5 Blind Spots of Companies Ready to Grow & Scale

Identify and overcome the most common blind spots for growing businesses with our free, comprehensive e-book.

Imagine you’re cruising down the interstate, enjoying the sunshine, listening to your favorite podcast. You approach another vehicle traveling slower than you’d like to go. You check your mirrors and start to move into the left lane to go around them. A horn blares, and you quickly return to your lane. Flustered and heart pumping, you realize another car was in your blind spot.

Maybe your vehicle has a blind spot monitoring system to alert you when it detects something out of your view. Maybe it beeps, flashes lights, or even pulls you back into your lane? Mine does, and it’s saved me more than once. I drive a Volvo XC90, one of the safest cars on the road.

Volvo has long been known for their commitment to safety. Early on, Volvo invented the three-point seatbelt. Over the years, they’ve continued to innovate and focus on features that will reduce death and serious injuries in crashes. They’re also very focused on adding features that help mitigate crashes, like BLIS (Blind Spot Information).

BLIS is designed to detect vehicles in other lanes and alert the driver. And in case the alerts aren’t enough, Volvo also incorporated “steer assist” technology with BLIS to help drivers avoid a collision.

STEER ASSIST FOR YOUR BUSINESS

As your business grows and scales, there are blind spots along the way. Things were going well in your business; you were cruising along, enjoying the growth and profitability, and then… BAM! New problems and opportunities seemingly come out of nowhere.

Each stage of business (start-up, growth-stage, and maturity) has unique challenges and opportunities. Just when you think you’ve figured out how to navigate one stage, the growth and scale you’ve worked so hard to achieve results in a whole new set of challenges you didn’t anticipate. Blind spots.

At TDT, we’ve been helping successful business owners navigate those blind spots for 45 years. And we’ve created this comprehensive guide to help you identify and overcome the most common blind spots for growing businesses.

This guide will serve as your business blind spot monitoring system. In the following pages, you’ll learn about five common blind spots for growth stage businesses. One or more of these challenges likely exists in your business right now, hiding in your blind spot.

This guide will help alert you to the blind spot. And like Volvo’s “steer assist” technology, this guide enables you to steer clear of those challenges by sharing what you can do and where you can start.

1. You’ve reached your limit, and you know there’s got to be a better way

The Blind Spot

Most successful entrepreneurs got to where they are by digging in, figuring things out, and learning from their mistakes. Those skills are valuable, but as they say… ‘what got you here, won’t get you there.’

To grow and scale your business, you have to figure out where you and your team’s skills provide the highest value to your business. As your business grows, the demands on your time and energy grow, as well. It’s common in the growth stage to find yourself (and your team) consumed with activities that creep beyond your competency. Your scrappy, get-it-done MO was working until all of a sudden, it wasn’t.

Carrying out roles and responsibilities within your business that don’t match your skills and desires is risky. At worst, it will stall your growth. And at best, it’s boring and unfulfilling for you and your team. If someone else wouldn’t pay you to process payroll, keep the books, design your website, or screen resumes, for example, your business probably shouldn’t be paying you to do those things either.

What You Can Do About It

Your greatest contribution to your business is doing what you are best at and most passionate about. The rest should be handled by an appropriate mix of contractors and employees carrying out clearly defined processes and procedures.

Most entrepreneurs thrive on innovation and the words “processes and procedures” trigger disinterest, even nausea. But there’s good news – just because it needs to be done, doesn’t mean it needs to be done by you. That’s kind of the point of this blind spot.

Many business owners use outsourcing as a solution for handling specialized roles such as process improvement, accounting, marketing, human resources, and technology. Outsourcing can also be an effective solution to temporarily supplement your team, expand your capacity, or find an expert to help with a special project.

Start Here

Look for ways you can increase efficiency, gain access to new expertise, and optimize your processes. Brainstorm with your team, ways you can:

  • Outsource specific functions
  • Automate manual processes
  • Leverage existing technology applications
  • Research software integrations and solutions
  • Clarify roles and responsibilities for your team

And if brainstorming with your team isn’t the highest and best use of your time, outsource that step, as well! Contact TDT to learn how we can help you with process optimization, outsourced accounting, and more.

2. Your gut feel for what’s happening in your business is no longer accurate

The Blind Spot

Business owners often have, in their minds, an expectation of what the numbers should be. When the financials don’t reflect their expectations, they assume the financials are wrong.

