Managing Post-Funding Decisions – Avoiding the OPEX Trap
Securing an injection of funding is a pivotal moment for any business. It validates your vision and provides the resources to pursue growth opportunities. However, this influx of cash can tempt management teams to expand operational expenditure (OPEX)—particularly through increased headcount—without fully considering the financial impact.
While optimism and ambition are crucial, it’s essential to remember that increasing OPEX too quickly can erode profitability, leaving businesses scrambling to maintain performance rather than improve results. This guide explores how to make smarter, more sustainable decisions when managing post-funding spending, linking costs to revenue, and maintaining profitability.
The Challenge: The Temptation to Over-Invest in OPEX
One common post-funding misstep is rapidly expanding management headcount or other fixed costs to demonstrate progress. With the average UK management salary at £40,000, adding headcount can quickly escalate OPEX.
It’s vital to calculate the financial impact of these decisions. For example:
- At a 5.7% gross profit margin (the UK average in 2023 and 2024), every £40k in costs requires £702k in additional revenue just to maintain profitability.
- The margin for error is slim, and poor planning can lead to negative outcomes, even in high-growth scenarios.
This makes it imperative for businesses to align spending with achievable revenue targets while ensuring that profitability is preserved.
The Context: Trends in UK Gross Profit Margins
Over the past three years, the average gross profit margin for UK companies has shown modest improvement:
- 2022: 3.98%
- 2023: 5.70%
- 2024: 5.70%
While these figures represent a positive trend, they also highlight how narrow profit margins remain for many businesses. It’s important to note that these averages vary significantly by industry, meaning your specific gross margin may be higher or lower.
This variability underscores the importance of understanding your business’s unique financial metrics before making significant OPEX decisions.
Recognise Internal Pressures to Expand Teams
It’s not uncommon for existing management to push for the recruitment of additional subordinates after a funding round. In my experience, your management team will often be convinced they need more heads to handle the additional workload and expectations.
While these requests can have merit, it’s essential not to take them at face value. Don’t assume the need for additional headcount is entirely factual. Instead, work through the specifics:
- What additional effort is required, and is it truly beyond the current team’s capacity?
- Can the workload be redistributed, streamlined, or supported through tools or processes before committing to new hires?
- Will this new role genuinely alleviate constraints or simply create new layers of management?
Taking the time to evaluate these pressures critically helps avoid the “easy option” of expanding headcount unnecessarily and ensures every hire contributes directly to value creation and sustainable growth.
Challenge the Justification of Additional Costs
I often hear management teams justify a £40k investment by breaking it down into monthly salary terms—seeing it as a manageable £3,333 per month. While this might make the cost feel more palatable, it’s only part of the picture.
Instead, consider the £702k in additional revenue required to cover that £40k annual cost (based on an average 5.7% gross margin). Spread that revenue target over 12 months—suddenly, it’s a staggering £58,500 in extra revenue per month just to stand still.
When viewed from this perspective, does the investment still feel like a “no-brainer”? Reframing the conversation this way encourages leaders to assess whether the additional cost is truly necessary and whether the associated revenue targets are realistic.
Reframing the Post-Funding Conversation
Instead of asking, “What can we do with this funding?”, ask:
- “How much additional revenue is required to offset new costs?”
- “Are these expenditures sustainable given our profit margins?”
- “How can we optimise existing processes before increasing fixed costs?”
By shifting the focus from spending to sustainability, businesses can avoid common pitfalls and ensure that growth efforts lead to tangible, profitable results.
Practical Framework for Post-Funding Decisions
1. Understand the Financial Impact of Additional Costs
With average UK gross profit margins at 5.7%, it’s essential to calculate the revenue required to break even on new expenditures. For example:
- Every additional £40k management salary demands £702k in new revenue to maintain profitability.
- To improve profitability, the required revenue is even higher.
This highlights how even modest increases in OPEX can have outsized implications for revenue targets.
2. Optimise Existing Processes Before Expanding
Use funding to address inefficiencies and strengthen existing systems before committing to increased OPEX. Scaling flawed processes amplifies inefficiencies, leading to wasted resources and reduced profitability. Focus on:
- Automating repetitive tasks.
- Streamlining workflows.
- Enhancing operational systems to handle growth without proportional cost increases.
3. Invest Strategically, Not Reactively
Expanding headcount is often necessary for growth, but it should always align with clear ROI. Before making new hires, assess whether the role:
- Addresses a critical constraint to growth.
- Will lead to measurable revenue or efficiency gains.
- Could achieve the same outcomes through outsourcing or technology.
4. Link Expenditure to Revenue-Generating Activities
Ensure that every expenditure contributes directly or indirectly to revenue. For example:
- Instead of hiring additional management, could a combination of junior roles and improved systems achieve similar outcomes at a lower cost?
- Are you investing in sales or marketing capabilities that will drive the necessary revenue growth?
5. Foster Financial Awareness Across the Team
Educate your leadership team on the relationship between OPEX, profit margins, and revenue. Encourage them to think critically about how each decision impacts the bottom line. This not only leads to better decisions but also creates a culture of accountability and strategic focus.
