What Stops Promising Companies from Building Scalable Businesses?

Momentum. We know it when we see it, don't we? It’s the force that propels successful companies to sustainable revenue and market share growth. And its the failure to generate momentum that condemns so many apparently promising companies to an also-ran existence.

The problem is rarely product-related (although I’m prepared to make honourable exceptions in a few cases). As Steven Gary Blank points out in “The Four Steps to the Epiphany”, most start-ups fail to achieve their potential because they fail to develop customers and establish a proven, scalable financial model.

So what stops these apparently promising companies from building scalable businesses - and what should they be doing about it? After years of observation, and not a little frustration, I’ve identified at least six factors. I’m sure you can add others.

1. They Fail to Identify With their Key Customers and Decision-Makers

This is as good a place as any to start. Companies that cannot identify the common characteristics of their most valuable existing and potential customers - or fail to identify with the prospect’s key decision-makers, and what really matters to them, are doomed to waste incredible levels of effort on the wrong targets.

2. They Fail to Understand Their Prospects Key Issues and How They Impact Them

Vendors have to be able to identify and discriminate between the issues that are interesting, important and critical to their prospects. Interesting issues might spark a conversation. Important issues might get you considered. But only critical needs, associated with a clear business impact, are likely to get you bought.  The rest just suck up your resources.

3. They Fail to Achieve a Compelling Problem-Solution Fit

It matters not one jot how many (or which) features you have, if none of them are relevant to your prospect. Vendors need to learn to identify their most powerful capabilities, to relate then to their prospect’s most critical issues, and to set all the rest of the product baggage aside. Without a clearly identified and compelling problem-solution fit, vendors will struggle to scale their business - and throwing extra features in won’t help.

4. They Fail to Recognise the Prospect’s Catalysts for Change

Even if you’ve identified an ideal potential customer and aligned yourselves with an apparently critical issue, you’re still unlikely to make the sale unless and until a key market trend or trigger event causes the prospect to realise that “business as usual” isn’t going to get them through it, and they need to take action. In the absence of a powerful trigger event, many opportunities will still end in “no decision”.

5. They Fail to Understand and Facilitate the Buying Decision Process

This is a favourite, but for all the wrong reasons. I am shocked by how many companies still attempt to manage their sales process without regard or sympathy for the prospect’s buying decision process. The consequences are painful - the same usual suspects in the sales pipeline, all due to close “next quarter”, with no real understanding of the true state of the buying decision, or any real ability to facilitate it.

6. They Fail to Manage an Integrated Revenue Cycle

I thought I’d save one of the best for last. CEOs have listed “better sales and marketing alignment” as a key goal, year after year. You’d think it would be easier in SMEs and start-ups, but this isn’t always the case. However, one thing is clear - that unless companies start managing sales and marketing as one integrated revenue creation process with shared definitions, goals and metrics, way too much energy still ends up falling through the cracks.

The Key to Building Scalable Businesses

Well there we have it. Six common causes of failure. While shortcomings in one area on its own can hold a company back, the multiplicative effect of multiple failures serves to deny otherwise promising companies their chance of success. And while they may not kill the company off straight away - or ever - these factors can deal a deathly blow to any ambitions of market leadership.

Is Your Business Capable of Generating More Momentum?

The answer, almost certainly, is yes. We’ve captured many of the lessons learned into a short 20-point self-assessment checklist. You can download it here. I think you’ll find it an interesting (and hopefully not too chastening) experience. Why not have a go and let me know what you think?