Business Growth’s Ugly Side: Manage the Challenges of Scaling

Business Growth’s Ugly Side: Manage the Challenges of Scaling

If you want to find out about the positive aspects of growth, it will take you about ten seconds to track them down. But what about the not-so-pretty aspects of growth?

Even good problems, like having to hire more people, require thorough preparation. Business growth isn’t linear and there is no step-by-step manual.

Tara Bryant speaking at SaaStr

This is why Tara Bryant, Pipedrive’s Global SVP of Sales, took to the SaaStr Annual stage in San Jose to talk about the four categories of the ugly side of growth: hiring, innovation, revenue model and international growth.

This guide to growing business challenges will help you set yourself up to reach all of your long-term goals and scale in a healthy and sustainable way.

Business growth challenge 1: people

When you’re trying to figure out your finances, people are the number one resource. The challenge with people comes in three categories: recruiting, productivity and culture.

Recruiting

Let’s face it, hiring is uncomfortable. That’s why you might want to delay doing it for as long as you can, which won’t help your growing business.

But here’s the cold hard truth: every person has their strength, and they have areas they’re not so great at. If you know hiring isn’t one of your strengths, even if you’re the CEO or the founder, let someone else handle it.

One of the most frequent hiring mistakes is making it an emotional decision. Our subconscious mind makes us hire people we like based on things that have nothing to do with the role they’re interviewing for.

To avoid this, follow these steps:

  1. Understand what the ideal candidate looks like: what are their strengths, skill sets, work history, track record
  2. Write down skills and characteristics
  3. Sort them into two categories: “must-haves” and “nice-to-haves”
  4. For things you don’t want in a candidate, divide them into two categories, too: “absolutely not” and “could-work-with”
  5. Build questions around the lists of skills and characteristics you end up with

As early as you can, ensure that multiple people inside your company interview your candidates, as it will yield the most complete and thorough hiring decisions.

Productivity

One of the recurring traits you might keep seeing in the desired skills and characteristics of your company roles is “ability to reach an end goal.”

Whether the goal is revenue, retention rate or lifetime value, you need people who use their time in an efficient way and value their commitments.

In other words, you need productive people who follow through—and there’s an easy way to test this.

Tara suggests saying this during the interview: “I’m interviewing five more people (even if you aren’t.) If you don’t hear from me by next Wednesday, call me at 2 pm.”

Whether they call or not will show you their discipline and commitment to their word, and the job. At the end of the day, you have goals to hit and need productive people to help you achieve them.

Culture

Culture is a really popular topic in companies these days, but what does it actually mean?

People you hire are either going to add to your company culture or take away from it, there is no middle ground.

You need people who will enhance your company culture. Don’t stick with a stereotype of a person that you have in mind as the perfect hire, hire diverse people, always keeping in mind whether they will add to your culture or take away from it.

There’s another way to think about culture: what is your company culture now, and what do you want it to be in the future?

When you’re just starting out, with three or five or ten people on staff, you might be at a point where your culture isn’t scalable. But what will happen when there are 500 people in your growing business? How do you want your culture to look like then?

Hire your core staff really well. That’s the level where everything starts. As mentioned earlier, make sure you’re hiring people that are strong in areas where you’re not. Don’t hire people who are exactly like you, but those that fill the gaps. They will move you through difficult stages of growth.

Business growth challenge 2: innovation

How can you always make sure you’re on top of your market, your customers’ needs and your product?

Innovation is critical, but it’s also an age-old chicken versus egg question. What is more important? Being product-led or being sales-led?

There’s no chicken without the egg and vice versa, so the answer is: you need them both.

The importance of marrying product and sales

You need to constantly be improving your product, as staying on top of innovation will improve your sales and revenue.

Sometimes, things start moving and you realize you’re selling your product without a sales team or with only a couple of people—that’s great, but it won’t scale.

A sales team will help you achieve higher lifetime values for your customers, helping customers understand your product in depth so that they know everything that your product can do for them and extract the most value from it.

From first impressions to being in the deep end of the product with the customer, your sales team fulfills a much larger role than just selling.

Tara mentions a situation when she was asked—for the first and only time in her career—to slow down the sales her team was bringing in. The product and the platform weren’t ready for the influx of customers.

This is when she asked herself: “How did the product team not know my sales goals, and how did I not know that they didn’t match up?”

Ensuring alignment in the organization is critical. Make sure everyone is building and operating cross-functionally rather than in a vacuum.

Whether it’s marketing or product, sales or finance, you all have to be scaling at the same level and everyone needs to know how their responsibilities and actions impact others.

Enable salespeople to share their learnings from the battlefield

Salespeople have the advantage of being in the trenches and knowing the field inside out. They understand what they need and want in order to bring in the best results, often better than their team leaders and executives do—it’s the benefit of knowing the terrain.