Key Questions for Post-Funding Spending Decisions
- Does this expenditure align with our growth strategy, or is it reactive?
- How much additional revenue is needed to cover these costs?
- Are our current systems optimised to handle growth, or are we scaling inefficiencies?
- Could alternative solutions achieve the same outcomes more cost-effectively?
The Leadership Advantage: Sustainable Growth Over Quick Wins
Post-funding decisions set the tone for your business’s next phase. While it’s tempting to ramp up OPEX to deliver immediate results, it’s crucial to prioritise profitability and long-term sustainability.
By understanding the financial implications of decisions—such as the revenue required to support an average £40k management salary—you can ensure that your growth efforts are strategic, measurable, and sustainable.
At NorthCo, we specialise in helping leadership teams navigate these critical moments. Our tailored leadership and operational support services ensure that businesses maximise the value of their funding while avoiding common pitfalls.
Conclusion: Grow Smarter, Not Harder
Post-funding growth should be exciting, not stressful. By linking spending to achievable revenue targets and maintaining focus on profitability, you can avoid the OPEX trap and position your business for sustained success.
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About the Author
Trevor is the Managing Partner of NorthCo, a fellow of the Institute of the Motor Industry and a member of the Institute of Interim Management. Trevor is a respected C-Suite leader, Chairman and professional Interim Leader. For over a decade, he has provided interim leadership solutions to private equity, venture capital, and asset-backed firms. Whether it’s to stabilise a business during a turbulent trading period, fill a temporary skills gap or support a management team to navigate challenging situations, Trevor’s wealth of experience and proven track record in delivering value creation and retention plans demonstrate his ability to lead and support operational management teams effectively. To find out more about his approach, explore his LinkedIn profile and read what others say about Trevor.
Balancing Value and Quality: How to Compete Across Price Points
Balancing Value and Quality: How to Compete Across Price Points
In competitive markets, balancing value and quality is a critical challenge. Customers expect affordability without compromising on quality, and businesses must find ways to deliver on both fronts. Whether you’re targeting budget-conscious buyers or premium-seeking customers, a thoughtful approach to balancing value and quality can set you apart.
Here’s how to strategically compete across price points while maintaining your brand integrity.
1. Understand Your Customer Segments
Key Principle: Different customers value different things. Tailor your offerings to meet their specific needs.
Action Step: Analyse your customer data and create three distinct personas representing key segments of your market.
2. Build a Tiered Offering
Key Principle: Offering options at different price points allows you to cater to a broader audience.
Action Step: Evaluate your current offerings and identify opportunities to add or refine value and premium tiers.
3. Communicate Value Clearly
Key Principle: Customers need to understand why your products or services are worth their price.
Action Step: Revise your marketing materials to ensure they effectively communicate the value of your offerings.
4. Optimise Cost Structures Without Compromising Quality
Key Principle: Efficiency allows you to deliver quality at a competitive price.
Action Step: Conduct a cost review to identify one area where savings can be achieved without sacrificing quality.
5. Leverage Customer Feedback to Refine Offerings
Key Principle: Your customers can guide you in striking the right balance between value and quality.
Action Step: Launch a survey to gather customer opinions on your value and quality balance, and use the results to guide improvements.
Winning Across Price Points
Balancing value and quality isn’t about being everything to everyone—it’s about understanding your customers and meeting their expectations strategically. By segmenting your audience, building tiered offerings, communicating value, optimising costs, and leveraging feedback, you can appeal to a wide range of customers without diluting your brand.
When you get the balance right, you’re not just competing—you’re leading.
Prepare to move, Trevor
Elevating Customer Loyalty Through Personalisation
Elevating Customer Loyalty Through Personalisation
Loyal customers are the foundation of any successful business. While discounts and promotions can bring people in the door, personalisation is what keeps them coming back. In today’s competitive landscape, understanding your customers on a deeper level and tailoring your approach can turn one-time buyers into lifelong advocates.
Here’s how to elevate customer loyalty through the power of personalisation.
1. Know Your Customers Better
Key Principle: Understanding your customers is the first step to building meaningful relationships.
Action Step: Create three customer personas based on your existing data to better understand the needs of your audience.
2. Deliver Tailored Experiences
Key Principle: Personalisation is about showing customers you understand them.
Action Step: Launch a personalised email campaign targeting a specific customer segment this month.
3. Build a Loyalty Programme with Purpose
Key Principle: A well-designed loyalty programme reinforces trust and rewards repeat business.
Action Step: Audit your existing loyalty programme (or design a new one) to ensure it aligns with customer preferences and behaviours.
4. Engage Through Omnichannel Experiences
Key Principle: Consistency across all touchpoints builds trust and enhances loyalty.
Action Step: Map the customer journey across your channels and identify one area to improve consistency or remove friction.
5. Measure and Refine Continuously
Key Principle: Loyalty strategies must evolve with your customers.
Action Step: Choose one loyalty-related metric to track over the next quarter and create a plan to improve it.
