall, building a scale-up business requires a more balanced approach than simply pursuing fast revenue growth. Balance is the key, you don’t want to stifle growth with too much bureaucracy. However, by making time for stability, scalability, and strong financial management, you can set your business up for success in the long run.

Flexible Financial Leadership

The Smart Team recognise that businesses looking to grow won’t have the financial leadership skills in-house nor do they, at this point in their business lifecycle, wish to recruit a permanent role. The cost alone is off-putting and the rigmarole of recruiting someone and knowing if you have the right person. No, there’s a much easier and flexible way, your own Virtual FD, supporting you as much or as little as you need.

Please message me to arrange a call or find a suitable slot in my calendar to find out more about the options for your ambitious business.