Once the company has completed its first commercial sales, scaling and growth are next.

In Norway, approximately 650,000 businesses are registered. Less than 2% have more than 50 employees, and less than 1% have more than 100 employees, according to Statistics Norway. In other words, many businesses plan for growth, nationally or internationally, without success. Growth and scaling are demanding, the intensity of competition is increasing, and the company faces completely new challenges.

Both established players and technological, fast-growing companies do not achieve the desired growth. Often this is due to a lack of market penetration, internal conditions or other challenges that arise from international establishment and growth. Many questions and opportunities arise when you have to scale the business for greater volume, nationally or internationally.

• How to get more customers to use the product?
• Which markets should be prioritized?
• What skills does the team lack?
• How to organize to support growth ambitions?
• How to handle a growing customer base?
• Which partners do we need to grow?

 

Factors for success

Many companies experience periods of strong growth without having established an organization to support the growth. The growing pains can become visible in the form of shortcomings in the delivery model. There may be limited internal capacity or issues with subcontractors. Missing structures and systems within the organisation can also become visible. This leads to many manual processes, lack of control and increased risk.

Capital management and measurement of the business in several dimensions are among the areas that are central to the growth phase. Very often, companies lose control over financial management due to a lack of scalability in accounting and financial functions. At the same time the complexity of the organizational structure and environment increases. This can cause the decision-making basis to disappear in large volumes of data.
As a result, strategy may lack necessary prioritisation and adjustment. Some companies fail to establish management systems that reveal why growth is not happening. As a result, they rely on gut feeling and untested hypotheses.  A lack of financial management reduces the likelihood of succeeding in long-term growth.

Companies expanding into new geographical areas may lack internal control and structure.
This can cause problems with measuring performance and ensuring accountability within the organisation. Establishment decisions are often made without involving the CFO. This means tax and duty consequences may not be properly assessed. Opportunities in the ERP system may be overlooked and financial risks might not be evaluated thoroughly. Adjustments in the organization happen reactively and can slow down the company's growth.

These are examples of questions you, as managing director, may be challenged on. Developing a tailored management system is essential. It should include key performance indicators relevant to the company’s goals.
This helps maintain stakeholder trust in the managing director. The company’s management system should have a holistic approach and be used continuously to measure and adjust the company’s development. This is a time-consuming task if done manually.

The need for support systems and administrative assistance increases further during the market entry phase. Any organisational “debt” becomes increasingly apparent. Systems are often inadequate.
This can lead to critical weaknesses in the business model being discovered too late.
It may also result in excessive time and resources spent on administration and follow-up. This can have unsustainable consequences.

Examples of services provided by BDO’s industry team:

• Accounting, CFO and legal services
• Support with business model development, including pricing strategy, market strategy, and delivery model, etc.
• Establishment of management systems and automated dashboard reporting
• Capital planning, including assessment of financing options, support in share issue processes, and grant application writing for public funding
• Assessment of loan capacity and assistance with loan applications to banks or public funding bodies
• HR services / HR partner support
• Support with business reviews and monthly evaluation of company performance
• Collaboration agreements and contracts with customers and suppliers
• Tax and VAT assessments of the business model

Financing growth

When scaling, several financial and ownership issues often arise:

• Should the business be sold in whole or in part to someone who can assist with growth?
• Which organizational structure should we choose for international establishment? Should we grow through acquisitions and if so how will this be financed? Which assessments should be the basis for acquisitions/mergers?
• What form of financing should the company have for the various parts of the business?
• Which employees are important for the company's further growth and how can we ensure that they are tied to the company?

 

Helping you

We can assist you whether you need a sparring partner or need practical assistance with growth and scaling. Examples of what our advisers can help you with:

• Establishment of business abroad
• Tax law clarifications
• International accounting
• Financial management for good control of units, departments and projects
• Profit calculations and profitability analyses
• 'Beyond budgeting' and activity-based business management
• Capital planning and liquidity management
• Growth strategy, and "health check" of the organization
• Financial audit