In addition to writing and coaching about personal finance, I also coach and guide many entrepreneurs. Many focus on “growth” (often “at all costs”) and don’t understand that companies live and die because of their ability to generate and manage cash flow. If your market or industry is ready to grow, it may be time to grow your business with it. According to a report by financial services firm Fundera, some of the fastest-growing industries in the United States today are real estate, hospitality and consumer retail. Jim Patterson, the editor-in-chief of The Kiplinger Letter, shares a handful of other industries that he expects to grow significantly over the next five years, including cannabis, online grocery delivery and healthcare.
This may sound counterintuitive because most founders are afraid that if they start small, they will lose potential customers along the way. Startups are more likely to accelerate growth by narrowing their target demographic, better understanding customer needs, building more targeted products, and tailoring their marketing message to their specific audience. One of the biggest mistakes startups make is assuming that many people want to buy a particular product or service because the business owner likes the idea or knows one or two people who want the product or service. Startups need to invest early on in building effective and efficient sales, marketing, financial and product innovation processes. Lack of processes slows growth because companies aren’t effective enough to sell, market, and meet customer needs, and businesses can run into financial trouble if they haven’t scaled their processes with their business. As the business grows, other people go into sales, manufacturing or engineering and first support and then even displace the skills of the owner, reducing the importance of this factor.
For most fast-growing startups to move on to the next crucial stage, they need to bring in an executive team with diversified skills and experience in scaling a business to complement the founder’s vision and energy. In addition, instilling company values in your product development and customer engagement will help your customers feel part of your broader community. By creating values that span both your own team and your customers, you ensure that customers are at the center of your decision-making. Ultimately, you’ll build a dedicated customer base that grows with your business.
To be truly successful in the long run, when companies add customers and revenue exponentially, costs only need to increase gradually. Take Google, for example, a spectacular example of founders defining and supporting growth versus the scale of their business. Alphabet’s crown jewel has solidified a business philosophy that has made it possible to continually add customers (whether paying business customers or ad-supported free users) while keeping costs to a minimum. We started our company Hidden Founders with the idea of helping non-technical founders build and market their startup projects. We had so much value that we wanted to offer people, connect them with our team of designers and developers to help them build the MVP, teach them how to test their product on the market.
But just like in a marathon, business pace and perseverance must be paramount. A long life span in the creation of businesses is taken for granted: no one intends to establish a business with an expiration date. But there are few early-stage companies that think critically about the strategic principles needed to survive. By looking at long-standing companies in various industries, we were able to identify several fundamental elements that contributed to the ownership of these companies. They include principles that put society first, long-term adaptive strategies, and scalable leadership. By adopting such standards, startups can increase the likelihood of long-term sustainability without negatively impacting short-term growth or society at large.
The changing role of factors clearly illustrates the owner’s need for flexibility. An overwhelming concern for cash is very important at some stages and less important at others. COP27 Delaying tax payments at all costs is paramount in Phase I and II, but it can seriously disrupt accounting data and consume management time during periods of success and growth.