This is Part-Time Genius Blog on how to grow your business in a profitable and sustainable way.

Why is pricing important? 

Pricing has the highest impact on the growth and profitability of a company yet often very little is invested in planning it compared to the dedication businesses put to customer acquisition, customer retention, or defining product functionality.

According to a great read "The anatomy of SaaS pricing strategy" by Price Intelligently, the average SaaS company spends six hours on pricing over their whole lifecycle. 

Come on - that's less than a working day! 

How much does your company spend on understanding pricing?

Make no mistake - this is not a SaaS-only matter. Pricing is equally important to all businesses on any competed market. Just that in the SaaS business model, pricing has elevated importance as the company has to monthly (read continuously) earn the justice to bill the customer. 

Without an emphasis on pricing, you underserve customers and leave revenue on the table.

Three dimensions of pricing strategy - positioning, packaging, and the price.

Let's start off with positioning.

In sound product planning, after defining a compelling product vision (something you dare to get a tattoo) which states the core business benefit and the target user, you should deep dive into user personas.

Who do you serve - what industries are they in, what is the customer company like, what is the role of the persona in that company?

Here clarity makes the difference. Think it as if you would see a group of people walking down the street and you can say without hesitation who belongs to what segment and why. 

Come up with a handful of personas that are distinctive and relevant to your business. Here quality over quantity rules.

As I wrote in my earlier blog post "WHAT, WHY, TO WHOM AND HOW" these questions are dead simple, yet it can be grueling to find the right answers. 

Likely that's the very reason why companies too often skip the act with predictable outcomes - producing mediocre products and services that are not solving anyone's problem. 

Next, you want to know what are the high-value features for each of the user personas, and how much they are willing to pay (WTP) for those. 

Why is it relevant to find the high-value features and WTP?

Let's invite in the two other dimensions of pricing. 

Take your product feature list and ask your existing customers and prospects to sort them into two baskets - the most preferred/valuable ones and the least preferred/valuable ones. 

As an outcome, you don't only see what features are valuable for your customers but you understand what features the different personas value.

You will see also what features you can well live without as they don't deliver value to your customers.

That's your product packaging.

Now it's getting even more interesting as you are about to learn what your customers are willing to pay for the high-value features. That's the essence in value-based pricing.

Based on the product positioning and packaging examples above, you should now have a pretty good understanding of the different product packages, how they differ from each other and who are their customer personas - right?

Next, you go and ask from the existing customers and prospects behind the personas what they would be willing to pay for the product "package" you just designed.

With four simple questions and numeric price point scale, you can build a surprisingly solid understanding of the price range for each product package. 

Your questions are - at what price would you consider the product to be too expensive, at what price would you consider the product to be too cheap (relative to perceived quality), at what price would you have to think twice before buying, and at what price would you consider the product to be bang for the buck?

When you match the price range data with customer lifetime value (LTV) and customer acquisition cost (CAC) you can further define at what price point the LTV/CAC ratio is optimal. 

Why's LTV/CAC ratio relevant - higher the ratio, greater the growth of your business. 

See, for these questions, you just cannot shoot the answers from the hip but you need data. In practice, it means that you have to go out and interview your customers and prospects.

In case you don't know LTV and CAC for your product, go and find them - it will be an eye-opener.

Why should you be paranoid about the pricing of your products? 

When your product pricing is clear, value-based, targeted to the right audience and is aligned with the buyer's willingness to pay, a big part of your marketing and sales effort has already been taken care of, not to forget that you'll growth faster with increased profitability.

In an evolving marketplace, pricing is a continuous optimization effort of your product value against the customers' willingness to pay. Pricing is a process.

By the way, pricing is the lever that has 1:1 impact on profitability - pretty cool.

What's your excuse for not investing in proper pricing?

Again, if you have good practises on the covered subject, let me know as I'm eager to learn from the best.

Cheers,

Pekka

Tämä on Part-Time Genius blogi liiketoiminnan kestävästä, kannattavasta kasvusta.
 
Tämä blogi käsittelee lyhyesti toisen seitsemästä esittämästäni pääkohdasta Vendep Capital B2B SaaS Channel aamiaistapahtumassa.

