ith the days of free-flowing investment capital long gone, the path to scaling a high-growth company is no longer a wide, paved yellow-brick road. In fact, it’s a winding, mountainous path riddled with elevated interest rates, supply chain problems and talent shortages, oh my! And as costs rise and prior valuations fall, professional investors are carefully assessing their investments for returns, while overhang from
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Customers are always a top priority for businesses, but in today’s environment, profitability means obsessively putting customers at the center. Businesses need to get ahead of changing customer needs, behaviors, and buying patterns and strengthen these relationships while delivering exceptional value.
Put your customers first
Americas EY Private Leader
Lee Henderson
“Investors are reevaluating their portfolios, along with revising their investment criteria. And all this is compounded by elevated interest rates that have really increased the cost of capital. There’s still a lot of unspent cash reserve out there. But the cost of capital is expensive, and investors are being a lot more selective about who they invest in.”
To get on the path to profitability, founders should focus on five key areas of value creation:
Learn how
Take action to improve customer experience
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Managing Director, Blackstone Growth (BXG)
Katie Storer
Inspiration from
of CEOs are prioritizing technology to optimize products and services and boost customer loyalty.
of CEOs plan to increase investment in marketing, including the customer experience
EY CEO Outlook Pulse
Innovate and communicate
Reshape products and services to align to customer needs and invest in digital marketing and brand management strategies to drive sales and build loyalty.
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Deliver a better experience
Map your end-to-end customer journey and identify opportunities to improve the experience at every channel and touchpoint.
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Understand their needs
Pay attention to customer feedback and invest in data analytics to understand their evolving needs and deliver tailored experiences.
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Take action to improve your customer experience:
Managing Director, Blackstone Growth (BXG)
Katie Storer
“We’re looking for businesses that can execute across the three pillars of product, brand and mission. What’s the product that you’re selling to your customers? Is it effective? What’s the brand that you’re building around it and that develops emotional attachment? What’s your purpose? What’s your mission? What’s your reason for being, outside of just your product, and does that resonate with your customers and consumers?”
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Scaling is impossible without talent. The right talent and skill sets can further your company’s mission and vision and propel your organization forward. To unleash the full potential of your workforce, connect your business and talent strategies and foster a strong workplace culture.
Nurture talent
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In today’s landscape, investing in digital capabilities isn’t a choice — it’s an imperative. Whether it’s boosting operational efficiency or elevating customer experiences, technology, especially in the age of artificial intelligence (AI), acts as a catalyst for long-term growth, empowering your teams to make better, quicker and smarter decisions that deliver value for customers.
Propel growth with technology
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When the goal is to minimize costs, maximize profitability and improve customer satisfaction, supply chain optimization can be instrumental in driving value creation, helping your organization become efficient, resilient and agile.
Optimize your supply chain
Source: How to unlock business growth by putting customers at the center
past funding rounds further erodes their confidence.
Learn how
Take action to harness the power of talent
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Founder, Supergoop!
Holly Thaggard
Inspiration from
of EY Entrepreneur Of the Year® alumni rank "people" as their most important focus area.
Business leaders rank acquiring diverse and skilled talent as the most important factor for growth in 2024.
Source: How private businesses can harness people power to drive growth and EY 2023 Work Reimagined Survey
Invest in skills and ideas
Provide growth opportunities while future-proofing your workforce by investing in upskilling and creating a culture that welcomes ideas and innovation.
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Align talent and business goals
Encourage the right team behaviors and performance by linking talent performance management to your growth strategy.
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Support employee needs
Prioritize employee well-being by creating a culture of belonging, providing competitive compensation and adaptive benefits, and promoting autonomy and flexibility.
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Take action to harness the power of talent:
Founder, Supergoop!
Holly Thaggard
“We were a team of four, and now, we are a team of 150. You start out doing a little bit of everything as a founder, and then, you slowly give away jobs to people that are way more skilled at doing those jobs than you ever were. Also, resources, opportunities and connections change lives. Who can I connect my team with that is going to matter for these young kids just starting their careers?’
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Learn how
Take action to drive growth with technology
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President and CEO, Resilient Solutions 21
Charles Rath
Inspiration from
of business leaders are using artificial intelligence (AI) for process automation.
of private company CEOs are planning to grow their organizations' digital and technology capabilities.
Source: How to capitalize on the power of technology as a driver of growth
Safeguard data
Invest in cybersecurity expertise and architeture to combat cyber threats, safeguard customer data, and comply with privacy regulations.
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Create a data-driven culture
Use AI and predictive analytics technologies to capture and analyze data so you can rapidly respond to changing market dynamics and predict customer behavior.
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Hire, upskill, and reskill
Building the right digital capabilities relies on having the right skills. Hire tech talent and invest in upskilling or reskilling employees to work with new technologies like AI.
