There’s no question, access to capital is a critical component of growth for many companies. In fact, when we ask our customers, “funding growth and working capital,” are the two biggest reasons they visit Lendio in the first place.
- Don’t hire anyone for the first month: “Growth is not just hiring more people,” says Rangnekar. Although it’s tempting to jump right in and start expanding the team, resist the urge. You might be surprised at how similar it feels to being a kid and getting your first allowance. You’ve got a buck or two burning a hole in your pocket and you want to spend it. Take a breather and make sure you’re not making a knee-jerk reaction to the influx of cash.
- When you do hire, hire differently: The people you hire at first are likely going to be different from the people you will need to hire now. “Once you have money in the bank,” says Rangnekar, “you should hire specialists who can put their heads down and focus on one aspect of the business.” The mark of a really smart CEO is his or her ability to hire people that might be smarter in some aspects of the business than him or herself.
- Don’t hire talented people and assume you’ll figure out their job later: Before you hire a specialist, make sure you’re prepared to take advantage of what they offer. Rangnekar suggests, “For example, you can’t hire an online marketing expert and expect him or her to perform well if you haven’t built the infrastructure for his or her role and his or her talents.” If you’re not ready, it’s doubtful you’ll ever see the value of what they have to offer.
- Help the team maintain a true sense of goal and vision: Speaking once with the former CEO of AtTask, Scott Johnson, he once said the biggest challenge he faced as the CEO of a growing company was keeping the culture that existed when they were in the start-up phase as they grew. Rangnekar adds, “That’s exciting—and that can create confusion as to what is next.” It’s important to make sure nobody gets distracted by the influx of cash and loses sight of the vision of the company.
- Don’t forget your investors: If you’re part of the very small percentage of business owners who are able to acquire venture capital, congratulations. It is important to keep the lines of communications open with your investors. However the same is true with a lender. I’m aware of one small business that has maintained such a good relationship with their lender that they have acquired financing several time over the last couple of years as they’ve needed it. It doesn’t hurt to maintain good lender relationships even if it isn’t with the local banker.
- Hire an accountant: “Don’t mess around with one-off spreadsheets or financial models you’ve created on your own,” says Rangnekar. “It’s time to hire an accountant.” As you grow and the need to manage financials, cash flow, etc., it’s time to hire and account that can take an active role by providing analysis and counsel. The more you grow the more important a good accountant becomes.
- Create open dashboards: “Pick four of five key indicators of business performance and start sharing them with investors and employes,” says Rangnekar. Most people want to contribute to something bigger than they are. To encourage this type of behavior, doesn’t it make sense to make goals and objectives visible to the team? I don’t think it matters if you’re a growing software company or a small photography studio, when everyone knows what the objectives are, you’re more likely to hit them. That’s also true of challenges.
Finding the financing to fuel growth is only the first step. What you do with it is what really determines whether or not you are successful.