Winning Long-Term Loyalty
Personalisation is more than a strategy; it’s a mindset. By understanding your customers, delivering tailored experiences, and building trust through consistent engagement, you can create loyalty that lasts. When customers feel valued and understood, they’re not just more likely to stay—they’re more likely to advocate for your brand.
Prepare to move, Trevor
Competing with Lean Competitors: Lessons in Operational Efficiency
Competing with Lean Competitors: Lessons in Operational Efficiency
Lean competitors, like discount retailers or low-cost service providers, often gain an edge through streamlined operations and razor-sharp efficiency. For businesses with more complex structures, competing in this space can feel like an uphill battle. However, with the right strategies, it’s possible to adapt, optimise, and thrive.
Here’s how to compete effectively by embracing operational efficiency.
1. Audit and Eliminate Waste
Key Principle: Identify inefficiencies that drain resources without adding value.
Action Step: Select one operational area to audit this month and implement a cost-saving adjustment.
2. Streamline Supply Chains
Key Principle: A lean, well-managed supply chain reduces costs and improves agility.
Action Step: Review your supplier agreements and identify one area to negotiate improved terms.
3. Leverage Technology for Automation
Key Principle: Automation frees up resources for high-value activities.
Action Step: Identify one manual task that could be automated and research tools to implement the change.
4. Empower Your People to Drive Efficiency
Key Principle: Employees on the ground often have the best insights into operational improvements.
Action Step: Host a team meeting to gather ideas for improving workflows or cutting waste.
5. Monitor and Adapt Continuously
Key Principle: Efficiency isn’t a one-time achievement—it requires ongoing attention.
Action Step: Choose one efficiency-related KPI to track over the next quarter and review progress monthly.
Outpacing Lean Competitors
Competing with lean competitors requires a relentless focus on efficiency and a willingness to challenge existing practices. By eliminating waste, streamlining supply chains, leveraging technology, empowering your team, and continuously adapting, you can level the playing field and even gain an edge.
Remember, operational efficiency isn’t about cutting corners—it’s about making smarter, more strategic decisions.
Prepare to move, Trevor
Purpose-Led Leadership: Building Loyalty Through Values
Purpose-Led Leadership: Building Loyalty Through Values
In an era where trust and loyalty are harder to earn than ever, purpose-led leadership has become a critical differentiator. Customers and employees alike gravitate toward organisations that stand for something bigger than profit. Purpose gives people a reason to believe in your business, fostering deeper connections, long-term loyalty, and a competitive edge.
Here’s how to lead with purpose and inspire loyalty through values.
1. Define Your Purpose Clearly
Key Principle: A clear, authentic purpose aligns your organisation and inspires action.
Action Step: Host a team workshop to define or revisit your organisation’s purpose and discuss how it aligns with your strategy.
2. Embed Purpose in Everyday Actions
Key Principle: Living your purpose daily builds credibility and trust.
Action Step: Identify one operational process where you can better align actions with your organisation’s purpose.
Action Step: Identify one operational process where you can better align actions with your organisation’s purpose.
3. Communicate Purpose Consistently
Key Principle: Repetition and transparency reinforce belief in your mission.
Action Step: Create a communication plan to share one story each month that demonstrates your organisation’s purpose in action.
4. Build Trust Through Authenticity
Key Principle: Purpose-driven organisations must be transparent and genuine to maintain credibility.
Action Step: Conduct a review of your purpose-related claims and ensure they align with measurable actions and outcomes.
5. Inspire Loyalty Through Shared Values
Key Principle: People remain loyal to organisations that align with their personal values.
Action Step: Launch a small community initiative or partnership that aligns with your organisation’s values and purpose.
Purpose-Driven Success
Purpose-led leadership is not just a philosophy—it’s a strategic advantage. By defining your purpose, embedding it into your operations, communicating it authentically, and aligning it with the values of your employees and customers, you can build a more engaged, loyal, and inspired community around your organisation.
Remember, purpose isn’t just what you say. It’s what you do every day.
Prepare to move, Trevor
Innovating Through Uncertainty: Unlocking Opportunities in Tough Times
Innovating Through Uncertainty: Unlocking Opportunities in Tough Times
Periods of uncertainty can feel like a time to play it safe, but history shows that some of the most groundbreaking innovations arise during challenging times. Leaders who embrace change and encourage creative thinking can uncover new opportunities, gain a competitive edge, and position their businesses for long-term success. Innovation isn’t about taking reckless risks—it’s about finding smart, strategic ways to adapt and thrive.
Here’s how to foster innovation and unlock opportunities in uncertain times.
1. Stay Close to Your Customers
Key Principle: Innovation starts with understanding customer needs and pain points.
Action Step: Schedule a focus group with a segment of your customer base to explore how their needs are changing and what solutions they value most.
2. Encourage a Culture of Experimentation
Key Principle: Innovation thrives in environments where teams feel empowered to try new things.
Action Step: Identify one area where you can pilot a new idea within the next month, and establish clear criteria for measuring success.
3. Leverage Existing Strengths
Key Principle: The best innovations often build on what you already do well.
Action Step: Brainstorm with your team to identify one way to adapt or expand an existing product or service to serve a new customer need.
