It was billed as THE comeback year. Instead, for some, it’s been another of uncertainty and challenge.
And when you’re doing it through the lens of a funder, CEO or as part of a senior team, it can be bewildering as to why that has been the case.
As a growth consultancy and management consulting business we sit in a position of privilege; able to see the wood from the trees and aggregate lessons learned across a number of different B2B sectors, industries and company types.
And it’s for this very reason that we try and share as much of what we learn as possible so it’s easier for those working ‘in house’ to put into context what they’re seeing in the market.
And what better time to do that than at the end of a year. A year in which the best have risen to the top, but many have indeed struggled to find traction.
Why? Because the world really is changing and those not able to keep up are falling behind very fast. Below then, is what we’ve observed through the last 12 months. The key ‘trends’ we have been bumping up against and what you might be able to do about it if you are experiencing the same.
The specialists are winning.
This is the biggie. The number one takeaway for 2024. Whilst many have struggled to deliver a flat YOY performance in a difficult market there have been outliers. And like any good NED or consultants we work hard to understand the trends around out performance across every variable possible. And the one unifying factor is this simple truth: those that have a super tight proposition and GTM plan have grown.
We have supported several clients through large GTM reimagination projects this year and every single one have seen revenue growth as a result. And equally we have worked with several PE firms to help them assess opportunities for investment too. And you know what? Every single one of them that has presented good Compound Annual Growth Rate is a specialist.
What do we mean by that? Not only have they figured out that they need to be great at a single channel (if they are an agency or professional services business), or have a tight understanding of their SOM (Serviceable Obtainable Market) if they’re a product or software business, but they also lean into a specific sector too.
It is now a much more powerful message to be an influencer marketing agency for, let’s say, tech brands than it is a sector agnostic one.
For many it’s not been easy. Here’s why.
There have been other factors at play of course in the challenging year that many have endured. Principally the impact has been felt by those competing in increasingly competitive niches. With the economy struggling we have had to live through 12 months of recession-like macro factors. In times like that it means there is less to go around but with Covid having artificially inflated some markets it created a perfect storm; one where we have an oversupply of supply and diminishing demand.
Sectors like commerce have certainly suffered from this and start and scale ups, agencies and many other service businesses have struggled to find enough work as they compete against too many competitors.
This issue naturally works itself out with the weaker businesses often being forced to leave the sector, or fold completely and whilst there is still a bit of this to play out we are now definitely seeing the end of the rebalancing.
Glass ceilings still exist.
Having the privilege of working with and meeting so many different B2B businesses gives you unique insight into the challenges of growth. And we’ve been there too of course. What does it teach you? You can predict when people feel that pain the most acutely and often it’s because they have been bouncing off a certain level of revenue or MRR/ARR for some time and can’t quite figure out why it’s happening.
We call these the ‘glass ceiling moments’ and they usually happen at circa £1m / £3m/ £5m / £10m. Its a subject we have written about previously and it’s one that is still as true today as it was.
What got you to hear won’t get you where you want to go next!
Many see advisors as costs and not investment
Clearly we are biased to this one but if we had a penny for how many times we have been told that a business doesn’t want to invest in a NED or advisory support right now ‘because it affects EBITDA’ we’d be rich. Most see it as a cost and this is exactly the mindset that we spend a lot of time coaching people out of. You have to invest to grow. This means narrowing margins for a time but that does the OPPOSITE of value destruction.
You often cannot break through those aforementioned glass ceilings without investing in growing things like a proper sales and marketing engine, hiring senior team and brining in experienced NED support to guide you through it.
To an eventual acquirer that ADDS VALUE as it proves you’ve built back office and have a machine capable of expanding further.
Plus, advisory costs are usually adjusted out of your EBITDA when it comes to working out the value of the business!
The M&A market is heating up and you WILL sell if you build a great business.
2024 saw a gradual improvement in deal making and there can be little doubt that B2B has been the hottest ticket in town.
As we work with several M&A brokers, buyers and PE houses we also know there is pent up demand for great software and service businesses in the space.
In just one example a client of ours is going to market in ’25 and the prospective buyer list we’ve built has almost 130 names on it!
Lack of operational and financial data and reporting is hurting decision making
So many business owners and senior teams struggle to make good decisions as a company grows and most often its because they have failed to invest in improving financial reporting and operational BI.
Having up to date P&L data, good revenue and cost recognition and then great utilisation and profitability data makes objective decision making easy!
A lot of the time the issues start with your go to market
We have covered this a little in the point about ‘specialists winning’ but the problems inherent in a lot of flatlining businesses can be traced back to go to market. If you are pointed at the wrong opportunity, or you don’t have enough clarity around it then you tend not to do well. It’s surprising how often a business loses itself in this.
Few know where to turn on sales and marketing because for it’s changing so fast for B2B
B2B sales and marketing is changing faster than it’s ever changed. And we know that only too well, having been in it for 25 years. And this is causing much heartache and concern for many.
