Sixty-three percent of tech startups fail in the first four years - the highest failure rate...
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Pop quiz: 43% of small businesses claim their biggest financial challenge is ________.
Before you answer, think of the reasons why businesses fail in the first place. Inability to keep up with demand, lack of product innovation, insufficient resources - all of these factors come down to one core financial issue.
Alright, here’s the answer: 43% of small businesses claim their biggest financial challenge is paying operating expenses.
And this is a major problem for businesses eager to scale and grow. Covering operating expenses is the baseline of a healthy business and is the only way to keep yourself afloat while you expand offerings, grow operations, and avoid closing your doors.
In part one of The CEO Playbook, we showed you how to get your business off the ground using a customer-led growth strategy. Now it’s time to take it a step further and see how you can efficiently scale your business without doing too much, too quickly.
Are you ready to tackle your business growth challenges? This playbook shows you how to do it by investing in the right tools that support your growth, finding and maintaining strategic partnerships to fill the right gaps in your functionality, and tapping into your customers’ needs for long-lasting business success.
How to grow a tech business
In part 2 of this playbook, you will learn how to:
- Scale your business by investing in tech, tracking competitors, and fundraising for growth
- Find the right partnerships that complement your product and support your business expansion
- Sustain long-term success by leveraging your customers’ voice to instill trust and drive product innovation
Scaling your business: Ways to efficiently grow and expand
New business owners who see fast success often find themselves in a never-ending cycle behind the growth ball. They’re selling products, revenue is coming in, and demand is increasing, but they aren’t sure how to keep up.
Once you’re up and running, the next step is figuring out how to grow your revenue, while scaling the operations of your company in a reasonable and sustainable way. You don’t want to scale too much, too quickly or you’ll find yourself perpetually behind the ball. Best case, this will lead to burnout and worst case, solvency.
To put this into perspective, Shopify research shows that business owners with no employees spent $18,000 in their first year while businesses with one to four employees spent $60,000 in their first year. Trying to scale from a handful of employees to a robust team overnight is costly and may take away from other unexpected costs.
Before attempting to scale up operations, make sure your business is fully equipped with S.M.A.R.T. goals, the right technology, resources, and enough funding to execute on these goals and support operational investments.
1. Reverse engineer your goal
Figure out your endgame. In a perfect world, what does success look like as it relates to your venture? Be specific when pinpointing your goal, think long-term, and don’t compromise on your vision. Once you’ve clearly articulated your ideal outcome, simply reverse engineer it. You know where you want to be, so what do you need to get there?
The most important element to focus on is making sure your ideal customer profile (ICP) is in line with your vision of expansion and growth.
Krish Subramanian describes how Chargebee managed to scale by reverse-engineering their desired outcome, starting with their ideal customer profile: “One thing that has helped us scale is investing more time [in the] best customers for whom [Chargebee is] a good fit.” Subramanian explains, “In B2B, there are lots of customers [and you won’t] be able to satisfy every single need they have. It’s harder to stretch and make them happy if you want to win all of them.”
Co-founder and CEO, Chargebee
2. Invest in the proper technology
“Grinding it out” is fun - until it’s not. The late hours and manual work required when getting a business off the ground are hallmarks of a great story. However, these hallmarks are usually what lead to the demise of a company altogether.
Grit, late hours, and manual work won’t scale effectively as your business grows. Therefore, the technology you invest in to mitigate these things are critical to achieving lasting, cost-effective growth.
But is there an ROI to investing in more technology? Yes, actually - companies that fully leverage technology experience four times the annual revenue growth compared to those that don’t. And despite that incredible growth data, 80% of small businesses still do not take full advantage of available technology.
Certain processes, such as sales outreach, marketing communications, and customer account management, can be easily automated with technology. Putting systems in place to handle these evergreen needs will help mitigate risks young businesses can’t afford to take, like excessive manual data entry, potential inaccuracies, and wasted time. These systems can then easily support you at whatever rate of growth your business takes.
Tip: When shopping for software, evaluate solutions that offer integrations to sync data and share information across all systems. This will provide you with a holistic view of your business so you can accurately track revenue, predict future trends, manage your operations holistically, and avoid the silo game down the line.