4. Collaborate for Fresh Perspectives
Key Principle: Partnerships and external input can spark new ideas and open doors to opportunities.
Action Step: Organise a brainstorming session with a mix of internal and external stakeholders to explore new ideas.
5. Invest in Future-Focused Technologies
Key Principle: Technology can be a catalyst for innovation, especially in times of change.
Action Step: Identify one technology investment that could enhance your operations or customer experience, and create a plan to implement it.
Seizing the Moment
Innovation during uncertain times isn’t about taking unnecessary risks—it’s about finding smart, calculated ways to adapt and create value. By staying close to your customers, fostering a culture of experimentation, leveraging your strengths, collaborating with others, and investing in technology, you can uncover opportunities that set your business apart.
In the face of uncertainty, those who innovate don’t just survive—they thrive.
Prepare to move, Trevor
The Power of Focus: How to Simplify for Success
The Power of Focus: How to Simplify for Success
In a world of endless possibilities, many businesses fall into the trap of trying to do too much. Sprawling product lines, complex processes, and misaligned priorities dilute effectiveness and create unnecessary strain. True success often lies in doing fewer things exceptionally well. By focusing on what matters most, you can optimise resources, energise your team, and deliver greater value to your customers.
Here’s how to harness the power of focus and achieve more by doing less.
1. Identify Your Core Strengths
Key Principle: Focusing on what you do best creates a foundation for long-term success.
Action Step: Conduct a review of your products, services, or projects and identify one area where you can streamline or refocus.
2. Simplify Processes and Systems
Key Principle: Complexity wastes time and resources. Simplicity drives efficiency.
Action Step: Choose one operational process to streamline this month and implement a simpler, more efficient workflow.
3. Align Priorities Across Your Team
Key Principle: A focused team is a powerful team.
Action Step: Hold a team meeting to review current priorities and align efforts towards the most critical objectives.
4. Focus Resources on High-Impact Activities
Key Principle: Concentrating your time, money, and energy on what delivers the most value yields better results.
Action Step: Review your resource allocation and identify one area where you can shift focus to maximise impact.
5. Monitor and Measure Progress
Key Principle: Staying focused requires regular checks to ensure you’re on track.
Action Step: Select one key goal and define metrics to track your progress over the next quarter.
Achieving Success Through Focus
The power of focus lies in its ability to transform complexity into clarity, inefficiency into impact, and misalignment into momentum. By identifying your strengths, simplifying your operations, aligning your team, and concentrating resources on what matters most, you create a solid foundation for growth and success.
Remember: doing more isn’t the answer. Doing less—but better—is the way forward.
Prepare to move, Trevor
Reconnecting with Customers: Strategies for Staying Relevant
Reconnecting with Customers: Strategies for Staying Relevant
There are no spare customers. Each relationship matters, especially during times of uncertainty. Staying close to your customers is one of the most important factors in maintaining and growing a business, especially during times of change or uncertainty. When customer needs and behaviours shift, businesses that adapt quickly can strengthen relationships, build loyalty, and stay ahead of the competition. Reconnecting with your customers isn’t just a reactive measure—it’s a proactive approach to long-term success.
Here’s how to realign with your customers and ensure your business remains relevant.
1. Understand Your Customers’ Changing Needs
Key Principle: You can’t serve your customers effectively if you don’t understand what they want.
Action Step: Create a simple survey this week to gather insights into your customers’ current challenges and priorities.
2. Focus on Solving Pain Points
Key Principle: Customers value businesses that address their most pressing challenges.
Action Step: Identify one common customer pain point and adjust your messaging to emphasise how your business solves it.
3. Strengthen Communication Channels
Key Principle: Open and consistent communication builds trust and loyalty.
Action Step: Review your current communication channels and identify one way to improve accessibility or personalisation.
4. Reward Loyalty and Build Engagement
Key Principle: Customers who feel valued are more likely to remain loyal.
Action Step: Design a simple loyalty programme or create a personalised offer for your top customers.
5. Innovate Based on Customer Insights
Key Principle: Insights from your customers can guide your next big idea.
Action Step: Brainstorm with your team to identify one customer-inspired idea to pilot in the next quarter.
Building Stronger Customer Connections
Reconnecting with your customers is about more than just understanding their needs—it’s about building meaningful, lasting relationships. By listening to their feedback, addressing their pain points, communicating effectively, rewarding loyalty, and innovating with their insights in mind, you position your business as a trusted partner in their success.
When you focus on staying relevant to your customers, you don’t just survive—you thrive.
Prepare to move,
Trevor
Positioning for Growth: Using Slowdowns to Build a Stronger Business
Positioning for Growth: Using Slowdowns to Build a Stronger Business
Periods of economic slowdown can feel like a time to hunker down and focus only on survival. But for strategic leaders, these moments present a unique opportunity to position their businesses for long-term growth. By optimising operations, refining strategy, and investing wisely, you can turn challenging times into a foundation for future success.
Here’s how to prepare your business to thrive when the tide turns.
