A good situational snapshot is a valuable measure of growth and helps companies to make the right decisions
Mar 10, 2022
The situational growth awareness project, coordinated by Business Jyväskylä, aims to build a model of creating a snapshot of company growth. Its purpose is to help growth companies make better decisions and predict changes in customer relationships, sales, finances, personnel, and financing needs.
For a company and its investors, a good situational snapshot is a more valuable measure of growth than the previous financial statements. However, growth companies rarely have all the data and metrics available to them to create such a snapshot.
– The situational growth awareness project, coordinated by Business Jyväskylä, creates a model and tools for growth companies to predict typical growth-related challenges and respond to them promptly and with the right decisions. The purpose of the situational snapshot is to improve companies’ ability to assess their own situation from the perspective of customers, sales, and finances, says Nina Rautiainen, Project Manager, Business Jyväskylä.
Companies have a huge need for a reliable situation snapshot. Rautiainen gives an example.
– If a growth company is growing and living mainly on its cash flow, it is important to identify possible seasonal fluctuations and sales cycles. Through the snapshot, the company is better able to predict when seasonal fluctuations will occur and how long they are likely to last. This allows, for example, the reorganization of funding or personnel allocation in advance of the event. The same goes for the workload of experts and other important resources that need to be considered while growing.
Better credibility, responsiveness and more reliable decisions to support growth
Often, investors require growth companies to have a credible growth plan and that the management is capable of driving growth.
– It is not enough that staff and management have a strong belief in the future, that belief must also be credibly justified to outsiders. With an up-to-date situation snapshot and an understanding of what will happen soon, it is possible to convince investors of the workability of the company’s business idea, Rautiainen says.
Another benefit of having a reliable snapshot is related to a business intelligence approach to management, and the third benefit to staying on top of constant market change. Once the snapshot is in place, management will be able to evaluate the goals set and plan for the next steps.
– Growth data helps company management make data-based decisions. The more comprehensive the data, the better decisions are likely to be made.
– Changes in the market happen all the time and sometimes cause potential crises for companies. Growth data provides the possibility to react quickly and with the correct measures in crisis situations. In other words, the responsiveness of companies will improve, Rautiainen says.
Project manager Nina Rautiainen.
Snapshot built on three pillars
Launched in 2021, the Datahub project interviewed several companies that had been operating for a longer time and were still growing strongly. Based on the interviews, the most important dimensions influencing the growth were found: growth ability, productivity, and responsibility.
A set of individual measurements underlay every dimension. Indicators predicting growth are, for example, turnover, sales growth, number of leads and customer churn. Productivity is measured, among other things, by EBITDA, customer acquisition cost (CAC), customer profitability and inventory turnover.
– In addition to these, the snapshot is built from a responsibility perspective. In growth companies, the operational ability and wellbeing of personnel are significant factors that have a bearing on the snapshot. Indicators of responsibility include, for example, absence through sick leave, staff turnover and job satisfaction. Responsibility also includes economic stability and social impact, not forgetting the environmental aspects, Rautiainen explains.
The pilot group is starting in spring 2022
Project specification has progressed on schedule and the new tool will move into the testing phase later this year.
Around a dozen pilot companies will be selected. Their business area should be related to renewables industries or the promotion of sport, health and wellbeing.
– We are looking for companies with more than 10 employees with strongly growing turnover and who feel that they need support particularly in building their future, Rautiainen drops a hint.
Interested in joining the situational growth awareness pilot group? Contact Nina Rautiainen: tel. +358 50 413 7028 or firstname.lastname@example.org
The situational growth awareness project, aiming to create a better situational snapshot for companies, is led by Business Jyväskylä and implemented by the consulting company Woolman. The project is funded by ERDF under an ecosystem agreement signed between the Ministry of Economic Affairs and Employment and the City of Jyväskylä a year ago with the aim of developing the operating environment for companies. Participants include ecosystems of renewable industry, as well as those of exercise, health, and wellbeing.