That’s why it’s important to empower sales teams to be heard.

You can create a shareable document for salespeople to add deals they’ve lost along with reasons. Say, for example, there wasn’t a feature or a functionality the customer wanted, you could make sure this information is accessible in a sales dashboard accessible to all your team members. They should also add reasons they won a really good deal.

Bucket this information into dropdowns (instead of allowing freewriting) so you can understand why you’re losing and winning deals. Add more into what’s winning and make adjustments based on what’s losing.

When a salesperson marks a deal as ‘lost’ on Pipedrive, a dropdown menu appears showing a selection of reasons that you can customize. Add reasons that will give you an insight into what’s helping you win and causing you to lose deals. You can then track these ‘lost’ reasons in the ‘Reports’ view on Pipedrive.

Every month, the head of product and head of sales should review the list together. When there’s won and lost revenue assigned to these entries, it’s easier to understand where to focus on.

This allows for sometimes painful, but important, insights such as: “We could have had an extra $2 million of revenue this year if we’d had this one feature.”

Take the emotion out of it and rely on raw data that speaks for itself. When you make sales people an important part of the company, you can grow in ways you haven’t thought of before.

Business growth challenge 3: revenue model

The creation of a revenue model is another reason why you’ll want to hire people with an excellent track record.

And that’s because there is such a thing as bad revenue. Many SaaS companies go through this: their revenue suddenly goes up, making their growth chart look like a hockey stick, but then it goes down.

Bad revenue might be that which comes from a customer who brings in $100,000 in a year, but costs your company $200,000 to serve and implement everything they need.

Sometimes, bad revenue is okay. Here’s an actionable way to look at it.

Think about your desired end state. Forget about where you are right now. Where do you want to be? Do you want to be in the enterprise space? Do you want to be the king or the queen of the SMEs?

It might be a market, a number, or an evaluation, but think about where you want to take your company. Then ask yourself: “What are some key pivot things that will get me there? What types of customers do I need to get there?”

For example, let’s say you want to get into the enterprise space. When you’re first starting out, that’s a really hard thing to do because huge players like GE won’t come in and talk to you when you have zero customers—or ten, or even a hundred. They’re not interested... yet.

However, if you do get involved with a company of that size, you will likely make a bad revenue deal. You will probably spend more time and lose some money on the deal, but it will help you get closer to the end goal.

Not all of your deals can look like this because you won’t be profitable. If about 10% of your deals are like this then that’s a great starting point. On a quarterly basis, review your deals to ensure they’re at the right revenue point and that you’re aware of the resources you’re investing in them so that you don’t crash and burn.

Be aware of what profitability means in terms of specific numbers for your company early on. Sit down with your finance team quarterly and get answers to these questions:

  • Which deals are profitable?
  • What percentage of our revenue is not profitable?
  • What percentage of our customers are not profitable?

Business growth challenge 4: international growth

Pipedrive started in a small country called Estonia; many other companies that later became massive (Skype may be the most famous) started there, too.

If these companies decided to only sell in Estonia, which has a population of just over 1 million, they’d never have become so big in their respective markets.

When you decide to go international, there’s a lot to be said about sales. Sales is easy, because it’s a mathematical equation and a numbers game: the more people you talk to, the more people you have meetings with, the more people moving through your CRM and the more people who see your demo, the more you’ll sell.

Tara tells a story about one of her first sales jobs where she spent her days on the phone and, as you can imagine, she was getting ‘no’ for an answer—a lot. But every time she got one ‘no’, she was happy and marked a check on a post-it next to her.

The reason she loved it? In her own words: “I never got a hundred checkmarks without getting a yes. Each ‘no’ meant I was a checkmark closer to a ‘yes.’ It’s a numbers game!”

International growth follows the same approach. If you can grow internationally, do it quickly and do it right. What does right mean? It means understanding differences across cultures and currencies and talking to a specialist who has helped other companies achieve the same.

Even though sales is a numbers game, it’s also a challenging one. It’s hard coming in and getting rejected every day and being hung up on all the time.

We now have offices in Estonia, Portugal, United Kingdom, United States and the Czech Republic, and we serve over 90,000 customers across the globe.

So if you power through the tough times, it pays off—we promise.

Claw yourself over the tough side of growth

There are no shortcuts. There’s no playbook that will help you skip the bumps on the road to growth and scalability.

This means that your founding team members might not be able to grow with you and they’ll resist changes. As a leader, you have to be ready to recognize this and make difficult decisions at times.

Make sure you don’t fall into the trap of making huge deals and bringing in revenue that hurts your business in the long run. If you have to make them, keep them at 10% of your total revenue or less.

Finally, remember to stay true to the original reason you started your company—hopefully, it came from something organic and from your own problem you wanted to solve. At the end of the day, it’s what will make this rough road of growth that much easier!

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