1. Evaluate Your Core Strengths
Key Principle: Growth starts with a clear understanding of what your business does best.
Action Step: Conduct a SWOT analysis with your leadership team to identify areas of focus for strengthening your business.
2. Invest in High-Impact Areas
Key Principle: Strategic investment during a slowdown can yield significant returns when the economy rebounds.
Action Step: Identify one high-impact area where a strategic investment could position your business for future growth.
3. Strengthen Customer Relationships
Key Principle: Loyal customers are the backbone of sustained growth.
Action Step: Reach out to your top customers and ask how you can better support their goals during this period.
4. Streamline Operations
Key Principle: Efficiency creates resilience and frees up resources for growth initiatives.
Action Step: Select one operational process to streamline this month and track its impact on efficiency.
5. Stay Open to New Opportunities
Key Principle: Slowdowns often reveal gaps in the market or opportunities for innovation.
Action Step: Host a brainstorming session with your team to explore new opportunities or innovations to pursue.
Emerging Stronger
Positioning your business for growth during a slowdown requires a proactive mindset and a willingness to adapt. By evaluating your strengths, investing strategically, nurturing customer relationships, streamlining operations, and staying open to new opportunities, you can lay the groundwork for long-term success.
When the economy rebounds, your business will be ready not just to recover, but to thrive.
Prepare to move, Trevor
Leadership That Inspires Loyalty: Keeping Your Team Motivated in Uncertain Times
Leadership That Inspires Loyalty: Keeping Your Team Motivated in Uncertain Times
In challenging times, leadership is tested most. Teams look to their leaders for guidance, reassurance, and inspiration. How you lead during periods of uncertainty can make the difference between a disengaged workforce and one that is energised and committed to success. Inspiring loyalty isn’t about grand gestures—it’s about consistent actions that show you value and support your people.
Here’s how to lead in a way that earns trust and motivates your team when it matters most.
1. Communicate with Clarity and Transparency
Key Principle: People trust leaders who are honest, clear, and consistent in their messaging.
Action Step: Hold a team meeting this week to update your employees on key priorities and invite questions to clarify concerns.
2. Show Empathy and Understanding
Key Principle: Loyalty is built when people feel seen, heard, and understood.
Action Step: Send a personalised message or publicly acknowledge an individual or team effort that has made a positive impact this week.
3. Empower Ownership and Autonomy
Key Principle: People are more engaged when they feel trusted to make decisions and take responsibility.
Action Step: Identify one project this week where you can delegate more responsibility and encourage independent decision-making.
4. Provide Growth Opportunities
Key Principle: Investing in your team’s development shows you care about their future, not just the organisation’s immediate needs.
Action Step: Organise a training session or workshop on a skill that will benefit both your team and the organisation.
5. Lead by Example
Key Principle: Actions speak louder than words. Demonstrate the behaviours you want your team to emulate.
Action Step: Identify one specific behaviour you want your team to adopt and model it consistently this week.
Positioning Your Team for Success
Leadership that inspires loyalty isn’t about control—it’s about connection. By communicating openly, showing empathy, empowering your team, fostering growth, and leading by example, you create an environment where people feel valued and motivated to give their best.
In uncertain times, your ability to inspire loyalty and engagement will not only steady the ship but also position your organisation to emerge stronger.
Prepare to move, Trevor
Adapting to Customers’ Needs: Creating Value During a Downturn
Adapting to Customers’ Needs: Creating Value During a Downturn
In challenging economic times, customer priorities shift. What once was a “must-have” may now seem like a luxury. As businesses tighten their belts, so do customers, forcing leaders to rethink how they deliver value and stay relevant. Adapting to these changing needs isn’t just about survival—it’s about building stronger, more loyal relationships that last beyond the downturn.
Here’s how to align your business with your customers’ evolving needs and expectations.
1. Understand What Matters Most
Key Principle: Customer needs evolve during a downturn. Anticipating and addressing these changes is critical.
Action Step: Conduct three customer interviews this month to gain insight into their changing needs and pain points.
2. Refine Your Value Proposition
Key Principle: Deliver more of what customers value and eliminate what they don’t.
Action Step: Review your product or service portfolio. Identify one area where you can enhance perceived value or better align with customer needs.
3. Offer Flexible Solutions
Key Principle: Flexibility shows customers that you understand their constraints and are willing to work with them.
Action Step: Identify one area where you can introduce a more flexible offering or payment structure to accommodate customer needs.
4. Strengthen Relationships
Key Principle: Customers remember businesses that go above and beyond to support them during tough times.
Action Step: Create a customer outreach plan to check in with your key accounts and ask how you can better support them.
5. Innovate to Solve New Problems
Key Principle: Use the downturn as an opportunity to adapt your offerings and address emerging customer needs.
Action Step: Brainstorm with your team to identify one new offering or improvement that addresses a current customer challenge.
Positioning for Long-Term Loyalty
Adapting to customers’ needs during a downturn isn’t just about maintaining revenue—it’s about deepening trust and loyalty. By staying close to your customers, refining your value proposition, and offering flexible, empathetic solutions, you position your business as a reliable partner in their success. When the economy rebounds, these strengthened relationships will drive your growth.
