The Secret to Successful Business Growth
If your business is about to scale up, you might be interested in the results of a recent survey we conducted with Oxford Economics.
We spoke to 150 decision-makers at small and medium sized businesses (SMBs) around the world that had launched a growth initiative during the past year.
We found UK SMBs tended to be less cost-conscious than their global SMB peers overall. Only 70% of UK SMB respondents said spending and cash flow was an important factor in their expansion decisions, compared with 81% of SMBs overall.
But perhaps the key finding was that a cost-conscious approach, with clear visibility into spending across the organisation and careful attention to cash flow, supports successful growth.
Keeping Expansion Costs in Line
When you’re planning to expand, you budget for the additional costs that are likely to be involved.
We asked respondents how closely actual expansion costs aligned with budgeted costs.
Across the board, we found UK SMBs were less successful than cost-conscious SMBs at controlling their growth initiative budgets.
For example, UK SMBs were more than twice as likely as cost-conscious SMBs to go over budget on talent recruitment, compliance, wages and benefits.
Our findings suggested UK SMBs recognised a lack of visibility into spend was a problem – 60% had increased their visibility into spend since expanding.
The Challenges of Expansion
As a business expands, the workload increases but so do the challenges. Amongst UK SMBs, we found:
- A third (30%) said auditing operations in new geographies and preparing for a new regulatory environment had been very challenging or extremely challenging since their businesses had grown.
- More than a quarter (27%) said their organisations had trouble reacting nimbly when their business hit an unexpected roadblock.
- Seventeen percent reported having difficulty making meaning from the data they collected (compared to 9% of total respondents).
New Ways of Working
Another interesting finding was that expansion tends to make organisations work more collaboratively. Two thirds of respondents (70%) – whether they were defined as cost-conscious or not – said they found themselves working more collaboratively with other teams in the business.
What Are the Lessons We Can Learn?
Perhaps the biggest takeaway from this research is the importance of focusing on cash flow, spending management and risk management when scaling up. Being cost-conscious shouldn’t necessarily be the only factor to consider, but it’s worth remembering better awareness of spending could prevent unexpected difficulties and costs.
Other Areas to Consider Include:
- Focusing on efficiency and cost control as a way to mitigate some of the difficulties of expansion. Nine out of 10 UK companies said they would benefit from focusing on efficiency.
- Maintaining close collaboration. Cost-conscious SMBs were more likely than others to say that finance and IT were strategic partners in their expansion, and they were less likely to say their organisations were siloed.
Automation is one of the smartest ways to achieve these things. Automating the AP process, expense management and travel booking makes you more efficient and frees up time to focus on strategy – important when you think that UK SMBs’ top reason for expanding was to boost capacity to meet market demands.
Automation increases visibility into spend for people in the finance team but also those in the wider business, something that helps you and all your colleagues. It gives you agility and insight, making you better at overcoming obstacles and capitalising on opportunities.
In other words, automation maximises the chances of success when planning business growth.
If you’d like to talk to a member of our team about navigating cash flow and spend considerations on your path to growth, contact us.