3. Keep up with your competitors
Always keep an eye on your competitors and find out what they’ve done to grow in your industry. While you never want to copy another brand’s strategy, you can always learn from their tactics and apply them to your business.
If you’re looking for a more personal learning channel, reach out directly to other entrepreneurs and experts in your space for advice. If there’s one thing you can count on, it’s knowing that every entrepreneur was at some point in your shoes with the same questions, harboring the same concerns. And there’s no one better person to talk through those issues with than someone who’s already navigated them.
Although your strategy and operations are likely to change as you scale, it’s important to protect your business’s core values. Don’t lose sight of your end goal, and make sure your team feels confident in the growth roadmap. Use your internal data to help you predict what your customers want and how they will adapt to your scaling business.
Tip: Network too small? Hiring an outside consultant can be your window into gathering insights from the countless entrepreneurs they’ve helped in the past, so you can get your company back on track and ready for expansion.
4. Fundraise for growth
Picture this: you get your business off the ground, your proof of concept is widely adopted, and demand for your product is through the roof. What could go wrong?
If you’re not careful, everything. Your current funding model may support existing operations, but you now have to scale up your staff, resources, technology, and support to take on the additional demand staring you down the barrel.
While you can revisit ideas like crowdfunding or additional bank loans, there are other ways to receive financing to scale your business.
- Create a new revenue stream: This new stream should be something dependable with low overhead or easy-to-implement to mitigate the risk of failure. For instance, you can launch a subscription model for your product, an ongoing service, or repackage your current offering with an incentive to spend more.
- Introduce auto-renewals: The only thing better than new revenue is existing revenue. Create the ability to auto-renew and your customers won’t think about churning, creating more dependable and predictable income for your business.
- Co-selling: Partnering with another brand that aligns with your values and customer base is a highly effective way to expand your business, get your product in front of fresh eyes willing to give you the benefit of the doubt, and gain additional revenue.
Partnering to grow: The makings of a good strategic partnership
Speaking of partnering, finding a business to partner with is an incredibly effective way for you to scale and grow long-term. However, not all partners are created equal.
Your partners must be aligned with your business’ product and values. At the most basic level, a good partnership should include similar customer profiles and products that complement each other — or ideally, integrate. A partnership should benefit you from a business owner’s perspective while also actively adding value for your customer.
In other words, think of the good old “1+1 = 3” formula: my product, plus their product, equals a whole greater than the sum of its parts. You want to look at your product and say “no other company can deliver solutions as good as ours through this partnership.”
It’s important to note that while you want to partner with brands that align with yours, you don’t want to work with companies that could potentially take away business. Your products should complement each other. If your partner offers the same or similar solutions, you don’t want your customers to simply choose their product over yours.
When looking for the right partner, ask yourself:
- Do they help fill gaps in or extend my product’s functionality?
- Does their ICP closely align with mine, or create opportunities for my product to be used by new markets?
- Do they pose a threat or act as a direct competitor to my product or business?
of companies use strategic partnerships to acquire new customers, and 44% use them to get new ideas, insights, and innovation.
Maintain your partnerships
Identifying a strategic partner is just the beginning. Once you find the right fit, you need to ensure both parties follow through with and sustain the partnership for the long run. You must lay the groundwork for your partnership and dedicate effort to getting both teams aligned on a joint strategy, goals, and outcomes.
Godard Abel describes how business owners can leverage their strategic partnerships to scale their company to the next growth level: “Once you have a partnership going, especially with a big partner, [you can] have them invest. I’ve found that [when] bigger platform partners invest, it’s helpful because now both parties have a mutually vested interest in your company making money.”
“When building my last company, [we were] very much focused on [our partnership with] Salesforce and that ecosystem,” Abel reflects. “And we leveraged their massive distribution and customer base to get our product in front of buyers we otherwise may not have been able to reach.”
Each partnership is unique; however, all partnerships require trust beyond leaders. Once you’ve established a partnership between you and your counterpoint, you should heavily focus on departmental alignment. Make sure your product teams are constantly communicating and working together on the functionality. Connect your sales and marketing teams with their counterparts to discuss messaging, promotion, campaign strategies, and co-selling opportunities.
of strategic partnerships fail due to factors like unrealistic expectations, failure to agree on objectives, and lack of trust or communication.