In some cases, that’s true – transactions haven’t been properly recorded, and adjustments are needed. In other cases, the financials are correct; it’s the calculations in the business owner’s head that don’t account for everything that actually occurred.

As your business grows and scales, you can no longer keep all the financial details in your head. You need accurate, relevant financial reports that provide a clear picture of how your company really makes money. Without this information, you can end up with lots of activity, even high gross revenue, but little profitability.

What You Can Do About It

Almost without exception, a business’s accounting system needs to be restructured to provide more meaningful information. You may have started with a simple chart of accounts, and it’s grown and expanded over time. Or, you may still be using a generic chart of accounts provided by your accounting software. Regardless of how you ended up with your current chart of accounts, it will need to be refined as your business grows.

Your accounting system must be set up to gather information at the appropriate level of detail. It can be tempting to think you know this information in your head, but you really need to capture and analyze the data.

Most accounting systems have features for reporting on profit centers so you can run a Profit & Loss (P&L) for each profit center, in addition to your overall P&L. Accounting by profit center requires some discipline on the front end when entering transactions, but it’s well worth the value of the information you end up with to run your business.

When it comes to expense categories, you need certain categories for your annual tax return. Beyond those accounts, it’s up to you to determine what additional expense categories are relevant to you and your business. It’s important to keep things simple and only get more detailed or granular when you really need the information.

Once you have this information, you can focus on growing the revenue streams that are the most profitable, assessing those that are performing at a mediocre level, and stop wasting energy on those that are not producing.

Start Here

First, make sure you have accurate, timely financial statements. Then, evaluate what changes would need to be made for those reports to be more helpful and relevant. Do your financials report:

  • Sales mix (by customer, industry, geography, etc.)
  • Profit margin by product or service
  • P&L by profit center (division, location, etc.)
  • Relevant expense categories

Need help making changes to ensure you have accurate, timely, and relevant financial reports? Contact TDT to learn how we can help you refine your accounting systems and create easy to understand visual reports.

3. You are spending a lot of time putting out fires instead of preventing them

The Blind Spot

As your business grows, you can end up spending a lot of time putting out fires instead of working to prevent them. As you add more people and more activities in your business, it becomes harder to identify the underlying issues. Suddenly, it becomes challenging to tell whether you’re fixing symptoms or fixing the underlying causes.

Have you heard the Parable of the River? It tells of a group of campers settling on a riverbank. One camper notices a baby in the river and immediately jumps in and saves the baby. Then, another camper spots another baby in the river. And another. Then another. The campers frantically rescue as many babies as they can, but there are so many. They know they can’t save them all. At one point, one camper gets out of the river and starts walking upstream. The others are outraged and ask – “Where are you going? Look how busy we are! We need you here!” The camper replies, “I’m going upstream to find who keeps throwing all these babies in the river.”

You certainly have to deal with the acute issues in your business – put out the fires, save the babies, etc.; but you also need a way to prevent, or more quickly detect, future issues.

What You Can Do About It

Identify your upstream issues. Financials report the results of all the activity in your business. Those numbers are certainly important. But they only tell you what has already happened. To impact future results, you must also identify Key Performance Indicators (KPIs) to focus on the activities happening right now.

For example, let’s assume the current fire you’re fighting is a tight cash flow. Your sales are high, your margins are strong, but it takes too long for you to collect payment from your customers.

A common financial metric for monitoring customer collections is Receivable Days (the average number of days it takes your company to collect payment). Let’s assume your Receivable Days is 65. Measuring and monitoring this number won’t change your results. It’s a lagging indicator.

You have to identify the underlying activities (leading indicators) that impact your Receivable Days and measure and monitor those. Maybe it’s taking your team too long to get the customer invoices sent out. Or perhaps the invoices often have mistakes, which lead to customers withholding payment until corrected invoices are issued. There are a number of underlying issues that could be contributing to this problem. You have to identify those underlying activities and then measure and monitor them.

Each business is unique, so it’s important to map out the activities that drive your business and then focus on selecting measures around the most critical activities. Identify your primary goals and challenges, determine the underlying activities, and then start measuring and monitoring those KPIs to improve your future results.