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Take action to drive growth with technology:
President and CEO, Resilient Solutions 21
Charles Rath
“First and foremost, we’re in the era of AI, so if you’re a business, you are now a data and AI company. If you’re not using AI, you will become obsolete. So the question is not if you’re going to use AI, it’s how will you use AI. And that could be in everything from customer support to automation to robotics to predictive analytics. The list never ends.”
Learn how
Take action to optimize your supply chain
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EY Americas Supply Chain & Operations Practice Leader
Ashutosh Dekhne
Inspiration from
Fine-tune inventory
Rethink what you keep in stock, increasing safety stock for some items or shifting to just-in-time inventory management for others.
3
Minimize supplier risk
Find alternative sources for key materials, leveraging localization or nearshoring to mitigate supplier risks, and strengthen these relationships for favorable terms and pricing.
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Improve visibility
Invest in technologies that provide predictive analytics and give you a clear picture of your supply chain at every step so you can react to issues quickly and keep risks in check.
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Take action to optimize your supply chain:
EY Americas Supply Chain & Operations Practice Leader
Ashutosh Dekhne
“Anticipation and preparation are key for managing supply chain disruptions effectively. Contingency plans can help to ensure the continued flow of goods, maintain customer service levels, sustain financial health, and ultimately protect the company’s reputation and future growth.”
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Learn more
Supply chain optimization can be instrumental in driving value creation, helping your organization become efficient, resilient and agile.
Optimize your supply chain
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Learn more
In today’s landscape, investing in digital capabilities isn’t a choice — it’s an imperative.
Propel growth with technology
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Learn more
Scaling is impossible without talent. The right talent and skill sets can further your company’s mission and vision and propel your organization forward.
Nurture talent
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Learn more
Investors are no longer funding growth at any expense. In challenging times, they want to see businesses prioritizing the right initiatives while keeping costs down.
Keep costs in check
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Learn more
Customers are always a top priority for businesses, but in today’s environment, profitability means obsessively putting customers at the center.
Put your customers first
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Strategic Growth Forum on-site pulse survey
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Strategic Growth Forum on-site poll, November 2023
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How to reduce supply chain costs and adapt to market uncertainty
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of supply chain leaders say increasing end-to-end visibility is a top priority now and for the next two years.
of the cost of doing business is influenced directly by supply chains.
50% to 70%
Building supply chain sustainability that can drive revenues and reduce operational risks, 2022
Source
Source
Entrepreneur Of The Year® US alumni priorities
more likely to avoid downturns in the first place due to their cash-conscious cultures
21%
better at handling initial shocks due to their additional liquidity
25%
more resilient than their low-performing peers
19%
Global firms with robust cash management strategies were:
How to drive operational resilience with better cash management (Dec. 2022)
Source
Source
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Corporate Vice President and Global Head of M12, Microsoft
Michelle Gonzalez
Inspiration from
Corporate Vice President and Global Head of M12, Microsoft
Michelle Gonzalez
“Inflation is affecting different sectors differently. The cost of capital is now much higher, so as founders, folks are having to think a little bit differently about how that’s affecting their consumers. For example, do they have the ability to continue spending, and what is the price point that they’re willing to adapt to?”
Learn how
Take action to prioritize cost efficiency
Source: Entrepreneurs need to manage cash and focus on profitability, A tale of two markets, 4 key business lessons from venture-backed women founders
Seek new sources of capital, such as tapping existing investors for bridge loans, using credit lines, or pursuing strategic alliances for additional funding.
Tap new sources of capital
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Examine your financial forecasts and operating plan, develop cash flow models that underpin your capital needs, and stick to a tight operating budget.
Understand capital needs
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Be diligent about your cash burn rate, manage cash carefully, and promote a cash-conscious mindset at every level of the organization.
Stay cash-conscious
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Take action to prioritize cost efficiency:
Investors are no longer funding growth at any expense. In challenging times, they want to see businesses prioritizing the right initiatives while keeping costs down. Company leaders must now convey a story of operational excellence, disciplined investments and tangible business impact to garner the attention and support of investors.
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Keep costs in check
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A clear path to profitability
Source: Will venture capital market rebound in 2024 or seek new floor?
overhang of existing VC-backed startups that continues to impact the investing landscape
50K+
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A sustainable long-term growth plan
Source: Will venture capital market rebound in 2024 or seek new floor?
35%
year-over-year decrease in VC investment in 2023, the lowest level in four years
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A compelling value proposition
Source: Strategic Growth Forum on-site pulse survey
41%
segment of business leaders who worry about economic uncertainty or a downturn in the next 12 months
Gone are the days of growth at all costs. To stand out and gain investor confidence, entrepreneurial businesses must level up and demonstrate:
Prioritizing profitability over growth at all costs
Sources