The three phases of a strong and successful partnership are:
- The qualitative feedback phase to build trust and activate the partnership
- The repeatability phase to create strategies and incentives for employees on both ends to take action
- The scale phase to create systems and engrain processes to ensure the partnership is sustained long-term
The Chargebee and GoCardless integration is a perfect example of a successful partnership. Chargebee’s product provides a robust billing system for businesses. It helps sales and marketing teams run special promotions and gives support teams the right tools to bill accurately and respond quickly to billing queries.
Chargebee’s product also provides recurring payment and subscription management. Therefore, the company offers integration with GoCardless, a leader in account-to-account payments. By utilizing this partnership, users are able to efficiently manage subscribers and scale their subscription business.
“Chargebee has fantastic partnerships,” Takeuchi explains. “A good lever to market is to work through partners, empower them, and enable them to help their customers to get paid, but embedding that really deeply into the workflows of that specific use case and that customer.”
Co-founder and CEO, GoCardless
Sustaining success: Why you should leverage your customers’ voice
Don’t lose sight of how you got this thing off the ground in the first place. Your growth is customer-led from insights and by building trust with the market through reviews and testimonials. Now you need to leverage that power to sustain success and continue to grow your business. While investing in technology and partnerships are crucial for growth, tapping into your customer sentiment is the true key to lasting, long-term success.
The benefits of your customers’ voice are tremendous. You can leverage your customers’ voice to spread brand awareness, help users make confident purchase decisions, and drive product strategy and innovation internally.
Instill trust in potential buyers
When’s the last time you made a major purchase without reading the reviews first? Reviews influence purchases more than any other factor, and as businesses continue to fight through this crisis of trust, the sentiment of other users is more important than ever.
Social proof instills confidence in buyers who are exploring different products or solutions. This means that buyers will lean on platforms like blogs, forums, and review sites to research and shortlist providers.
And reviews don’t just benefit potential customers. On third-party review sites like G2, consistently soliciting user reviews can provide you with an arsenal of highly valuable buyer intent data. When your customers leave reviews, those reviews affect how you rank on results pages and reports. The more visitors you get to your profile, the more data you have on your audience.
In essence, implementing a strong review strategy will help you spread brand awareness and gather applicable buyer intent data.
of consumers say online reviews influence their purchasing decisions.
Drive product strategy and innovation
The future of business success depends on customer-led growth strategies. Shifting your focus on customer needs and values will help drive product strategy and innovation within your company. Find out where customers see gaps in your product and work to make those changes.
Let’s say your reviews uncover a common paint point: customer success users consistently express the need to filter and group account profiles by location in your CRM software. After conducting some research, you find that customer success individuals need this functionality to plan calls and email cadences based on time zones. You would then present this information to your product team so they can work on creating this feature.
On the other hand, you can use this feedback to research potential partners. Instead of investing time and money into developing the feature, for instance, you could instead partner with a product that automatically schedules meetings and emails based on the location of individual accounts.
In short, you should always be collecting, analyzing, and implementing your customer feedback. The best way to earn trust and build long-lasting relationships is by interacting with and listening to your customers.
Reach your next PEAK
Godard Abel built G2 on these PEAK values: Performance, Entrepreneurial Spirit, Authenticity, and Kindness. These values continue to drive G2 throughout all stages of development as we continue to scale business, find valuable partnerships, and sustain long-term success.
Whether you’re launching a new business or expanding on existing product offerings, it’s important to put the needs and values of your customers first. Leading with a customer-first mindset will help you tackle challenges and reach your next PEAK.
Learn proven lessons from proven leaders Godard Abel (G2), Krish Subramanian (Chargebee), and Hiroki Takeuchi (GoCardless). Access The CEO Consult for free today.
Brittany K. King is a Content Marketing Manager at G2. She received her BA in English Language & Literature with a concentration in Writing from Pace University. Brittany’s expertise is in supporting G2 products and sellers, focusing specifically on Buyer Intent data and Review Generation. After 5pm, you can find Brittany listening to her extensive record collection, hanging with her dog and cats, or booking her next vacation.
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