Loput viisi vinkkiä käsitellään tulevissa blogeissa – pysy kanavalla.

Joko luit ja jaoit eteenpäin bloggaukseni "Oletko yhteensopiva kumppanin bisnesmallin kanssa"? 

Työskennellessäni todellisen kanavamyyntigurun, Ollilan Juhan, kanssa F-Securella, hän esitteli kolme yksinkertaista tekijää, joita kumppani yrityksessäsi arvostaa, ja jotka suoraan vaikuttavat liiketoimintasuhteen menestykseen. 

1. Loistavat tuotteet. Tuotteittesi ei tarvitse olla kategorian parhaita (toki tämä aina helpottaa), mutta niiden täytyy olla vähintään yhtä hyviä kuin kilpailijoilla.
2. Hyvä ansaintamalli. Kumppani hakee kannattavaa kasvua ja liiketoimintasuhteen täytyy pelata tähän maaliin. Kanavamarginaali ei ole kuitenkaan ainoa väline. Mieti, kuinka yhteistyö auttaa kumppania tehostamaan toimintaansa ja pienentämään liiketoimintakuluja.
3. Yhteistyön helppous. Tässä pienet yritykset voivat olla ylivoimaisia isompiin kilpureihin verrattuna. Kumppani sitoutuu mielellään yritykseen ja edustajaan, joka on luotettava, arvostaa ja ymmärtää aidosti kumppanin liiketoimintaa.

Yksinkertainen ja ymmärrettävä logiikka vai kuinka? Toteuttaminen vaatii kuitenkin tahtoa ja pitkäjänteisyyttä.

Tämä on keskeinen kysymys, johon vastaus selviää arvioimalla onnistumistasi mainitun kolmen tekijän suhteen.

Sitoutuminen tarkoittaa kumppanille, että hän on valmis sijoittamaan liiketoimintasuhteeseen yrityksesi kanssa aikaa, vaivannäköä, työntekijöitä ja rahaa. Investoinnin tulee tarjota pääomalle hyvä tuotto ja kannattavuus tulee saavuttaa nopeasti. 

Tasapuolisuuden nimissä, sama pohdinto sinun tulee käydä kumppanin osalta ennen kuin allekirjoitat kumppanisopimuksen. Käsittelen tätä lisää tulevissa kirjoituksissani.

Kumppanin sitoutumisen todennäköisyyttä voi ajatella seuraavasti. Hänen näkökulmastaan on olemassa kolme vaihtoehtoista polkua:

1. "Ei kiitos". Arvoväittämässäsi kaksi kolmesta tekijästä ovat selkeästi heikompia kuin kilpailijoilla. Yksi arvokomponentti, vaikka olisikin täysin uniikki ja ylivoimainen, ei riitä tasapainottamaan kokonaisuutta.
2. "Riittävän hyvä". Vaikka arvoväittämä ei olekaan täydellinen, kaksi kolmesta tekijästä ovat kumppanin kannalta riittävän arvokkaita kompensoidakseen heikoimman. Arvo on riittävä, mutta vaatii jalostamista.
3. "Mihin voin allekirjoittaa?" Arvoväittämä on tasapainoinen ja kilpailukykyinen kokonaisuus. Kumppani kokee, että arvo on suurempi kuin osiensa summa. Kumppanin sitoutuminen on taattu.

Älä huijaa itseäsi arvoväittämää arvioidessasi ja säilytä outside-in näkökulma. Muista, että yrityksesi kasvaa kun kumppanin liiketoiminta kasvaa. 

Parantaminen ja tehostaminen alkaa lähtötilanteen kartoituksella. Yrityksestä riippuen, sinulla saattaa jo olla käytettävissäsi laadukasta dataa kumppanityytyväisyydestä.

Kvantitatiivinen palaute antaa tuntuman tilanteesta, mutta hyödyllisintä on tavata kumppani kasvokkain - tämä sinun tulisi tehdä säännöllisesti joka tapauksessa.

Pyydä kumppania pisteyttämään arvoväittämän kolme elementtiä rehellisesti. Uskalla käyttää miksi-kysymystä riittävän usein, jotta pääset käsiksi juurisyihin, olivat ne sitten positiivisia tai negatiivisia.

