Two mindsets that make your business more resilient - Takeaways from growing at 46% with positive cash flow

Elin Lundström

CFO at Upsales

Elin Lundström

CFO at Upsales

What would you do if I told you that everything you know is wrong, and that it's your job to make it right? 

I'm going to be honest with you. My first months here at Upsales weren't hassle-free. It was my first job as a CFO, and my to-do list grew faster than mile-a-minute weed can invade an entire neighbourhood. 

So I approached our CEO: 

"Daniel, there's too much on my plate. There's no way I can manage it all. How do you want me to prioritise?"

He looked at me for a second before he answered: 

"Elin, assume that everything is wrong. It's your job to fix it."

And that's when I realised...

I had just stepped into our office on my first day at work and assumed the status quo was how I was expected to work around here. 

I completely forgot to question things and find better ways of working. 

Common sense takes you further than most 

If there's something you'll learn at Upsales, it's to think for yourself.  

You could say we've made challenging common beliefs our guiding north star. When looking closely at how we've run our business over the years, you'll see it shines through. 

When most tech companies raised capital and pressed the gas pedal, we chose a different way (and still managed to grow successfully).

There's no such thing as a blueprint for growth

When people ask us (as they often do):

"Why haven't you brought in capital?"

We counter: 

"Why would we?"

Sometimes, I feel like the entire tech scene has adopted this American idea of how to run a successful business—everything revolves around raising (a lot) of money to build the organisation. 

Sure, it's great to find inspiration in success stories. 

But just copy-pasting concepts is like standing in the Louvre, snapping a picture of the Mona Lisa and expecting to get the same results from selling a printed copy of it. 

The truth is that all companies are unique, and just doing as others do is often not a good idea. 

Growth and profitability aren't opposites

Even though many seem to believe so, growth and profitability aren't opposites. Our policy of not raising outside money and relying on organic growth has worked great for us. 

In Q2 2022 (our last quarterly report), we grew our earnings by 46%, with an EBIT margin of 18%. We're cash positive and have a policy of paying 50% of our free cash flow as dividends. 

I'm not saying you should do as we did. Following the global economic conditions, however, I think there's a lot of upside in thinking about how to become more resilient. That's why I'd like to share two things I learned while we grew with positive net cash flow, even in challenging times. 

Takeaway #1: Look for better ways to accomplish the same thing

A couple of years ago, we knew it was a matter of time before we needed to find new markets to sell to. We've always had ambitious growth targets, so we started exploring what an international expansion could look like. Hoping to be up and running when the domestic market would no longer be enough to reach our goals. 

As we were in the middle of an IPO, we talked to many investors. They told us expanding is expensive; "you need to register a subsidiary, recruit senior competence and buy a local office where you can build the organisation". 

Everyone stressed the importance of having "war cash", which meant being fully prepared to invest a lot of money without seeing returns.

There was just one problem. 

We weren't willing to do that. 

If people go left, turn right

So, we asked ourselves:

"Is there any better way we could accomplish this?" 

And yes, there were. We began on a small scale by investing in Google ads. We got a couple of leads, booked some appointments and closed the first customer within a month. 

We tested the ground cost-effectively, and it gave us what we needed to scale when the moment came. 

By daring to question what everyone says, I learned how to scale our organisation whilst maintaining our policy of resilience. 

Is this really the right way for you to execute at this moment? 

Trust your entrepreneurial intuition. Decide what's best for you, and don't depend on what an ‘expert’ told you. Always look for better ways to accomplish your ultimate goal. 

Takeaway #2: Lack of resources drives innovation

The second thing I've learned is that lack of resources can be a good thing—it's a catalyst for innovation. 

Earlier this year, we focused a lot on the software-as-a-service (SaaS) segment. 

Our marketing team needed to drive awareness and find new leads for the sales team. They're a team of only two full-time employees, so they had to prioritise their time wisely. 

When they had the opportunity to sponsor one of the largest SaaS conferences in Europe, do you know what they did first?

They asked themselves: 

  • Will this make people remember us and book appointments with us?
  • Will we see any impact on revenue in the coming quarter? 
  • Is it worth a substantial part of our budget? 

And the answer was no. 

But, it was undoubtedly a place where the audience would be.  

So, they started researching and discovered that renting an entire rooftop bar would be a third of the cost of buying a stand at the conference itself.

And with some creative work, they managed to get 100 SaaS CEOs and sales directors to join us for an after-conference mingle. The event was a success and much stickier than a traditional booth. It also provided an excellent opportunity for our sales reps to meet their prospects without hundreds of other reps lurking in the background. 

Be obsessed with getting remarkable results 

We could've easily raised their budget to attend this conference. Yet, the question never even arose. 

I think that's because this mindset is so imprinted in our culture. We are obsessed with finding smarter ways to get the best results possible. More money doesn't equal better results, and thanks to the people that question this idea daily, we get more output than those who don't. 

It also makes us care about which initiatives we spend time on. Because, in our experience, key people's time is often more of a bottleneck than capital. 

When it's hard, you're doing it right

Trust me; it's not always easy working at Upsales. As soon as you get an idea, you get the question:

"Is that the most important thing we can spend our resources on right now?" 

And when you want more budget: 

"Can't we accomplish that by doing this?"

However, I know this is why we have managed to grow profitably over the years. We force each other to think for ourselves – every single day. 

What about the tougher times ahead? 

As global turbulence continues, the general risk appetite has decreased. Investors are increasingly reluctant to give away funds, and many companies experience higher pressure than they're used to. 

It's worrying, but we must remember we can't impact macroeconomic factors. 

What we can do, however, is adapt how we run our businesses. 

  • Evaluate the things you're doing and the risk that comes with it. Is there a better way?
  • Keep track of when you expect to get payback on a project and shut things down if they don't go as planned. A shortage of resources can create the most effective and innovative solutions.
  • Stay brave, and dare to take bets.

And, most importantly, think for yourself

I'm confident you have the answers to upcoming challenges within.

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