Why Growth Companies Have to be Data-driven
Fast growing companies often make decisions quickly and challenge old truths, ideas, and concepts to constantly optimize their business and create growth opportunities. They usually reinvest all their cash flow to continue to create progressive growth, which means that these companies must have an agile and data-driven work process to keep a close eye on their KPIs and figures – they must constantly have access to continuously updated data that simplifies quick decisions and optimizes available capital for continued growth.
In this article I'm going to talk about why it's so important for growth companies to be data-driven and to invest for the future rather than the present.
Increase Accountability – Become Data-driven
Increasing the ownership of targets and forecasts is important for any company that wants to create a high performing business, but especially for companies that are constantly changing and experiencing rapid growth. You must be able to make new decisions quickly, which sets high demands on the business support processes and systems used to quickly analyze and understand how the whole is affected by these decisions. For example, from a financial planning perspective this could entail instantly being able to see what impact said decision would have on the P&L and cash flow.
To build this type of understanding and to directly be able to see the financial effects, it’s more or less a demand to have a data-driven work process. When it comes to financial planning and management you can’t rely on an accounting-based process. You need to work with KPIs and budget drivers to see what changes drive revenue, costs, earnings and cash flow, and what effect it has.
With a data-driven work process where everyone involved feels a high sense of ownership of targets and financial forecasts, you get a more committed and transparent organization. It becomes easier to work towards the same strategic objectives.
Dare to Invest for the Future
As mentioned earlier, good and customizable systems that support growth companies processes and businesses becomes more and more important, but many companies still haven’t taken the step to invest in appropriate systems. Surprisingly, many growth companies “under-invest” in processes and systems that enable data-driven work, which gradually creates obstacles to continuing to be a fast-growing and agile company where everyone feels a high level of commitment. This is usually due to the fact that many companies have the perception that they are not big enough, or that their processes are not yet static enough for that type of investment. Therefore, they postpone these important decisions.
My recommendation as CEO of a growth company, with a lot of experience in optimizing the financial planning and management, is to dare to make investments that shape you for a greater future early on – to start working data-driven and with a high level of commitment and accountability as soon as possible. You should implement data-driven systems (business management, business intelligence as well as financial reporting and planning to name a few) that can grow together with your business and support your journey and continued growth.
Many growth companies make decisions based on their current size which only simplifies their business short term. Since you want to continue to grow considerably this should, logically, be reflected in the investments you make today. Investing in systems suitable for smaller companies is counterproductive. It will slow down the development you want the systems to contribute to and you will have to make a new decision about a new system fairly quickly.
Planacy Loves Growth Companies!
Even if many systems for financial planning often target larger and more “well-established” companies, there are those who offer subscription-based models for “smaller” growth companies too.
Planacy itself is a growth company with big visions, and our employees have extensive experience of working with like-minded companies. Trustly, Vitamin Well, Foodora, EasyPark and Fyndiq are all examples of Planacy customers who use our platform to simplify and streamline data-driven and continuous work with financial planning.
We are convinced that the earlier a high-performance growth company invests in Planacy, the better the chances of achieving full-scale success. Therefore, we want to support you on your growth journey and offer a Growth License with up to 50% lower price for fast-growing companies. Read more >>