Insights

How To Lay The Foundations For Fast Growth

Thursday 16 June 2022

On the most recent episode of Extraordinary Entrepreneurs Together, the podcast from EHE Capital, I was excited to reveal a project the EHE team has been working on behind the scenes for a while now – we’ve written a book!

The full details will be announced shortly, but I couldn’t resist sharing a glimpse of what we’ve got in store for our readers.

Our goal with the book is to guide entrepreneurs through their entire journey, from founding the business to assembling their team, securing funding, achieving growth and, finally, exit. It’s full of useful insights and advice – the product of everything we’ve learned as a team since we took our first steps as entrepreneurs. We don’t expect that everyone will agree with everything we’ve got to say, but it’s all the product of our own first-hand experience.

 

Looking back on my own 17-year journey with my first company, Cake Solutions, I see so many things that I could have done differently. However, I’ve also learned that making mistakes is an essential part of growing a business. As Daniel Booth from Leonard Curtis Business Solutions Group put it in a previous podcast, “If you’re not making mistakes, you’re not trying hard enough.” We hope that our book will help our readers avoid some of the mistakes that we made, so that they can get on with making their own!

 

The book will cover a whole range of topics, including different funding options, preparing a pitch deck, and the latest investment trends. This week, though, I wanted to focus on the concept of “fast growth”, so I was joined by EHE’s Operations Director, Pete Evison, to talk through how to lay the right operational foundations to achieve a truly explosive rate of growth in your business.

 

Pete: “Operations is not overlooked, but it’s something that people don’t give enough consideration to. That side of the business can be built with people, but more so with technology, systems, procedures, culture. Ultimately, if you’re thinking of getting operational ready, exit ready or investor ready when you’re halfway through your fast growth, or just beginning, it’s usually too late.

 

What do we mean by fast growth?

When I first started Cake Solutions, I enrolled in a number of government-run business support schemes, providing free consultancy, training and other benefits. For the schemes, their barometer for a good rate of growth was a 20 per cent year-on-year increase across your most important KPIs – net profit, gross profit, revenue, EBITDA. At the time, I thought this sounded like a pretty impressive target.

 

Then I enrolled with the Strategic Coach Program. On the first course I took, Dan Sullivan told us that our target should not be to grow our profits by 20 per cent, or even to double them, but to increase them by a factor of 10. I’ll admit that the first time I heard this, I thought it was impossible. However, I soon came to realise that it was simply a question of having the right mindset; and this, ultimately, is what sets “growth” and “fast growth” apart.

 

What is a fast-growth mindset?

10x growth can sound like a big ask, but the first thing to understand is that you get to decide your own timescale. It could be two years, five or eight. The most important thing is that the goal of achieving 10x growth is always at the centre of your thinking. Once you’ve adopted this mindset, you’ll find yourself making different decisions and adopting different strategies than you did at 2x or 20 per cent growth.

 

In the last six years at Cake, we built all of our strategies around a fast-growth, 10x mindset. This gave us the ability to strategise at a higher level, achieving our goals more quickly without putting ourselves under too much pressure. In some cases, this resulted in 15x or even 20x growth across some of our most vital KPIs.

 

Of course, it isn’t enough just to set yourself an ambitious target. You also need the right structures in place to deliver. So, what are some of the key foundations that need to be in place to support fast growth?

 

Getting the right management team

For me, the management team is the single most important factor in developing a successful business. At EHE, when we’re assessing a commercial proposition, we look first at the founder and then the team that they’ve built around them (or will build once they’ve secured funding). What skills do they bring to the table? What are their experience levels? What gaps do they still need to fill?

 

Only once we’ve made these assessments do we take a view on the idea behind their business, because even the most game-changing innovation in the world won’t fly if it doesn’t have the right team behind it.

 

As Strategic Coach teaches us, every person has their own Unique Ability – that particular set of skills that define “what you love to do, and do best”. As a founder, your first, most important step is to recognise your own Unique Ability. It might be that your Unique Ability means you’re less suited to being a project’s CEO, but would be a better fit as creative director, in which case you’ll need to hire in a CEO from outside.

 

Leadership means being able to spot the gaps in your own skill set, and identify the right people to plug them. I know that financials are not my strength or my passion, so I’ve always made sure I can depend on a CFO who knows how to present me with the financial information I need in order to strategise effectively. With a diverse team around me, I know we’ll be able to meet the challenges that come with adopting a fast-growth mindset.

 

Assembling the right team also means finding colleagues who will help drive up standards and efficiency across the board – one of the keys to fast growth, as Pete explained.

 

Pete: “At Cake, we had the foresight to get a really good non-exec called Ian Brooks. He came in and really professionalised us very quickly. He had a little black book of contacts and said, ‘Right, we need this – I know somebody.’ This turned what would be two months of research into, ‘Bang! Job done.’…I can’t stress enough the importance of a non-exec. They pay for themselves.”

 

 Operational foundations for fast growth

As everyone at EHE knows, Pete Evison’s Unique Ability is knowing how to organise a business’s operational procedures to enable fast growth. On this week’s podcast, he shared some of the most important areas you’ll need to bear in mind.

 

Pete: “You’ve got to think about having the right HR system in place. Don’t hire an HR person; get an off-the-shelf system to do it for you, get an outsourced HR legal company to look after your contractual obligations. Get all that in place very quickly and let the system run it for you. Have you got access to cash flow data? If you haven’t, ask yourself why. And plug that gap, because the first thing that any investor is going to zoom in on is the finances.

 

Project management: are you on top of your clients? Do you know your customer sentiment? Are they happy, sad, fair-to-middling? Do you have some stats to prove this? Do you know how many people you need to hire to match your sales projections? What are you basing those numbers on?

 

Ultimately, an investor will want to look at your senior team, and your operational effectiveness, and say, ‘If I came in, would this business manage itself without the founders?’ That is the litmus test for your business. It takes a long time to get there.”

 

Watch this space

This is just a taster of what you’ll find in the book, which we’re sure will become your best friend on your fast-growth journey. EHE Capital Community members will be the first to hear news about the release, as well as having the opportunity to get their hands on a copy. Members also get access to a whole host of other assets, which will really complement the insights contained in the book, including guides and templates for pitch decks, presentations and business plans. Sign up today for all this, and so much more.

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