Juurisyyt ymmärrettyäsi, säädä arvoväittämä kohdalleen yhdessä kumppanin kanssa. 

Tekeminen on puheen ylin taso - sinun on toimitettava suunnitellut muutokset pian, jotta kumppanin luottamus säilyisi. Tämän tehtyäsi sykli alkaa alusta sinun ja kumppanin arvioidessa tehtyjen parannusten vaikuttavuutta.

PS. Kumppani osaa arvostaa vaivannäköäsi ja jo pelkästään näin toimimalla vahvistat arvoväittämän "Yhteistyön helppous" kohtaa konkreettisella tavalla.

Mikäli uskot, että tämä lisää yrityksesi kykyä rakentaa kestävää, kannattavaa kasvua, soita tai lähetä sähköpostia niin jutellaan lisää.

Terveisin,
 
Pekka

Tämä on Part-Time Genius blogi liiketoiminnan kestävästä, kannattavasta kasvusta.
 
Tämä blogi käsittelee lyhyesti yhden seitsemästä esittämästäni pääkohdasta Vendep Capital B2B SaaS Channel aamiaistapahtumassa.

​Loput kuusi vinkkiä käsitellään tulevissa blogeissa – pysy kanavalla.

Yksinkertainen ja hyvä määritelmä tuotteesi yhteensopivuudesta markkinaan on se, että tuotteesi tarjoaa asiakkaalle selkeää lisäarvoa ja tekee sen paremmin kuin kilpailijat. Hyvä alku, mutta tämä ei riitä.
 
Jotta tuotteesi saavuttaisi merkittävää kaupallista menestystä, on sinun suunniteltava se yhteensopivaksi kanavakumppanin liiketoimintamallin kanssa. 
 
Myyntikanava on yrityksesi ehkä arvokkain omaisuus ja merkittävin liiketoiminnan skaalakerroin. Tehokas kanava erottaa voittajat häviäjistä.
 

Jos tuotteesi laatu ja sisältö ovat samalla tasolla kuin kilpailijalla, mutta tuotteesi on optimoitu kumppanin liiketoimintaan sopivaksi, todennäköisyys sille, että kumppani myy mieluummin sinun kuin kilpailijan tuotetta kasvaa merkittävästi. 
 
Sama sanottuna toisin - ylivoimainenkaan laatu ja sisältö eivät auta, mikäli tuotteesi ei tue kumppanin liiketoimintamallia. Myymättä jää.
 
Logiikka on yksinkertainen. Kaikki yritykset, myös kumppanit etsivät tapoja kasvattaa liikevaihtoa mahdollisimman kustannustehokkaasti - luoda kannattavaa ja kestävää kasvua. 
 
Ymmärtämällä syvällisesti kanavakumppanin liiketoimintalogiikan sekä -prosessit voit suunnitella tuotteen, joka auttaa kumppania saavuttamaan molemmat tavoitteet.
 
Miksi tämä on sinulle kriittistä?
 
Yrityksesi kasvaa vain, kun kumppanin liiketoiminta kasvaa.
 
Toiseksi, näin toimimalla luot uskollisuutta auttamalla kumppania tekemään liiketoimintaa tehokkaammin sen sijaan, että tarjoaisit ainoastaan uuden tuotteen myytäväksi.
 
Kolmanneksi, kanavaan suunnitellun tuotteen avulla kumppani voi rakentaa ilmiömäisen asiakaskokemuksen, mikä näkyy korkeana asiakasuskollisuutena.
 
Korkea kumppani- ja asiakasuskollisuus ovat ratkaisevan tärkeitä yrityksesi kannattavuudelle ja pitkän aikavälin kasvulle.
 
Kuulostaa hyvältä – miten edetä?

Toiminta on jatkuvaa, etene iteroiden ja varmista tulokset kanavakumppanin kanssa riittävän usein.
 
Yleisön kommentti Vendep Capital -tapahtumassa "Tässä on todella paljon tehtävää". Näin kyllä, jos ajattelet, että tämä on jotain ylimääräistä, jota sinun tulisi tehdä.
 
Oikea tapa on ottaa yhteensopivuusvaatimus huomioon olennaisena osana liiketoiminta- ja tuotesuunnitteluprosessia.
 
