How to Scale While Saving Time and Money
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You need two things to properly scale a business: good financial hygiene, and the right combination of tools and systems.
Good financial hygiene helps with financial planning, figuring out your projections, and understanding cash flow. The right tools and systems mean cultivating an efficient and effective back office tech stack to keep your company moving in the right direction.
Pilot Principal, CFO Services, Hudson Bova, and Kimia Hamidi, Head of Savings at Ramp, recently joined us to discuss the best ways to help a business scale. Below, they share best practices for helping startups grow, such as why it’s important to build your systems before you scale, and the importance of profitability and sustainability over growth at all costs.
Make your systems talk to each other
Do your company’s internal systems communicate? If they don’t, they should. According to Kimia, inter-system communication is vital for your tech stack, because you need to be able to automate processes as your business grows.
“[If] it doesn't automate in the sense that it actually gets sent, and you're still manually sending the work, you're still on the back foot,” Kimia said.
The bigger your company gets, the harder it becomes to stay on top of manual tasks, which is why automation is so vital. Don’t let time-consuming tasks slow you down.
“Make sure your systems talk to each other,” Kimia said. “Make sure that you're investing the time and effort upfront to scale the system out.”
If your systems talk to each other, you won’t have to be the middleman. Automated communication will give you more freedom to focus on other areas of the business.
Build your systems before you scale
Though it’s expensive upfront, the long-term benefits will outweigh the cost, as it’s much easier to build a scalable system when your company is still small. Rather than redoing your systems to catch up to your growing business, take advantage of the present to start building your stack.
“I always say to founders, if they don't have a robust tech stack, to start putting one in today,” Hudson said.
If you’re unsure of where your tech stack stands, ask yourself: How are your backend systems? Are you collecting data in a clean, comprehensive way? Do you have the right operating procedures in place?
A lot of founders don’t realize that the systems they put in place when their company was small aren’t going to be representative of the business as it grows. So, instead of waiting until you need to course-correct, be proactive; not reactive. Switch out your systems today.
“Though it's never too late to start, it's so much easier to start implementing these things when the company is simpler,” Hudson said.
The earlier you start to shift your systems, the easier the transition will be. Put in the work today so your business can flourish tomorrow.
As a founder, the demands on your time and attention are constant. Your team always needs something from you: information, direction, or a final decision. This is why centralizing information is so important.
“You're constantly directing information,” Kimia said. “And when you need answers to route the switchboard of information to run your business, you want to be able to go to one place.”
When someone has a question for you, you don’t want to waste time looking through half a dozen tools to find the answer. Instead, make things easier for yourself—and them—by creating a central source of information for easier lookups.
“Go to a central source of information, whether it be a tool or an expert who really understands the question, and then try and get that answer,” Kimia said.
Speed and urgency is the name of the game here, so don’t let a complex system trip you up. If you simplify your source of information, you not only empower your team to work more autonomously, but you also save time and brain power.
Figure out where your money is going
The bigger your company gets, the harder it is to track your spending. So, make sure you aren’t overpaying for tools you don’t use by tracking where, how, and why you’re spending money on them.
Many founders “look at the end of the month and they're like, ‘Where's all my cash?’ And then they realize they have 19 tools that they're barely using,” Kimia said.
If you want to make efficient changes to your budget, you need to understand where your costs are going. Take a hard look at the tools you’re paying for. Do you really need them all? Which ones aren’t being used to their full potential?
“Go to your vendors, renegotiate those contracts, make sure that you have a fair price, make sure that your terms are aligned, and then make sure you have transparency,” Kimia said.
What you really need is visibility. When you know what you’re spending money on and why, it’s important and easier to find places to cut unnecessary spend.
Don’t go for growth at all costs
When the market is flourishing, many companies try to grow as fast as possible. But in a less stable market, you need to prioritize profitability and sustainability over scaling.
“The growth-at-all-cost mindset that was prevalent last year is gone right now, or at least taking a backseat,” Hudson said.
As long as interest rates are rising and the macroeconomic environment is choppier, profitability, unit economics, and capital efficiency should be top of mind for every single founder. While growth at all costs is an enticing model, it’s not a practical one in the current climate.
“If you are a VC-backed company, you're going to have to show the trends of your business when times were great, i.e. last year, and when times are a little bit more difficult,” Hudson said.
Start tracking metrics like critical KPIs and make sure that you're within the top quartile or the top half of companies your size. If you're not, figure out what the right strategy is to start correcting the ship. Remember: Growth at all costs isn’t always worth the price.
Watch our full webinar with Kamia and Hudson if you want to learn more about scaling sustainably in a turbulent market.
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