Start Here

Think about the main areas of your business – finance, operations, customers, and people. What fires are raging? What key goals are you striving to accomplish? Next:

  • Determine the underlying activities – think upstream, leading indicators
  • Narrow down your KPIs carefully based on the size and culture of your business
  • Establish your baseline for those KPIs, and then establish your goals
  • Develop a process for continuously measuring and monitoring the KPIs

Having trouble getting down to the underlying activities or narrowing your KPIs to a manageable set of metrics? Contact TDT to learn how we can help you select, measure, and monitor KPIs.

4. You have more cash than you’re used to, and you don’t want to waste it

The Blind Spot

Normally when we talk about cash flow problems, the problem is not enough cash to cover obligations. As your business grows and becomes more profitable, you’ll find yourself with a different problem – excess cash.

Is more money really a problem? It certainly can be. When things are going well, it’s easy for costs to creep in. It’s also easy for inefficient processes to become the status quo. The comfort of excess cash can cause you to undermine your own success.

What You Can Do About It

Use your excess cash as an opportunity to plan for the future. Start by creating a budget so you have a plan for what you’ll do with every dollar you make. We often think of budgets as a tool to help stretch our dollars when things are tight. Budgets can certainly be effective in that case, but ultimately, the purpose of a budget is to create a plan for spending your money – whether you have a lot or a little.

Just because you have plenty of cash doesn’t mean you shouldn’t scrutinize your spending habits and look for opportunities to increase revenue or decrease expenses. As you create your budget, evaluate the profitability of your various products or services, and ensure your marketing budget aligns with promoting those that are most profitable.

Take advantage of business credit cards. Utilizing a credit card for purchases you already make allows you to better control the timing of cash outflows and provides rewards or travel points. Cards have different reward categories, sign-up bonuses, and annual fees. So, it’s important to select the right card for your business. The rewards really do add up, and choosing the right card can make a big impact. For example, when we analyzed the rewards of a small business with annual credit card spending of $1.7 million, we found they could earn $19,000 in rewards with one card and $41,000 with another. By using no card, or the wrong card, you’re leaving money on the table and missing an opportunity to streamline your purchasing processes.

Start Here

Decide on your goals and design your budget to achieve those goals. Things to consider include:

  • Are you paying yourself appropriately?
  • How much should you set aside for cash reserves?
  • How much do you want to invest in research and development?
  • How much do you want to contribute to your retirement and/or the retirement of your employees?
  • Do you need to add additional employees or outsourced relationships?
  • Is your marketing budget strategic and intentional?
  • Are you maximizing credit card rewards?

Looking for help in creating and maintaining a budget? Contact TDT to learn how we can help you utilize budgets to proactively achieve better financial results. We can also provide you with an unbiased comparison of credit card reward programs based on your specific spending categories.

5. You have a vision for your future, but you’re not sure if it pencils out

The Blind Spot

You have a clear vision for your business. You have focused strategies to get you there. Or, at least that’s what you hope.

Without crunching the numbers, it’s hard to be confident about whether your strategies will actually get the results you’re planning on. You need financial projections to support your strategy. Otherwise, you’re relying on a strategy of hope. Though it’s a wonderful virtue, hope is not an effective strategy.

What You Can Do About It

Don’t let your planning stop with the strategic plan. Take another step to pencil things out.

Entrepreneurs are often visionaries, and creating financial models to see whether an idea or strategy will work, isn’t usually at the forefront of their minds. But without scenario planning and financial forecasts, you and your team can waste time executing strategies that won’t actually get you closer to your goals.

To reach your goals more quickly, start by making sure they are measurable and time keyed. For example, don’t set a generic goal to increase revenue. Instead, set a goal to increase the average revenue per customer from $1,000 to $3,000 within two years.

Then, brainstorm the various strategies you could employ to achieve that goal. Next, do the math and scrutinize the results.

Do the strategies you’re considering actually get you to your goal? Are your assumptions realistic? Have you accounted for the additional costs required to execute? Have you accounted for the ancillary impact on other aspects of your business?

Scenario planning and forecasting allow you to evaluate your options, predict your results, and determine your best moves. Using these tools in your business will help you meet your goals more quickly.

Start Here

Start incorporating scenario planning and forecasting in your strategic planning process. Areas to consider include:

  • Revenue growth goals
  • Profitability goals
  • Cash flow projections
  • Expense management
  • What-if scenarios

No CFO to crunch the numbers for you? No problem. Contact TDT to learn how we can help you utilize numbers to bring your vision to life.