Yrityksesi tulisi olla paranoidi kanavan laadun, suoritus- ja kilpailukyvyn suhteen. Paras tapa osoittaa tämä, on optimoida tuotteesi ja palvelusi kanavalle.
 
Mikäli uskot, että tämä on yrityksellesi merkityksellistä, soita tai lähetä sähköpostia niin jutellaan lisää.
 
Terveisin,
 
Pekka
 
PS – mikäli yrityksessäsi on tämä kyvykkyys kunnossa, ota yhteyttä sillä haluan oppia kuinka teitte sen. 
 
Hyvää lukemista ”product-market fit” teemaan on Dan Ohlsenin "The Lean Product Playbook".

This is Part-Time Genius Blog on how to grow your business in a profitable and sustainable way.

This post covers one of the seven key takeaways from my presentation at the Vendep Capital B2B SaaS Channel breakfast.

Stay tuned for the remaining six tips.

A simple yet good definition for product-market fit is that you have created a product that provides significant value to the customer, and does it better than the competition. Very good but that's not enough.

In order to reach meaningful commercial success with your product, you have to design it for the channel.

The channel to market, the way you reach your customers is maybe the most valuable asset to your business. That's the biggest business multiplier which divides the losers from the winners.

Keeping product attributes like features and quality on par with the competition, if your product is optimized for the business model of the partner, the way they make business, the likelihood that partner would sell your product over the competition grows significantly.

This is exactly what you want, don't you?

The logic behind my statement is simple. Like any business, partners are looking for ways to make more business with lower costs - building profitable, sustainable growth.

By well understanding the business logic and processes of the partner, you will able to design a product or service that helps the partner achieve both objectives.

Why is this relevant to you?

Your business grows only if the business of the partner grows.

Secondly, you will create partner loyalty by helping them run their business in a more efficient way instead of just providing yet another product to sell.

Thirdly, with your product partner can create a phenomenal end-user experience which drives customer loyalty.

High partner and customer retention are crucial for your business profitability and long-term growth.

Sounds good - what does it take to get there?

You must do it often, incrementally and verify assumptions frequently with the partners.

A comment from the audience at the Vendep Capital event "Oh man, there's so much to do". Sure, if you think this is something extra you should do.

The right way is to consider it an integral part of your business and product planning process. 

You should be paranoid about the quality, performance, and competitiveness of the channel. The best way to demonstrate that, is by optimising your product and service for the channel.

If you think this is relevant to your business and you should do something about it, let’s talk. 

Cheers Pekka

PS - if you think your product already has a perfect business model fit, let me know as I want to learn from you.

Good reading on Product-Market Fit, check Dan Ohlsen's "The Lean Product Playbook".

Improving Product Management capabilities and practices, crystallising business strategy, startup company's product concept grooming, channel partner on-boarding process validation, mentoring CEO on profitable sustainable growth, ... these were few examples of the super-interesting themes I have had a chance to work on during the last weeks. 

Hats off to individuals who I have met and who have openly told about the challenges their companies face. Special thanks to those with whom we have started a journey to improve the discovered issues.

Common to all of the examples mentioned above is that they look for answers to "what", "who", "how" and "why" in the business context.

When discussing the above topics and the issues behind them, I often get the comment that "Pekka, this is basic stuff in our company".

I agree. These are definitely the "basics" behind company's success, however, often these "basics" are implemented only mediocrely in the company.

The basic assumption is that "basics" are fine. Wrong - I can say from the experience that generally they are not in good shape.

Even though the questions are puzzling simple, getting well articulated and clear answers to them is surprisingly difficult and above all time consuming.

My observation is that dealing with the "basics" is less respected and valued than working on "more sophisticated" stuff that at least apparently has more momentum and sense of progress.

I am fully convinced that the most successful companies are very explicit about the quality of the "basics". By doing the "basics" properly, timely, in the right order, to the right extent and iteratively, business success is guaranteed or at least highly probable.

Another observation relates to company's growth capabilities and above all to timely availability of the crucial capabilities. I addressed this topic in my previous blog "WHY INTERIM MANAGEMENT CAN HELP MICRO AND SMALL BUSINESSES GROW"

Getting the "basics" right, does require constant efforts, commitment, ownership, proper resourcing and time.

