5 months ago by

Lessons for Scaleups on Balancing Finance

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Vanessa Jackson, Founder of our HR ​team was recently invited to speak at GC Angels Balancing Finance event. She joined a stellar panel to speak to a room of scaleup business owners on the importance of cashflow in business growth and making sound financial decisions. Learn from the mistakes she's seen many scaleup businesses make and read her top takeaways on how to make the most from investment.

Last night I was privileged to be invited to speak at the ‘Balancing Finance’ event, the next in the ‘Smashing Barriers’ series organised by the fantastic GC Angels, in collaboration with EY, and held at their stunning offices in St Peter’s Square.

The event focussed on the many pitfalls that present themselves to early stage tech businesses and founders when it comes to cash flow and finance. As a business owner, who’s successfully grown my business year on year since 2012, I understand cash flow and its pitfalls firsthand. I was joined by a stellar panel of speakers including Amy Whitell, Founder of Collctiv, Sam Patchitt, Founder of Finstant, Viv Parry, FD, NED, and mentor and Louise Leung from EY corporate finance division. Speakers discussed the significance of getting a grip on your business's financials, especially when it comes to raising and managing investment, presenting your business in the best possible light to would-be investors and ensuring it survives in the long term.

I started my career in corporate HR & Recruitment and transitioned into HR recruitment consultancy before founding Adam HR. As a team, Adam HR have placed over 1000 HR & Recruitment professionals throughout the UK and in the last 5 years we’ve recruited extensively within the tech and investor lead space, both placing talented individuals, and most importantly, advising businesses on what roles to recruit and when to hire.

Finding the right people, and releasing their potential, are the most important part of growing a business, but also the most complicated to get right. Hiring costs and paying salaries can have a massive impact on cash flow (and therefore the likelihood of your business’ survival) and it’s an area many business owners do not plan for properly.

Here’s my top takeaways from last night’s event to help you navigate the challenging world of balancing finance.

Engage a finance specialist

Cash is absolutely king, and you need to have a clear picture of cash flow within your business. It may be that you don’t need an FD immediately, but you should engage a consultant or accountant to help you understand the numbers, plan for growth and create systems to track your finances.

The right finance support is instrumental in increasing productivity & reducing operational costs. If you have or want to access a loan or investment, you’ll need to report regularly, so plan for finance support from the start and have regular conversations with a specialist to make sure you're always clear on the numbers. Seek to engage too with finance professionals with prior experience of investor led businesses, they’re uniquely placed to advise & add value from the get go.

Patterns of mismanagement

When a business is north of 40 people, the casual, informal “do what it takes” culture that worked so well to get the businesses from start up to scale up can become chaotic and ineffective. You need to have a robust strategy around workforce planning, culture, training, engagement, processes, and procedures. Without them you’ll struggle to progress much further, could stagnate or even worse, start to decline or fail.

We’ve seen many instances of mismanagement over the years that caused expensive and damaging financial mistakes. For example, a leading top 50 tech business in the North West who quickly scaled to 80 people and then benched two project groups of 15 developers, paying them monthly without any work to complete due to the hope that a tender would be won. We’ve also seen a FinTech business who failed to recruit the right senior leadership team. They had no cohesive strategy and their people management was horrific. Engagement throughout their team was dismal and attrition was sky high leading to a Glassdoor rating of 1/5. The cost to their reputation and cashflow was monumental.

Both examples could have been avoided through effective planning and ensuring the right people are in place to guide the business forward.

What do successful businesses get right?

There are three important rules to run a successful scaleup business from my point of view:

1.Make sure you’re able to demonstrate to investors the product / commercialisation roadmap

2.Have a defined people strategy that’s in line with your roadmap

3.Have a detailed budget and review it frequently to make sure you stay on track

The most successful businesses engage a people specialist to help plan that roadmap in detail. Whether that be an HR Director with experience in this area or an external recruitment partner. It helps them understand who to hire and when, the key skills they need, what they need to be paid and how long it’ll take to bring them in. Without this information it’s almost impossible to plan effectively or budget for growth. Most importantly, with the right plan you know what people are hired to do and what success will look like for them. It makes sure you get the recruitment process right from the start.

Once you’ve recruited a team, onboard & manage them properly. Hire, engage and retain is our mantra. Getting it wrong results in high staff attrition. It’s an expensive problem. A report from Oxford Economics stated that replacing an employee on average costs £30,614 per employee. We’ve seen it far worse than that too and have recently written about the true cost of attrition on our blog. It impacts output, team morale, client relationships, project success, costs of rehiring, management time. The lists is endless.

A considered people strategy developed in line with your product and commercialisation roadmap ensures your able to navigate through these challenges and put the business on the path to growth.

To learn more about developing your people strategy, I’d be happy to talk you through the key areas you need to get right. Contact me on vanessa@weareadam.com or call 0161 359 3789.