The truth is that sales and marketing now need to be part of the same conversation. And it starts with GTM. That’s a CEO-level conversation to ensure that everyone and everything is aligned to the right audience and is laser focused on helping them through the buyer journey.
Demand generation, capture, conversion and then customer success and upsell etc are now more than ever before part of the same team and conversation in those businesses that have it right.
Many are trying to do what they do for too many people!
We ran a workshop for a new client only this month that perfectly brings this point to life. Having stalled at a certain level of ARR the C suite were head scratching around what to do about it.
The first question we asked was ‘How many buyer personas do you have’?
The answer was 13. It’s not possible to service that many prospective markets well. The focus should be on becoming the best in the world on one or two first, then expanding slowly.
Scaling means removing complexity not adding it.
The process of scaling means first to move from a world of generalists to employing specialists. In doing this processes evolve and can be overengineered to make up for the lack of specialist leaders and experience. To get past that stage requires the most difficult of all skills; a mastery of taking complex things and simplifying them significantly. Without losing anything.
Communication solves all problems – but it’s often neglected.
We are great believers in this fact and always work quickly to understand how a business communicates both with its clients and customers and its people. Quite often the internal comms process gets lost, or is broken by inconsistency. This kills progress, clarity and culture.
WFH has its place but does create productivity issues.
We all need to have an open and honest conversation about HOW we are working in 2025. A lot of major organisations with the ability to measure utilisation and productivity with accuracy have started to move people back to the office. 100% in office isn’t perhaps the right balance either but with the world changing its right that conversation starts again.
The role of SDR needs reinventing.
The role of sales development within almost all B2B sales motions is broken. We see this weekly as we meet new businesses struggling to work out why sales pipelines are not moving, or growing. The answer as to why is a complex one but it begins and ends with a misalignment with audience and customer needs, a poorly constructed GTM and a separation of sales and marketing plans and KPIs. SDRs play a key part in the ‘flow’ of this and should sit across both in 2025 and beyond as ‘account managers for customers that are not yet customers.’
Outbound has to become a creative and human endeavour again
Thank the Lord that the days of spray and pray outbound are over! Just 18 months ago lead gen people sitting in bedrooms were making a fortune because they’d figured out how to use Apollo.
Saturation soon followed and it stopped working. In its place we find a now highly technical industry infinite personalisation at its core. But with it has come a whole new era in creativity; in how we find moments of intent, how we enrich data to allow for personalisation and how we build messages that resonate with very specific visceral pain in the present.
Expect this to grow into an exciting industry led by smart and experienced people in 2025.
Most service businesses don’t have a product roadmap
It may be dumbfounding to those building software products but less than 5% of service businesses have a up to ate and easily navigable service, or new product roadmap. And it’s a huge miss.
Speak to anyone in SaaS and they’ll tell you one of the most important comms and delivery processes is the product roadmap with everyone in the business feeding into it and monitoring its deadlines closely.
So why don’t agencies? In such a fast moving world it’s now an imperative to know how and when new services will launch and how existing ones will be improved.
Pricing is never solved, especially when inflation bites
Both SaaS and professional service businesses have been caught on pricing in 2024. A lack of competitor pricing analysis has left many missing out on significant margin upside with hourly rates or pricing tiers well below market.
The days of £9.99 a month pricing tiers or £60 hour rates are gone and for those stuck on them its created very significant margin destruction as overheads and wage inflation pushed costs higher.
It has served as an important reminder of pricing research and testing.
AI is still only an augmentation and efficiency tool
AI has created a lot of noise in 2024 and for good reason. But while it undoubtedly will significantly disrupt many industries n time that runway is always longer than the evangelists would have you believe. I know that as I’ve been one of those people cheering the latest tech, only for it to take longer and become less impactful than we think.
Major SaaS businesses will absolutely be built from the foundations of course but in 2025 it will continue to be an augmentation tool only. Learn how it can help you serve your customer better and your business will do just fine. But it pays to keep up and invest in training.
Remember that when the TV came out they said it would kill radio. Radio was supposed to do the same for TV…
Sales velocity is still a problem, but there are ways to unblock it
If we had a pound for every time a business told us that time to close had increased in 2024 we’d be rich. Macro uncertainty has not helped matters but there are still lots of creative ways to improve it.
Don’t be paralysed by the problem; instead think about things like pricing strategy, term flexibility, selling in consulting projects ahead of significant retainers are a few ways in which you can improve that picture.
And so there you have it, that’s what we have observed this year as NEDs and advisors for many of the UK’s fastest scaling B2B businesses. If any resonate with you and you want to chat through what you’re seeing and how to unblock it drop us an email at hello@scaled.co.uk and we’d be more than happy to walk through it with you.
Here’s to a brilliant 2025!
