Congratulations! You have hit the $100M mark. Your company is ready to move past the development stage into sustainable growth. It is time to invest in sales, marketing, talent acquisition, and sustained product innovation.
To build an enduring company, you need to continue to meet the evolving needs of your current customer and gain ground in tight markets. You need more than just hype, publicity, or impressive fundraising skills. Your company must continue to generate stable revenues, and maybe some profits.
The ability to think outside of the box and risk taking is the one trait successful entrepreneurs have in common. However, those same traits can hurt and stunt growth as your organization matures. Large organizations need a steady hand. Unrestrained whims can impact the business systems needed to sustain a $100-million company, sending your already hard-working employees down some very expensive rabbit holes.
Founders need to build a team that is amazing at what they do, an A-team. The faster you hire the best people in their respective fields, the more quickly you will grow. Ultimately, the idea of a maverick who is a one-person innovation machine must be tossed aside. As your organization grows, you must find creative solutions alongside your employees. Trust your employees for sage advice and lean on them to execute in order to carry the company further than any one person can do alone.
Creating a predictable revenue engine can be painful and even tedious. It requires alignment around the product, marketing, customer service, sales and operations to create a closed-loop around the customer. While breakout growth is tempting, successful companies invest in maintaining product-market fit before investing in expensive, large-scale marketing programs.
Predictability is king, and impatience is not rewarded in the long run. Now that you have fine-tuned your product, scaling up and expanding revenue streams is your next step. We all know — and want to avoid — a fate similar to those of MoviePass and WeWork.
The path to sustainable growth relies as much on repeat business as it does on new customers. Your marketing budget should focus on improving the customer experience in ways that will increase satisfaction (thus loyalty), drive revenue for the company and optimize marketing costs. In the end, companies should think just as much (if not more) about their current customers to accelerate growth.
Human behavior is difficult to predict. Always test, even if you think something is a no-brainer. Test messaging, target segments, creative, customer experience, and make changes as needed. We have been surprised many times by test results of both “horrible” and “great” ideas.
There is no hard and fast rule for setting your marketing budget. Depending on the industry and target, budgets can range from as little as 1% to as much as 35% of projected revenue. In terms of budget allocation, focusing too much on acquisition can actually hurt the company in the long run – while necessary in the early days. Test your way into the right mix of channels for both acquisition and retention.
It is a balancing act. You have to stand out. You have to be hot but reliable. You have to be on trend – and lead your pack of competitors… And you cannot be full of hot air.
Gordon Gekko was focused on the short-term when said, “Greed is good,” in Wall Street. It is tempting to focus on short-term gains or to offer wildly optimistic growth projections to attract investment. However, working closely with your most important stakeholders is paramount to your long-term success. Investors have long memories. Over-promising and under-delivering can be fatal.
Uber is one of many cases of hype-meets-reality. With its lofty fundraising and press accolades, it was the opposite of forgettable. But things got rocky right before its IPO, and only rockier afterward as public investors realized they’d been sold a bill of goods. However, it is possible to weather the storm with the right team. Case in point: Facebook’s recovery from a tough IPO, by focusing on execution and managing investors’ expectations.
You already know when you need to do: focus on steady growth, diversification, and expanding your market. The key is maintaining a great reputation. This means doing exactly what you said you would do.