Prepare to move, Trevor
Efficiency in Tough Times: How to Do More with Less
Efficiency in Tough Times: How to Do More with Less
When the economy tightens, businesses face mounting pressures to sustain performance while conserving resources. The challenge isn’t just surviving the downturn—it’s positioning your organisation to emerge stronger when the tide turns. Efficiency becomes the cornerstone of resilience, enabling leaders to optimise processes, cut unnecessary costs, and focus on what truly drives value.
In particular, prioritising the efficiency of Operational Expenses (OPEX) can unlock significant savings and free up resources for strategic initiatives. By scrutinising ongoing costs and eliminating waste, you can ensure your business remains agile and prepared for the future.
Here’s how to sharpen your operations and ensure your business thrives, even in tough times.
1. Streamline Your Processes
Key Principle: Simplicity breeds efficiency. Complex processes waste time, drain resources, and create bottlenecks.
Action Step: Map out one critical process in your business this week and challenge your team to find ways to reduce steps or eliminate redundancy.
2. Leverage Technology for Automation
Key Principle: Let technology do the heavy lifting, freeing your team to focus on high-value tasks.
Action Step: Identify one manual task in your business that could be automated and start exploring tools to implement the change.
3. Cut Costs Strategically
Key Principle: Not all costs are created equal—cut with care to avoid compromising long-term goals.
Action Step: Conduct a cost review with your leadership team. Identify one supportive cost that can be optimised or eliminated within the next quarter.
4. Focus on Employee Productivity
Key Principle: A motivated, well-supported team can achieve more with less.
Action Step: Host a team discussion about productivity. Ask employees what roadblocks they face and work collaboratively to address them.
5. Monitor and Measure Continuously
Key Principle: Data-driven decisions lead to sustained efficiency improvements.
Action Step: Choose one efficiency-related KPI to track over the next month. Set a target and involve your team in meeting it.
Positioning for the Future
Efficiency isn’t just about surviving tough times; it’s about positioning your business to scale and thrive when conditions improve. By streamlining processes, leveraging technology, cutting costs strategically, empowering your team, and tracking progress, you’ll build a more resilient and adaptable organisation.
When challenges arise, remember: every inefficiency you eliminate strengthens your foundation for growth.
Prepare to move, Trevor
Leading with Clarity: The Art of Transparent Leadership
Leading with Clarity: The Art of Transparent Leadership
In a world filled with complexity and uncertainty, clarity is one of the most powerful tools a leader can wield. Transparent leadership isn’t just about sharing information; it’s about creating an environment where teams understand the mission, priorities, and their role in achieving success. When trading conditions are tough, this clarity becomes even more critical. It helps teams navigate challenges with focus and purpose, reducing ambiguity and fostering decisive action. Leaders who lead with clarity during difficult times not only build trust and alignment but also instil resilience, empowering their organisations to adapt and thrive under pressure.
Why Clarity Matters in Leadership
Clarity is the antidote to confusion and misalignment. When teams lack understanding, they operate in silos, make mistakes, and lose motivation. Leading with clarity helps to:
Consider a leader like Alan Mulally, former CEO of Ford. During a critical turnaround period, Mulally implemented a transparent communication system where performance metrics were reviewed openly. This clarity brought alignment, trust, and accountability, enabling Ford’s remarkable recovery.
Carolyn McCall, former CEO of easyJet. McCall led with exceptional clarity during her tenure, focusing the airline’s strategy on customer service, operational efficiency, and employee engagement. By clearly communicating priorities and empowering teams, McCall transformed easyJet into one of Europe’s leading low-cost carriers.
How to Lead with Clarity
Practical Tools for Leading with Clarity
Case Study: Alan Mulally at Ford
When Alan Mulally took the helm at Ford in 2006, the company was on the brink of collapse. One of his first moves was to introduce a culture of transparency through a “Business Plan Review” process. Each week, leaders openly shared performance metrics and challenges using a simple green-yellow-red status system.
Case Study: Carolyn McCall at easyJet
As CEO of easyJet, Carolyn McCall focused on delivering clarity across all levels of the organisation. She communicated a clear strategy centred on customer service, operational reliability, and employee engagement. By simplifying objectives and aligning teams around these priorities, McCall was able to:
Your Leadership Challenge
Assess your team’s understanding of the mission and priorities. Are there areas where clarity could be improved? Use one of the tools above to communicate more effectively and align your team for success.
Empathy and Execution: Balancing People and Performance
Empathy and Execution: Balancing People and Performance
Great leaders understand that true success comes from balancing empathy and execution. While achieving results is critical, how you achieve them matters just as much. Empathy fosters trust and collaboration, while execution drives progress. When trading conditions are tough, this balance becomes even more important. Empathy helps leaders connect with their teams, addressing concerns and maintaining morale, while a sharp focus on execution ensures that the organisation stays on course. Together, these qualities enable leaders to guide their teams through challenges, creating sustainable success even in the most difficult circumstances.
