The company has developed the first version of the product and you are more or less ready for launch on the market. Some employees experience having their role description changed, and may now be responsible for sales and marketing, in addition to other tasks.

Many businesses are rightly impatient to get the product onto the market and the questions can be many:

• What do we do if the product does not work as expected?
• How do the customers perceive our product, do the marketing channels we have used work, does the product have the functionality the customers want?
• How do we differentiate ourselves from the competition, what price point should we choose?
• Do we have sufficient funding, do we have the right composition of employees, and how should we handle customer support?

 

Commercialization – complicated and time-consuming

For many, the biggest challenge with market launch is the change from a development-oriented focus, where you build the organization with heavy technical expertise, to a market-oriented focus with requirements for both commercial and technical expertise. In most cases, the phase requires recruitment, the company grows in number of employees and the composition of competence becomes increasingly important.

As the company grows, the general manager will not be able to sit with the operational responsibility for the entire company alone. The need for decentralization of responsibility and establishment of an organizational structure becomes more important in this phase. Often this places demands on the organization that the founding team is not prepared for. Some have not established clear areas of responsibility and decision-making structures, and until now "everyone" has been involved in everything. But now the company is becoming of such a nature that responsibility and decision-making authority must be delegated. In many cases, this delegation of responsibility takes place without associated structures for follow-up. This complicates accountability and can lead to a lack of control and poor results. 
 

Market adaptation can be slow

Many will find that market adaptation is slower than expected. Although you have been market-oriented throughout the product development, it is now that you get the first real test of the customers' willingness to buy. Analyzing purchase preferences requires the establishment of systems for market feedback, and market entry often requires significant adjustments to product functionality. It is important to establish structures for market feedback at an early stage, so that the necessary adjustments and adaptations can be made. Integrating such data into the company's management and reporting system will save time for the general manager, while at the same time focusing on some of the most important value drivers in the phase.
 

Delivery model, strategies and commercial agreements

It will be necessary to establish a delivery model and make several strategic decisions which, among other things, deal with product strategy, market strategy, price strategy and customer segmentation. This happens in parallel with the company entering into commercial agreements both on the customer and supplier side which will ensure scalability, prevent future ties and contribute to good profitability. It is now that the negative consequences of a lack of preparation and internal structures can come to light.
 

Tightened requirements from the employees

Market entry requires high commercial competence, and it will be necessary to establish a function for handling customer enquiries. In many cases, this leads to employment. More employees tighten the requirements for the company as an employer, and the employees expect the company to operate as a professional employer on the same level as any other company. As the company grows, the general manager will not be able to be responsible for all employees alone. The need for the support system and structures for follow-up of the employees is becoming more and more important. The appointments often take place reactively and during a period of rapid development. This tightens the requirements for the right appointments - incorrect appointments can lead to delays and a lack of focus on the core activities. At the same time, the composition of expertise in the team is becoming increasingly important; carrying out a conscious competence mapping measured against the requirements under which the businesses operate is crucial to having the right team to pull the company through the phase. Competence, culture and personality are both important to consider when hiring - often only competence is assessed in a phase where it is critical to bring in resources quickly.

Once the team is in place, active management of the employees is essential for success. Employees are one of the most important resources in a company, and perhaps especially in start-up companies. This applies to board members as well as employees. Losing key resources can lead to delays in company development, and even affect company value. Managing employees can be time-consuming, but with the establishment of routines and support systems at an early stage, the company will have a scalable platform that handles the company's most important resource.
 

New requirements from investors and other funding sources

Despite the company receiving its first revenues, many are still dependent on external financing to cover operating losses and investments. The supply of investor capital changes, and the company can in many cases qualify for some of the bank's loan schemes. Both investors and financial institutions carry out risk assessments before providing capital, and base their investment on, among other things, confidence in business plans and liquidity forecasts. It is important that the company can show traction in the market, and as mentioned, this is one of the most important value drivers in the phase.

In addition, investors often look at issue history, and there are now more challenges with a high valuation early on. It is important that the company has a conscious relationship with capital and ownership strategy from an early stage - remember that the investor must also be a good match for the company, not just the opposite. In some cases, it is best in the long term to set a lower price to get "active" or "smart" capital, rather than a high valuation and a passive investor who may not understand the company's goals or risk profile. Unfortunately, we often see that high valuation and access to capital come first.

As the cost structure increases in complexity, information from the accounts becomes increasingly valuable:

• What does the company spend money on?
• What margins does the company have on the various market segments and products?
• What do different marketing initiatives cost and what are the effects?
• What is the company's net and gross burn rate?
• How long does the company have capital and how sensitive are the company's forecasts?
• What does market adaptation look like?

These are examples of questions that you, as a general manager, will be challenged with. Development and maintenance of an adapted management system with the most important key figures is essential for maintaining the trust of the various stakeholders in the general manager. The company's management system should have a holistic approach and be used on an ongoing basis to measure and adjust the company's development. This is a time-consuming job if done manually.

The need for support systems and administrative assistance thus grows further in the market entry phase, and any organizational "debt" becomes more and more apparent. It is not uncommon for systems to be deficient, which often leads to failing assumptions in the business model being discovered too late, as well as a disproportionate amount of time and resources being spent on administration and follow-up. This can have unsustainable consequences.

Examples of services from BDO's industry team:

• Accounting, CFO and legal services
• Assistance with business model, including price strategy, market strategy, delivery model. etc.
• Establishment of a management system, and automatic reporting in dashboard format
• Capital planning, including assessment of financing opportunities, assistance in issue processes and application writing for public grants
• Assessment of loan capacity, and assistance with loan applications from banks or public grant providers
• HR-related assistance, including competence mapping, assistance with employment processes, remuneration mechanisms, systems and procedures for employee follow-up
• Assistance business review and monthly evaluation of the company's performance
• Cooperation agreements and contracts with customers and suppliers
• Tax and fee-related assessments of the business model