Six strategies to survive rapid growth
Stewart Roberts, CFO of fast-moving fintech company iZettle, talks AccountingWEB through some of the measures the company has taken to manage its growth.
A common misconception is that successful start-ups routinely convert their rapid growth to multi-million pound success. However, as demonstrated time and again if not managed correctly rapid growth can lead to financial, quality and reputational risks that may bankrupt the business.
For Stewart Roberts, executive vice president and CFO of Swedish fintech company iZettle, managing the express-paced growth of his company has been an all-consuming task.
Stockholm-based iZettle was founded in 2010, and pioneered the first payment card chip-reader to connect directly to mobile phones and tablets. The reader allows small businesses to sidestep the expense of till-based systems provided by banks.
iZettle is used by hundreds of thousands of businesses around the world, and recently won fastest growing software company (EMEA) at the Deloitte Fast 500 awards. According to Deloitte, the Scandinavian firm has grown by 30,114% over the last four years.
Roberts acknowledged that iZettle’s rapid growth is challenging: “We’re running in 12 different countries, we have a new customer join the business every minute of the day, so what we have to react to is something that’s not your everyday business scenario”.
Roberts has served two stints as CFO during his time at iZettle, and he talked AccountingWEB through some of the strategies and processes the company has adopted to manage its rapid expansion.
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Have an open-minded team
“If we look at the finance side, it’s never has it been more important to have a team that is open-minded. What we’ve built is a profile of senior and junior accountants who don’t expect one week to be the same as the previous one.
“That’s quite a challenge, so we’ve tried to develop a solution where at least 80% of new roles are filled internally. We only have a small team but we have people who came to the company in more junior roles and have been internally promoted.
“It’s also important to encourage teamwork, just with simple things like regular team lunches or social events. If they sit there on their own trying to solve the issues that 300% growth gives you they will burn themselves out. They need that collegiate support.”
Stop and look
“Due to the sheer pace of change, as a finance team we run for three months, review what has changed and what manual or non-automated scalable services have been created. We then review those and build a program to automate or scale those services.
“Because everything is so new, on a regular basis we have events that don’t need to be scaled: They’ve happened once, they’ve gone away. We don’t need to create a system or a process, we just need to deal with the event.
“But we do have to stop and look every three months and say ‘what do we need to build in an on-going solution for’”.
Take the long view
“It’s taken us three years to realise how important it is to constantly take an image of what you think 24 months out will look like. Even though it’s only a guess because things grow or change so rapidly, it’s still crucial.
“During 2015 we decided we wanted to go from being a large small company to a small large company. That’s got to happen by the end of 2016/17, so there are certain things which can’t wait until that date.
“For example, we are currently in the middle of converting to IFRS from a local Swedish corporate standard. We decided to post correct one year at the same time as implementing for the current year, so the third year would just be ‘business as usual’”.
Be ready to take your opportunities
“At the beginning of last year we had a business plan that was pretty much self-funding. Then in spring, when we were doing one of our two-year forward views, we could see there was opportunity that we would not be able to afford to access.
“So we spoke with our investors and decided it was a good time to raise some more capital when we didn’t need it for our cash flow. So we raised another €50m in summer last year, taking the total up to about €147m.
“None of that money has any immediate use, but it’s off the back of it that we’ve managed to launch new services around working capital facilities for our customers and two more services later this year, including bringing invoicing capacities to small business so they can take payment not just by credit and debit cards.”
Add value with data
“About 12 months ago we decided there was a whole area of data analytics and financial control that could help the business as a whole, not just the finance department.
“So we pulled out those two areas and they now have their own life – they are a service department supplying information to the finance team, but also to all operational parts of the business, including marketing, proposition and product.
“This has helped us realise how important data is; although finding the right numbers is hit and miss at first I would urge anyone not to use that as an excuse to wait. Start off with 100 different streams of data, keep a careful eye on the ones you go back to and start dropping off the ones where you’re just wasting your time.”
Divide and conquer with parallel roles
“As we were growing so quickly we discovered an ever-growing dependence on individuals’ knowledge. If we lose someone and they’re the only person in the business who has critical understanding of a particular aspect then we are not in a good place.
“This year we’ve changed our structure to allow people to own a division within the business. In essence this means creating a parallel rather than vertical hierarchy for areas with similar activity. We’ve therefore split our team into key roles where there are now two people who have responsibility for 50% of the business in that area.
“This allows people to feel more empowered because they can own particular areas, but it also protects the business from events that we can’t otherwise control.”