An analogue from construction business: the dull, dirty, costly ground work which is often invisible to the end-user, are the "basics" one cannot shortcut if long-term profitability and customer value is the target.

When the "basics" are right, or at least you know how they are, your company will significantly improve chances of success in building sustainable, profitable growth.

This is where Part-Time Genius Expert-as-a-Service help you.

Call 0405050698 or email pekka@part-time-genius.com and let's figure out how we can improve your company's competitiveness fast and with an impact.

Get the "basics" right from the beginning.

BR Pekka

Tuotehallinnon kyvykkyyksien ja praktiikoiden kehittämistä, yritysstrategian kirkastamista, startup-yrityksen tuoteidean jalostamista, kanavakumppanien onboardaus-prosessin viilausta, ylemmän johdon mentorointia kannattavan kasvun tiimoilta, ... muutama esimerkki mielenkiintoisista ja yrityksen kilpailukyvyn kannalta keskeisistä alueista, joihin olen päässyt tutustumaan viimeisten viikkojen aikana.

Kiitokset luottamuksesta kaikille niille, jotka ovat avoimesti kertoneet yrityksensä haasteista. Erityiset kiitokset niille, joiden kanssa olemme aloittaneet yhteisen matkan havaittujen asioiden parantamiseksi.

Yhteistä kaikille mainituille esimerkkitapauksille on, että niissä haetaan yrityksen kontekstissa vastausta kysymyksille "mitä", "kenelle", "miten" ja "miksi".

Keskustellessa edellä mainituista aiheista ja niiden takana olevista kysymyksistä, useasti tulee vastaan kommentti, että "Pekka, nämä ovat meidän yritykselle ihan perusjuttuja".

Olen samaa mieltä. Nämä ovat ehdottomasti "perusjuttuja" yrityksen menestyksen takana ja kuitenkin nämä "perusjutut" on yrityksessä toteutettu seiskan keskiarvolla.

Analogiana voi käyttää talonrakennusta: perustusvaiheen tylsät, likaiset, kalliit ja  välittömän asiakasarvon kannalta näkymättömät työvaiheet ovat juuri niitä "perusjuttuja" joissa ei voi oikaista kun tavoitellaan pitkän aikavälin tuottoa ja asiakasarvoa.

​Kun "perusjutut" ovat kunnossa, tai vähintään tiedätte missä kunnossa ne ovat, yrityksen mahdollisuudet rakentaa kestävää, kannattavaa kasvua paranevat merkittävästi.

Tässä Part-Time Genius vuokra-asiantuntija on oikea työkalu.

Soita 0405050698 tai lähetä sähköpostia pekka@part-time-genius.com niin mietitään yhdessä miten parannamme yrityksesi kilpailukykyä välittömästi ja mitattavasti.

Ei ole olemassa muuta kuin "perusjuttuja".

Terveisin,

Pekka

Tämä on Part-Time Genius blogi liiketoiminnan kestävästä, kannattavasta kasvusta.

Kaksi kovaa tekijää on liittynyt Part-Time Genius verkostoon, Michaela Ramm-Schmidt ja Tom Weckström. On etuoikeus saada kaksikko mukaan tiimiin. Tervetuloa!

Kaksikon täydelliset esittelyt löytyvät sivuiltamme, mutta ohessa lyhyet introt.

Michaela on intohimoinen vastuullisen liiketoiminnan puolestapuhuja, jolla on näkemystä, kokemusta ja ennen kaikkea kyky saada näkyviä tuloksia aikaiseksi nopeasti.

Tom on kokenut muutosagentti, jolla on takanaan menestyksekkäitä muutoshankkeita lukuisissa yrityksissä. Lisäksi Tom korjaa ongelman kuin ongelman yrityksesi tuote- ja palveluportfoliossa.

Kun yrityksesi kasvu ja kannattavuus sakkaavat, aika on rahaa. Toimi heti.

Varaa henkilökohtainen tapaaminen, jossa kartoitamme yhdessä liiketoimintasi kipupisteet.

