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3 Tips as You Scale to the Next Phase of Your Business | Entrepreneur

3 Tips as You Scale to the Next Phase of Your Business | Entrepreneur

طوبیٰ Tooba 8 months ago 0 2

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Twenty years into my career in finance, I decided to take a leap and start my own boutique investment firm. The first three years were all hands on deck. I was so busy building the business that I didn’t have the opportunity to look ahead.

Seemingly, in the blink of an eye, I had established my business, and new questions began to arise. Where did I want to take this business, and how could I identify my next step toward growth? Did I want to evolve my business model or explore a joint venture to accelerate growth? Did I have a succession plan? I felt the tenor of my conversations shift, and soon, I was making major decisions about the next phase of my business.

Through my journey, I have learned that my experience was fairly common. Three to five years into a steadily growing business is often a key inflection point for those looking to scale, either from a small to midsize company or from a medium to large company.

I found this period of growth to be exciting but overwhelming. After all, there’s no step-by-step guide for building and growing a business, and it can be even more challenging for diverse, first-generation founders.

There are three important things to know to guide you through this pivotal stage: the importance of long-term strategic planning, why capital management needs to be proactive and how the right team can help your business reach new heights.

Related: How Your Business Can Be Ahead of the Curve by Looking Backward and Thinking Forward

1. Shifting to long-term strategic planning

As an entrepreneur, I know it can be tricky to take a long-term view. I find many entrepreneurs get caught in the same trap I did, putting out fires and addressing immediate needs–like making it to the next year, hiring more employees and managing cash flow–but neglecting the development of a comprehensive strategic plan.

Between three and five years in business, it’s critical to think about both medium- and long-term goals to keep your business moving in the right direction. Ask yourself honest questions about your future desires and priorities.

  • In the medium term, think about the most effective ways to establish growth over the next three to five years:
    • Will you grow primarily through organic expansion, or will you pursue strategic acquisitions?
    • Will you increase your physical presence, either by opening more locations or expanding to new regions?
    • How will you invest in your workforce and infrastructure to support your expansion?
    • Are there any emerging challenges that may become more urgent over time?
  • In the long term, it may be helpful to think about broader strategic questions such as:
    • How is your industry evolving? Do you have access to the right insights to anticipate changes or potential disruptors?
    • How will your company stay ahead of your clients and their preferences?
    • How long do you intend to own the company? If you see a sale in your future, what is the best path to monetization?

Related: Why Long-Term Strategic Planning is the Lifeline Your Business Needs Right Now

2. Capitalizing for the future – not just for now

With your plan in place, you’ll need to align your capital strategy to help you achieve your goals and capture opportunities by ensuring you have enough at the right time.

According to our 2023 Midyear Business Leaders Outlook survey, 76% of midsize companies expect their capital expenditures to increase or remain the same as in 2022. But all too often, entrepreneurs wait until the moment they need capital to seek it, and it might be too late to realize the opportunity in front of you. That’s why it’s essential to implement advanced planning to gauge expected capital needs over the next several years.

Look at your projections and any major investments already included in your plan. Then, consider the macroeconomic environment and whether you may need additional capital to bolster the business later. Work with your banking team to understand your options – now may be the time to raise equity or seek debt financing.

I’ve seen some business owners struggle with these decisions. For some, the idea of parting with equity is challenging despite significant opportunities ahead. But the most important priority should be sustainably capitalizing the business — positioning you to weather any future storms.

As you navigate this process, having a team of experts can help steer you in the right direction.

3. Building your all-star team

Around this time, your role as CEO may start to shift. The larger the business grows, the more you’ll see value in bringing in experts to help it evolve.

I recommend spending time reflecting on your own career to understand where you excel and identify areas where you could benefit from additional expertise. Using those insights, you can build a team with a diverse skill set so you’re not over-indexing in any particular area.

Here’s my suggested approach:

  • Build a strong circle of third-party advisors, which includes your bankers, legal counsel, industry analysts, marketing and communications advisors and executive coaches. This circle should bring valuable advice and relationships to help the business grow.
  • Consider adding sector expertise that’s adjacent and relevant to your business, such as cybersecurity, customer acquisition, and artificial intelligence.
  • Aim for experts who have taken a business from start to finish and weathered multiple business cycles.

With these crucial roles, you can devote yourself to scaling your business.

Reaching the three-to-five-year mark is both a pivotal and exhilarating time to be a business leader. With clear long-term goals, a proactive capital management mindset, a fresh perspective of your role and a strong team of experts behind you, you will be prepared to take your business to the next level.

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