Why Empathy and Execution Matter
Empathy without execution can lead to stagnation, while execution without empathy risks burnout and disengagement. Combining the two enables leaders to:
Consider Howard Schultz, the former CEO of Starbucks, who balanced empathy and execution by providing employee benefits like healthcare while driving the company’s rapid expansion and financial success.
The Role of Empathy in Leadership
Empathy is more than just understanding others’ feelings; it’s about acting on that understanding to support your team. Leaders who lead with empathy:
Executing Without Compromising Empathy
Execution ensures that strategies and plans are brought to life. To balance this with empathy:
Practical Tools for Balancing Empathy and Execution
Case Study: Satya Nadella at Microsoft
When Satya Nadella became CEO of Microsoft in 2014, the company was facing declining relevance and internal silos that hampered innovation. Nadella brought a renewed focus on empathy and execution to revitalise the organisation.
Outcome: Under Nadella’s leadership, Microsoft not only regained its innovative edge but also became one of the most valuable companies in the world, demonstrating how balancing empathy with execution can drive both cultural and financial success.
Your Leadership Challenge
Reflect on your approach to empathy and execution. Are you leaning too heavily on one side? Use the tools above to find balance and strengthen both your team’s well-being and performance.
Leadership by Example: Inspiring Through Action
Leadership by Example: Inspiring Through Action
Great leaders inspire trust and loyalty not just through words, but through their actions. “Leadership by example” is more than a principle—it’s a practice that creates alignment, builds credibility, and motivates teams to strive for excellence. When trading conditions are tough, this approach becomes even more vital. By demonstrating resilience, adaptability, and a commitment to shared goals, leaders set the tone for their teams to follow. Embodying the behaviours they expect from others fosters a culture of accountability, respect, and high performance, even in the face of adversity.
Why Leadership by Example Matters
Actions speak louder than words, especially in leadership. Teams are more likely to follow a leader who demonstrates the behaviours they promote. Leading by example helps to:
Consider Indra Nooyi, the former CEO of PepsiCo, who regularly visited employees at all levels of the company and actively sought their input. Her hands-on leadership style earned widespread respect and strengthened the organisation’s culture.
Another inspiring example is Lord Horatio Nelson, the British naval commander. Nelson led from the front during battles, sharing the same risks as his sailors. His leadership by example earned him unwavering loyalty and inspired his crew to achieve extraordinary victories, including the famous Battle of Trafalgar.
Key Practices for Leading by Example
Practical Tools for Leadership by Example
Case Study: James Dyson at Dyson Ltd.
James Dyson, founder of Dyson Ltd., is a British leader renowned for his innovative approach and hands-on leadership. When developing his first bagless vacuum cleaner, Dyson created over 5,000 prototypes before finding success. He demonstrated resilience and commitment, values he expected from his team.
Your Leadership Challenge
Reflect on how your actions align with your leadership goals. What behaviours do you want to model for your team? Identify one action this week that demonstrates the values you want to instil in your organisation.
The Pivot Point: Knowing When to Change Course
The Pivot Point: Knowing When to Change Course
In leadership, one of the most critical decisions you’ll face is knowing when to pivot. Staying the course may feel like a demonstration of commitment, but sticking too long to a failing strategy can lead to wasted resources and missed opportunities. When trading conditions are tough, this ability becomes even more essential. Adapting to shifting circumstances, recognising new opportunities, and making tough calls can mean the difference between survival and failure. Great leaders understand that flexibility, paired with strategic insight, is what enables organisations to navigate uncertainty and emerge stronger.
Why Knowing When to Pivot Matters
Pivoting isn’t a sign of failure; it’s a strategic choice to adapt to changing circumstances. Leaders who pivot effectively can:
Consider Netflix, which began as a DVD rental company but pivoted to streaming at precisely the right time. This bold shift allowed them to outpace competitors and redefine their industry.
Signs It’s Time to Pivot
Recognising the need to pivot starts with observing key indicators:
How to Pivot Strategically
A successful pivot requires careful planning and execution. Follow these steps to change course effectively:
Staying Resilient During a Pivot
Pivots can be challenging, but resilience will help you and your team navigate the process. Here’s how:
Practical Tools for Evaluating a Pivot
Case Study: Steve Jobs and the iPhone Pivot
Steve Jobs faced a pivotal decision during Apple’s development of the iPad. The company had already invested heavily in creating a tablet device when AT&T approached with an opportunity to collaborate on a mobile phone—something Jobs had long wanted to pursue but hadn’t prioritised due to market resistance.
Despite the substantial resources already committed to the iPad, Jobs recognised the potential of the iPhone. He deprioritised the tablet project and redirected Apple’s focus and resources to developing the iPhone instead.
The result? The iPhone became one of the most successful products in history, redefining Apple’s future and reshaping the tech industry. This decision exemplifies the power of a well-timed pivot and the ability to focus on the bigger picture.
Your Leadership Challenge
Reflect on a current strategy or project. Are there signs it might be time to pivot? Use the tools above to evaluate your options and determine whether a change in course could unlock greater success.