PS. Etsimme jatkuvasti uusia intohimoisia osaajia Part-Time Genius tiimiin, ihmisiä jotka uskaltavat heittäytyä ja luoda uskomatonta asiakasarvoa.

Kiinnostuitko? Ota yhteyttä niin jutellaan lisää.

Terveisin Pekka, part-time-genius

The Part-Time Genius network of trusted business professionals has two new members, Michaela Ramm-Schmidt and Tom Weckström. I'm honoured to have both Michaela and Tom in the team. Most warm welcome!

I'm sure you want to read their full profiles but here comes a short summary.

Michaela is a passionate corporate sustainability evangelist who has the vision, knowledge and most importantly she makes the impact for you to succeed with a responsible business.

Tom, an old colleague of mine, is a one-man product and service powerhouse and a change agent with multiple successful transformation projects under his belt.

Both new members bring in a wide range of expertise, experience and point of views that are highly valuable for businesses looking for a turnaround, a turn to sustainable and profitable growth.

This is good news for Part-Time Genius customers. This gives us a chance to provide even better customer service through strengthened competencies.

We operate on an interim and assignment basis, solo or as a team whichever suits you best.

​BR Pekka at part-time-genius

This is Part-Time Genius Blog on how to grow your business in a profitable and sustainable way.

This is a spin-off from my previous blog post “Why interim management can help micro and small businesses grow”.

FiBAN, Finnish Business Angels Network has published a great study “The profitability of business angel investment” (FiBAN and Moring, 2017). This study is by far the most complete in Nordics, concluding analysis of 126 business angel exits.

Business angel is a private person investing time, money and connections into unlisted high-potential startup companies. In exit business angel makes most of the profits by selling ownership of the company.

​According to the study, a return multiple 3,75 X (ROI) was reported among the respondents who were mainly active full-time business angels. Internal Rate of Return for all investments since 1987 was 25%. 

Return on Investment multiple 3,75 X sounds great when considering that it includes all exits, also the 37% that went bankrupt.

Survey reported that Finnish business angels have longer holding period, but it was compensated with higher return multiples. Is it so?

The above table reports for Finnish investments 3,75 multiple in 66 months compared to USA with 2,6 multiple in 42 months.

Anticipating the time value of money, should the expected return reflect the extended time period? In this example, holding time for Finnish investments is 57% longer than in USA – should the multiple for Finnish be then 1,57 times 2,6 = 4,09, at least?

Another view - what if Finnish investment period would be 3,5 years instead of 5,5 years?

​As capital would rotate faster, the same impact could be achieved with a smaller total invested capital. Alternatively, with the current investment level a greater number of startups could be financed.

Could faster rotation of capital, even more prudent selection and high-intense management lower the number of failure cases?

​The two-percentage difference in failure rate doesn’t sound much but over long-term, the effect of compound interest can be significant.
​
Is there a way to improve the equation?

It is fair to assume that a person who invests his own money into a startup wants to make sure money is spent with care and according to plan – not just spent.

As stated in my previous blog post, the biggest challenge for micro businesses is to have access to required competencies and expertise exactly when needed – the same applies to startups.

​Traditional answer has been recruitment.

Personnel comes with fixed costs and this can be poisonous to a startup who is tight with money and time. In short-term, personnel costs are locked and hard to get rid of if needed.

​The long lead-time of recruitment causes delayed time-to-impact which is a cost as well.

Would it be optimal for a startup to maintain high flexibility on people resources? To have the required expertise available exactly when needed without commitments beyond the scope?

I believe so. Part-time professionals can be the flexible, scalable and cost-efficient tool for an investor to drive higher return on capital invested with less risk.

PS - big thanks to Ruben Moring for fact checking and sparring on the topic.
​
Sources
 
FiBAN & Moring, R. 2017. THE PROFITABILITY OF BUSINESS ANGEL INVESTMENT.

This is Part-Time Genius Blog on how to grow your business in a profitable and sustainable way.

I was very surprised to learn that according to Entrepreneurship statistics (The Federation of Finnish Enterprises, 2015), 99% of the companies in Finland were either micro businesses or small businesses. Micro businesses (265 041) employing up to nine people represented 93,4% of all companies and small businesses (15 559) employing from 10 to 49 people respectively 5,5%. Medium and large companies represented only 1,1% of nearly 284 thousand companies in total.

