Growing Smart

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Mid-sized companies in Canada are thinking big. As it was reported in our June 2014 survey, the American Express Survey of Mid-Sized Companies1, 57 % of Canadian decision makers said they expect their business to grow regardless of the economic climate. Similarly, 34 % have an even more positive outlook, saying they see the economy improving and expanding opportunities for their business. Growth may be welcome in any economy—but growing right means growing smart.

When putting together a comprehensive growth plan, you may want to focus on reducing costs and mitigating risks. Here are some suggested tactics.

Using Data to Mitigate Risk
In the post-Moneyball era, leveraging data for growth may no longer be optional—it can be table stakes. Planning for growth without the right data could be unnecessarily risky.

“Too many decisions are made on gut feelings,” according to Lee Swinerd2, Director of Turnaround and Transformation at KPMG UK. “They don’t have quality financial data that tells them what’s not working.” In these cases, Swinerd said, running out of cash is often the first indicator that something’s wrong—and that’s a mistake no business can afford.

Swinerd, who previously established KPMG’s US Restructuring practice and is an expert in helping global mid-sized companies optimize their cash flow for growth, noted that reliable, accurate data may be crucial to forecasting for expansion initiatives.

If your business sees data as just another analytical marketing tool, then you might be missing out on one of your biggest opportunities to prepare for major growth. Harnessing and understanding your business’s data may be important for knowing where your money is going, as well as driving process improvements, increasing forecasting accuracy, and achieving tighter control of cash flow.

Investing in the Right Tools to Support Growth
For many mid-sized companies, investing in next-generation technologies has been an important strategy to help drive performance3. Enterprise Resource Planning (ERP) solutions can record, manage, and distribute important data across multiple aspects of your business in real time. Integrating data from your supply chain with payables and receivables--among others--can help identify the strengths and weaknesses of your business. You could also be able to see where your cash is coming from and where it’s going--important data when preparing for major growth initiatives. Easier access to actionable data means it may not take long to see an ROI on your ERP.

Just like a good ERP, having a robust Customer Relationship Management (CRM) system might also help your business. These platforms collect useful data at every stage of the customer’s involvement, promoting a healthy cash flow by processing orders, tracking payables and receivables, and collecting payments faster.

How Innovation Can Drive Growth
Like big data, investing in technology (such as mobility solutions) may be just as critical, and high growth companies are taking notice. It’s easy to see why things like a robust mobile platform can help your business scale at a much lower cost, and could help drive growth in developing regions such as Africa, where many consumers use cell phones to make or receive payments4. Plus, mobile platforms for internal employees can be useful for managing expenses, tracking fraud alerts, enhancing productivity, and staying connected on the road.

But Canadian companies might want to keep in mind that they’re behind their global peers when it comes to innovation. The Boston Consulting Group’s list of the Most Innovative Companies hasn’t included a Canadian company since 2010, and according to their survey, only 4 % of Canadian executives rank themselves as strong innovators5. It may be time for Canada to be as aggressive in driving innovation as other economies like China and India.

Getting Expert Assistance
More money can mean more problems. For high growth companies, solving those problems often means seeking outside assistance. One place where it can pay to seek help is in navigating new tax territory, especially if your business is expanding overseas. Having a great accounting team and the help of experienced tax attorneys can be a lifesaver when navigating these and other new challenges that come with high growth. But don’t stop there, you could also bring in outside auditors. You may have a strong internal finance team, but an independent firm can provide indispensable knowledge as you’re growing.

Swinerd noted that some companies don’t seek assistance until their situations become dire. “The earlier you reach out to a firm like KPMG, the better off you are,” he said. “Once you’re in crisis territory, you’re operating with one hand tied behind your back.”

The Takeaway
Canada’s mid-sized companies have more opportunities for growth than ever before, but too much too soon may hurt your business. You might want to place data at the core of your growth plan, make sure you’ve got the right technology in place, and get help from the experts before implementing any major growth initiatives. It could take a little longer and cost a little more upfront, but that’s a small price to pay for stable, sustainable scaling.

To find out more about cash flow management, growth strategies, and preparing your business for new challenges, visit business.americanexpress.com/ca.

Sources
1. The American Express Survey of Mid-sized Companies was completed online among a sample of 200 financial decision makers in Canadian mid-sized companies. Interviewing was conducted by Ebiquity Research between June 2 – 19, 2014. Aside from Canada, the survey was also conducted in the U.S., Mexico, Germany, the U.K., Australia and Japan.

2. Personal Interview of Lee Swinerd, Director of Turnaround and Transformation at KPMG, UK, October 20, 2014.

3. Gary Sturisky, Keeping the Middle Market Growth Engine Humming: Three key growth drivers to consider, CorporateValue.net, May 2013.

4. Emerging Nations Embrace Internet, Mobile Technology, PewGlobal.com,
February 13 2014.

5. Tavia Grant, Canadian Companies Lag Global Peers in Innovation, TheGlobeandMail.com, October 28, 2014.