Michael Bannon’s Post

Is your growth real or just to attract investors? I’ve seen many companies excitedly predict growth, projecting from 10% to 50% year-on-year and aiming for unicorn-level valuations. But before setting those big targets, ask yourself: What will it take to get there, and is it worth it? Growth isn’t just about increasing sales; it requires the right infrastructure, capacity, and resources to support it. I’ve worked with companies that trying to secure funding, only to find that scaling up meant unexpected costs, more hiring, increased production, better logistics. These costs can eat up cash faster than expected if not carefully planned for. The result? Cash flow pressures, a business struggling to keep pace with its ambitions, and, even worse, the loss of investor confidence when the company fails to deliver on its promises. It’s important to remember that sometimes, rapid growth can even destroy value if the ROI isn’t high or the business isn’t capital efficient. When planning your growth: • Understand your ROI: Will your investment in growth yield enough returns to make it worthwhile? • Evaluate capital efficiency: Can your business sustain growth without excessive capital? • Include growth costs in your valuation: Know what it takes to move from point A to point B and factor these expenses into your plan. You might discover that certain growth projections could reduce long-term value instead of creating it. Is your growth plan ready for a reality check? Let’s discuss. #GrowthStrategy #InvestorTrust #SustainableBusiness #FinancialPlanning #FractionalCFO

One of the most common misconceptions among founders: ”Cutting spend = not investing in growth.” There are two buckets: 1. Inefficient spend today 2. Transformative opportunities tomorrow Take capital out of the first and move it into the second. Cutting spend today isn't about not investing in growth. It's about building a capital base to invest in better opportunities tomorrow. Many companies were built in an environment where capital was (largely) free. Founders were raising tons of capital and spending it quite aggressively. But that environment no longer exists. Interest rates rose, the stock market corrected, and capital is much more expensive now. This has created a new level of discipline. Now you only spend capital on things that: → Have a definable ROI  → Are lucrative to your business If you can’t get capital externally, you have to get it internally by running a more efficient business. So cutting costs is actually the instalment of banking capital to pursue more transformative opportunities in the future. You shouldn’t see it as waving the white flag on growth. You should see it as the first step towards creating capital to grow in the future.

Insightful and informative thoughts from @larry cheng

Are you building for growth that hasn’t arrived yet? Many growth-focused businesses make the mistake of raising large amounts of money and sinking it into fixed costs—like manpower service hours, ground space, large teams, or infrastructure—before they have the demand to justify it.  While it seems like preparing for future growth, this approach often backfires if revenue doesn’t scale as expected.  Fixed costs don’t adjust to reality, leaving companies with cash burn they can’t manage and a struggle to stay afloat. The old school approach is to grow alongside real demand and investing gradually to ensure long-term sustainability. 3 identified root cause for these are : 🔹Excessive investment in fixed costs before validating demand or revenue growth. (this is quite delicate, since what classified to be variable could turn into fix cost eventually) 🔹Scaling too fast can lead to unsustainable cash burn if demand doesn’t catch up. 🔹Focus on sustainable growth by aligning investments with actual, proven demand. P.S what's your number 4 on driving the managing growth ?

10 questions I ask of any investment. They’re also the questions I asked of my own business regularly, before I exitted… for what was one of the highest multiples in our industry 👊😑 And I don’t say that as a flex 💪 I say it as proof of what can happen if you can give a strong YES to each of these questions…. #1 Is this business essential? Is the product or service provided by this business something people or other businesses cannot live without, even during economic downturns or crises? #2 Does it have a competitive advantage (moat)? What is the company’s “moat”? Does it have a strong brand, loyal customers, intellectual property, or economies of scale that give it an edge over competitors? #3 Is the business scalable? Can the company grow significantly without a proportional increase in costs? Will it benefit from economies of scale as it expands? #4 Is it recession-proof or resilient in crises (e.g., pandemic-proof)? How did this business perform during past recessions, and how did it fare during the COVID-19 pandemic? Does it rely on discretionary spending or can it maintain demand even in tough economic times? #5 Does it have strong financial health and cash flow? Does the business generate consistent, predictable cash flow? Is it profitable or on a clear path to profitability? What is its debt situation? #6 How strong is the management team? Are the leaders experienced, and do they have a track record of success? Do they own significant equity in the business, aligning their incentives with those of shareholders? #7 What are the barriers to entry in this industry? How difficult would it be for competitors to enter the market? Does the company operate in a highly competitive industry, or does it have protective barriers like high capital requirements or regulatory hurdles? #8 What is the company’s growth potential? What opportunities does the business have for future growth? Are they expanding into new markets or developing new products? #9 Is the business adaptable to changes in technology or market conditions? Can the company innovate and pivot if industry trends shift or new technologies emerge? How does it respond to disruptions? #10 Is the valuation reasonable? Based on its current and projected earnings, is the company priced fairly? Is the potential return on investment worth the associated risks? These could be good questions to ask of your own business, regardless of where you are in your journey 🙏

