INDEED, WHEN TO SCALE, AND HOW FAST?


INDEED, WHEN TO SCALE, AND HOW FAST?

Well, if only all entrepreneurs knew the right answer to this question! Knowing the perfect time to scale your company to that right extent requires a data-driven approach. You can make better decisions by measuring the revenue growth and the measurable expectations at each stage.

If you are wondering about how you can measure the growth at each stage, do checkout the FaceValue Application. It’s a simple and straightforward tool to analyze and decide on the measurables that will indicate the progress of your company at every scaling stage. 

What’s the right time to scale your company again?
According to Mark Roberge, Managing Director at Stage 2 Capital, there are three main stages for driving revenue:

  1. Product-Market Fit
  2. Go-to-Market Fit 
  3. Growth and Moat

At each stage, he stresses the importance of forming a systemized approach at every stage of growth and concentrating on the important things to scale faster.

Whenever we talk about a company, we primarily talk about how fast it’s growing in revenue. Revenue is an important factor and so is revenue retention. According to Mark’s theory, the key formula to achieve 100% revenue retention and 200% revenue growth is to answer these questions:

How do you want to get to this stage? 

What’s the best way?

Mark says that it’s easier to slow down a company’s growth when you have achieved retention than to fix the issue of revenue retention when scaling a company. 

What’s the best measure for monitoring growth?
Customer success is a good place to start to consider when you’re trying to scale a company or re-establish a product in the market or the product’s positioning. A simple data analysis over a period that tracks sales and revenue will help check if the company is making progress. Create an automated process to track your figures on the FaceValue Application to monitor the growth. 

Unlike what many may think, selling your product isn’t a measure of the product-market fit. Instead, monitoring the customer retention rate is better than just depending on the sales numbers to decide the growth of a company. Among all the metrics for monitoring the growth, customer retention is the best one to choose. 

As we talk about customer success, let’s not forget another additional parameter - customer churn. Having a huge churn rate is a serious issue that needs an immediate fix. Many major SaaS companies like HubSpot and Slack use a process where they identify a few behaviours that would help them find the high-value prospects who will stay for a long time. 

Slack used the delivery of 2000 team messages as a measure and HubSpot identified the usage of 5 out of 20 features in the first 60 days as a measure. In any kind of SaaS company, the customer experience in the first one to two months plays a vital role in deciding if they will convert as a long-time customer. 

Wrapping Up
Having a good product-market fit isn’t enough. You have to establish a framework where the product-market fit is measured by customer value retention. When you have this foundation in place, you can begin scaling and building your company on recurring revenue and customer retention. 

Re-establishing growth and tracking the scaling process is made simple with the FaceValue Application. You can keep an eye on the scaling process by measuring customer retention, churn rate and prospect conversion on the application. 

This blog is excerpted from the blog 'Re-establishing growth' on PredictableRevenue.com.

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