Four Foundations of Sustainable Growth

There are a lot of founders/businesses that have great business ideas. Some have ideas that haven’t been thought of, some have creative twists on already successful businesses and a minority have ideas that will go on to change an industry or even the world. 

Despite the plethora of exciting businesses the stats for successful start-ups don’t make for great reading, no matter what industry, region or ownership/investment. There will be a lot of theories and reasons why this is the case, but a few spring to mind. 

Globalisation has meant that competition is extremely high and standing out is almost impossible, startups that are slow and inflexible will likely fail.

As ever a perennial issue is resource, be it time or money. In the context of  a global economy that has been struggling for years the risk of starting up has never been higher, be it finding the time to turn your side-hustle into a business, taking the personal financial risk or finding the right investment.

But, in our opinion the key issue we see time and time again is over-reliance on the idea. Good ideas are not enough. In fact some of the most successful businesses in the world often ditch their original idea and pivot; many of these businesses look completely different in terms of their USP when comparing against their original ideas as a startup. 

Flexibility and agility then in the startup world would seem a sensible ingredient for success. This does ring true in many instances, but the danger here is following fads or worse impatience; not giving enough time for results and success to materialise.  

Resilience would surely be a key trait to supplement this. There are countless stories and LinkedIn posts on founders/owners who swear by work ethic or the “always-on” culture. But again this has flaws. Being resilient and driven is a good trait, but if you’re heading in the wrong direction this will only get you further away from where you as a business want to get to. 

Reflecting on a strategic level, therefore, is extremely important for success, especially when most owners/founders tend to get stuck in the day-to-day or operational levels of the business. 

In truth there are too many issues and potential solutions to battle with, and our thought is that most startups that do succeed do so based on a mix of many ingredients including some degree of luck! That seems unfair and there are definitely those out there that are born entrepreneurs - but in truth most battle a mix of issues/problems with a number of different solutions  and the ones that succeed tend to have the right mix of people, a favourable situation, resilience and a lot of luck. 

However, in our opinion it doesn’t need to be that way. In our experience having the right amount of process, a growth framework, mixed with the right amount of agility and a lot of resilience is the best way to succeed. Luckily there are enough documented examples of this, and over the last 15 years we have been working with a number of startups, helping them on their growth journey. 

Our growth framework focuses on four key areas of business that often get overlooked in the startup world. Four areas that are vital for any business to succeed and are not a huge secret, but will more often than not be something that is not in the wheelhouse of the founders/owners. And will almost always not have any structured process that underpins them. 

Strategy

Often thought to be something that is external, managed by consultants and in the startup world inevitably a nice-to-have as opposed to a must have. But again this is not the case in those startups that succeed. 

Being deliberate about your strategy and making time to work on your business as opposed to in your business is a key trigger of success. 

Too often founders are stuck in the short term, fire-fighting and solving operational problems as opposed to looking forward and being aware of the external environment. 

Flipping this mentality and making time to intentionally plan ahead is an easy change to make especially if you have the right team and processes around you. 

Commercial

Sales is the life-blood of most businesses. Founders from a sales background, or with sales experience is a big plus and often it’s why startups get off the ground. But this has problems, founder led sales isn’t scalable as there will always be a bottle neck with individuals. 

And in our experience building a sales team and engine is a difficult task as there are a number of issues around incentivisation, targeting, systems  & processes, alignment with marketing  and cultural fits that are hard to get right. 

But naturally growth, depending on the business, almost always comes from sales. So getting this right is crucial to success and often this is where startups get stuck; many never exceed the £1m ARR mark, which is fine if that isn’t the aim! 

Financial

The easiest to fix but the most overlooked is often the businesses financials. Most founders think that having an accountant to file returns is good enough but the businesses that succeed more often than not invest heavily in this area internally, alongside having external support. 

We have spoken to many PE, VC and founders over the years and a common sentiment in this area is startups tend to hire far too late in this function.

If sales is key for growth, finance is vital for profitability and longevity. Understanding key metrics and drivers of financial success cannot be done by external accountants/auditors; this needs internal strategic support be it fractional, part time or full time. 

Operational

Understanding how your business operates and what the key drivers for success in terms of driving growth and delivering value to your clients is another important aspect of success. 

But like finance, this again often gets overlooked and things are done in an ad hoc and often random manner that inevitably leads to inefficiency. 

Things like templatisation, automation, productisation and digital transformation are all things that are easily implementable at the startup stage. But founders often skip this step, and if they don’t they continuously add processes on top of processes until things become convoluted and too difficult to unpick. 

Ultimately having structured processes across these four key areas is vital for the success of any business, not least startups. We’ve only touched on the surface of all of these areas here, but we will be deep diving into key topics across all these areas. .