Being understood by people for what you do is really tough, do you find the same thing? People all have a different perspective and look at you through different lenses which you have to understand. We’ve been pushed by the trends to try and describe how we help people, so the words ‘transformation’ and ‘growth’ have become buzz words for every service available! In my case, I help SME business owners with investment and buyout… plus I help large organisations with transformational changes to their companies… but growth means either growing the revenue or growing the profit, and transformation means making significant changes to the business to help with strategic growth, revenue or profit. And as all human beings we only know what we know, so how do we let people know what we do when they don’t understand what we do!? Getting the message across in a clear and simple way is one of the greatest challenges most businesses face! StrategyFred: Investing & buying into retiring SME companies 7Q Ltd: Transformation Governance CREATIVE in TiME: Digital Marketing #messaging #growth #transformation

Experiencing rapid growth can be both exciting and overwhelming for small business owners. While growth signals success, it also brings unique challenges that, if not managed carefully, can disrupt operations and strain resources. To thrive during periods of rapid expansion, it’s essential to focus on a few key areas: 1. 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁: Rapid growth often demands significant investment in inventory, staffing, or infrastructure. Regularly monitor your cash flow to ensure you have enough liquidity to cover expenses without compromising other aspects of the business. 2. 𝗦𝗰𝗮𝗹𝗮𝗯𝗹𝗲 𝗣𝗿𝗼𝗰𝗲𝘀𝘀𝗲𝘀: What works for a small team may not work for a larger one. Assess your current processes for handling operations, customer service, and sales, and look for ways to scale them effectively. This might mean investing in new technology or outsourcing certain functions to free up internal resources. 3. 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗦𝘁𝗮𝗳𝗳𝗶𝗻𝗴: As your business expands, hiring the right talent becomes crucial. Focus on adding team members who not only fill immediate needs but also align with your company’s long-term vision. It’s not just about filling positions; it’s about building a team that can grow with you. 4. 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁𝗶𝗻𝗴: Growth brings unpredictability. Implement regular financial forecasting to anticipate upcoming needs, whether for capital, inventory, or other resources. This foresight can help you stay ahead of potential challenges and seize new opportunities. Growing a business isn’t just about reaching new milestones; it’s about sustaining that growth and building a foundation for long-term success. Don’t let rapid growth catch you off guard—prepare for it strategically. Ready to take your growth strategy to the next level? Let’s talk about how the ZenStrategies team can help you navigate rapid expansion and optimize your business for the future. #BusinessGrowth #ScalingUp #CashFlowManagement #StrategicPlanning #SmallBusiness #GrowthStrategy #Entrepreneurship #CFO #ZenStrategies #FinancialForecasting

🚀 Growth Doesn’t Happen by Chance—It Happens with Strategy! 📊 At Cogniten Advisory, we know that sustainable growth comes from well-crafted plans and informed decisions. We help businesses identify opportunities, optimize operations, and build strategies that align with their unique vision. Whether you’re a startup looking to scale or an established company aiming for new heights, we’re here to support you every step of the way. Our team’s expertise in finance, HR, and IT ensures a holistic approach that delivers real results. 📈 Ready to take your business to the next level? Let’s turn your ambitions into a clear roadmap for success! Reach out to us today. #CognitenAdvisory #BusinessGrowth #StrategicPlanning #FinancialAdvisory #AchieveMore

Business growth is crucial because it improves revenue, expands the market, and drives profitability. This all helps a company’s long-term success and ability to stay competitive. It allows businesses to invest in new ideas, offer more products, and enter new markets. While also creating jobs and making the company stronger against economic ups and downs. Steady growth builds a company’s reputation, drawing in more customers, investors, and talented people, which all help drive its success and leadership in the industry. #SmallBusiness #Growth&Expansion #NeverGiveUp

Thinking like an investor can give precision and urgency to growth projects and focus them on the goal of increasing enterprise value. In PE and M&A, this is called the “deal thesis” — a plan for investment, cost cuts, commercial actions, and organizational change — that should produce a big increase in the value of the company. You want to make sure that individual business unit plans support and advance your value-growth thesis. You also want to favor ideas with the highest return on invested capital, because not all growth is equally valuable in its impact on shareholder value. One way to bring the enterprise perspective into the room is to include people from different divisions in a business unit’s “growth diligence” team who are the experts in particular functions and industries. This can also be a great opportunity for high-potentials to show their stuff.