From year 2001 to 2015, companies up to 49 employees created over 84 thousand new jobs whereas almost 15 thousand jobs were lost in companies larger than 50 employees. Nearly half of the jobs were in micro and small businesses, contributing to 37% of the overall turnover in 2015.
​
Even though figures are few years old, I believe that the relative proportions are accurate enough to make the point – Finland is a micro and small business economy.

Provocative statement of the title made by Pekka Usva at Part-Time Genius, claims that businesses up to 49 employees are locked to be small now and in the future if the current thinking won’t change. Let’s open the logic behind the claim.

The biggest challenge for small businesses is growth, to be more specific, profitable growth.
​
Why profitability is so important? It is the prerequisite for company’s existence, at least in long term, as profit is the excess fuel that can be invested back to company after all company’s liabilities have been covered. Much of the performance and manoeuvring flexibility is based on profitability and when it is taken away, company will be in trouble no matter the size.

Why growth is so important? In macroeconomics, growth creates new job opportunities and decreases unemployment, increases consumption which drives investment opportunities, and does good for our tax revenues allowing us to enjoy of a wide spectrum of public services.

In the company level, it positions the company positively in the eyes of the investors and is the key to higher overall profitability in long-term due to scale economies. Simply – growth creates opportunities and well-being (yet not fully without reservations as we will find out in the forthcoming blog posts).

That’s all great – what’s blocking the micro and small companies from growing profitably, and fast from micro businesses to medium and enterprise scale?

The root causes can be backtracked to act of balancing the four critical elements of a successful business. Micro and small companies are often short of expertise, skills, competencies and most importantly experience when it comes to making profitable growth that scales, especially internationally.

The key dilemma to micro and small companies is, how to acquire or rather have afford to acquire a person with such an expertise and experience. When company’s financial resources are extremely lean, company might not be able to compete for the required talents, even in a case the entrepreneur would be willing dilute the equity.
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This is truly a catch-22 situation. In order for company to grow, it would need the people crucial for the growth, but it’s missing the financial resources to recruit. As an end result, the growth will be delayed or stagnated altogether.

The traditional way to solve resource, competence or skills gap was recruitment – it was the hammer company had and all the needs were seen as nails. Fair – recruitment is still a very valid tool but not necessarily the fastest and best-fitting for businesses with rapidly changing workforce quality and quantity requirements.

Kauppalehti, a multichannel news outlet focusing on economic phenomena and the money market in the digital era, published recently an article (Kauppalehti, 2018) on interim management in Finland.  Article was based on a survey conducted by K2 Search, an interim management house part of Wise Company, a Stockholm stock exchange listed HR and recruitment company.

Survey revealed that companies who have used interim management service were extremely satisfied with the results and are likely to use the service again in the future. For me, this proves the core promise of the service – good return on investment and customer value.

In those companies, interim management service was used from product launches, opening international markets to IPO and M&A arrangements - not only for company reorganization and cost cutting exercises that are often considered to be the sweet spot for interim management.

According to article, even though interim management is gaining ground, it is not widely used by Finnish companies’ due to low visibility of the service and relatively small number of service providers. Whereas in Sweden, UK and Netherlands interim management services are being regularly used, the DIY culture is prevalent in Finnish companies.

Finnish companies take here an unnecessary competitive handicap. 

​According to Pekka Usva at Part-Time Genius, interim management works like any modern service where the user pays for the consumption, service scales depending on the needs, is available without long lead-time, and when the assignment is finished so are the attached costs.

Interim management can be the solution for micro and small businesses to enable access to needed skills and expertise in an affordable and flexible way, immediately and with low risk.

The saying “nothing stays the same, it either grows or shrinks” is very valid in this context: if your company doesn’t grow, your competition will.

Should you give a try? See how Part-Time Genius can help you – let’s meet and talk more about it.

BR Pekka at part-time-genius
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Sources:
Kauppalehti 2018. Väliaikaiset vuokrapomot yleistyvät: Vuokrapomo on usein saaneraaja - "Hän kerää kamansa, kun määräaikainen työ on tehty".
The Federation of Finnish Enterprises 2015. Entrepreneurship statistics 2015.