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

In Norway, approximately 650,000 businesses are registered, of which 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, lack of capacity internally or with subcontractors, or there may be missing structures and systems within the organisation. 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, while at the same time the complexity of the organizational structure and environment increases. This can lead to the relevant decision-making basis disappearing in the amount of data and the necessary prioritization and adjustment of the strategy missing. Others have not succeeded in establishing management systems that make visible and explain why the company's growth is not happening, and therefore manage on gut feeling and hypotheses. A lack of financial management reduces the likelihood of succeeding in long-term growth.

Companies that establish themselves in new geographical areas without the necessary internal control and structure will be able to have problems with both measuring and holding people in the organization accountable. Decisions about establishment are often made without the involvement of the CFO, and thus without sufficient assessment of tax and duty-related consequences, evaluation of opportunities in the ERP system and financial risk assessments. 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 and maintaining a tailored management system with the most important key performance indicators is crucial for maintaining 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, and any organisational “debt” becomes increasingly apparent. It is not uncommon for systems to be inadequate, which often leads to critical weaknesses in the business model being uncovered too late, as well as disproportionate time and resources being 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