Mission-Focused Leadership: Clarity in Chaos
Mission-Focused Leadership: Clarity in Chaos
When faced with uncertainty, it’s easy for leaders to become overwhelmed by the sheer volume of decisions and challenges. Plans can fall apart, and the path forward can seem unclear. This is where mission-focused leadership becomes invaluable. When trading conditions are tough, this approach is critical. By centring decisions around a clear mission, leaders provide their teams with a sense of direction and stability, even in the face of chaos. This focus helps prioritise efforts, conserve resources, and maintain morale, enabling organisations to navigate turbulence with confidence and purpose.
Why Mission-Focused Leadership Matters
A well-defined mission serves as a compass, ensuring that decisions align with long-term objectives rather than being reactive to immediate pressures. In chaotic situations, clarity of mission helps leaders and teams:
Consider the example of Ernest Shackleton during his Antarctic expedition. When his ship, the Endurance, became trapped in ice, his mission shifted from exploration to survival. This clarity allowed him to make bold decisions that ultimately saved his entire crew.
Helmuth von Moltke the Elder, a 19th-century Prussian military strategist, also exemplified the power of mission-focused leadership. Von Moltke revolutionised leadership by combining clarity of mission with flexibility in execution. His principles of Auftragstaktik (mission command) hold valuable lessons for modern leaders and form the foundation of many contemporary military leadership styles. Mission command, as it is practised today, emphasises decentralised decision-making and adaptability within a clear framework of objectives:
Von Moltke believed that no plan survives first contact with the enemy. He emphasised providing clear goals while empowering teams to adapt their approach based on real-time conditions.
By delegating authority, Von Moltke ensured rapid and context-appropriate decision-making.
Von Moltke’s famous quote, “No plan survives contact with the enemy,” reflects the inevitability of change in any strategy.
Helmuth von Moltke’s Enduring Influence on Modern Leadership
Von Moltke’s principles laid the foundation for many contemporary leadership frameworks, blending clarity, empowerment, and adaptability. His influence extends beyond military strategy, shaping leadership approaches in business, crisis management, and even technological innovation.
Modern mission command, used in militaries worldwide, directly descends from Von Moltke’s ideas. It emphasises decentralised decision-making within a clear mission, enabling rapid responses and adaptability in complex environments.
In business, Von Moltke’s teachings are reflected in agile methodologies and decentralised operational structures. Leaders set clear strategic objectives, trusting teams to innovate and act within those parameters.
Von Moltke’s assertion that “no plan survives contact with the enemy” underpins modern scenario planning and crisis management. Leaders today prepare for change by fostering flexibility and resilience, ensuring alignment even in unpredictable circumstances.
The Misunderstanding of Command and Control
The phrase “command and control” is often criticised as outdated, rigid, or authoritarian. However, this criticism frequently stems from a misunderstanding of what it truly means. In its authentic form, command and control is not about micromanaging every decision but about providing a clear framework for action while empowering individuals to execute with autonomy.
What Command and Control Really Means
The essence of command and control lies in establishing a clear mission and objectives. It ensures alignment across teams and reduces confusion.
Command and control does not mean micromanagement. It involves setting clear expectations and trusting teams to innovate and adapt within defined boundaries.
Effective command and control incorporates real-time feedback loops, allowing leaders to adjust strategies while maintaining focus on overarching goals.
Examples of Effective Command and Control
Von Moltke demonstrated that command and control can be highly flexible when combined with decentralised decision-making. His principles allowed for adaptability and quick decision-making within the framework of clear objectives.
Welch employed command and control principles to drive focus and accountability. While he set the company’s strategic direction, he empowered business unit leaders to execute independently, fostering both discipline and innovation.
Why Critics Miss the Mark
Critics often conflate command and control with micromanagement. In reality, poor implementation—not the framework itself—is the problem. Misunderstood command and control systems may feel oppressive when leaders fail to provide autonomy or overmanage details. However, when applied correctly, this leadership style ensures alignment, empowers teams, and drives results.
Modern Applications of Command and Control
Today, industries from the military to business use evolved command and control frameworks to balance clarity and flexibility. For example:
Reflection on Command and Control
The next time you hear “command and control” dismissed, consider its true meaning. Are you equipping your team with clear goals and empowering them to execute with autonomy? Are you fostering alignment without stifling creativity? Command and control, when done right, is not a relic—it’s a tool for clarity, focus, and empowerment.
How to Define Your Mission in Uncertainty
Defining a clear mission in times of uncertainty requires intentional focus. Follow these steps to establish your leadership compass:
(For more on adapting when the mission needs to change, see our guide: The Pivot Point: Knowing When to Change Course)
Staying Mission-Focused in the Face of Challenges
Uncertainty often brings distractions, competing demands, and emotional stress. Leaders must cultivate the discipline to stay centred on the mission. Here’s how:
Practical Tools for Mission-Focused Leadership
Case Study: Jack Welch and General Electric’s Transformation
When Jack Welch became CEO of General Electric in 1981, he set out to transform the company into the most competitive organisation in its industry. His clear mission was simple yet bold: focus on businesses where GE could be number one or two in the market, and divest the rest.
Outcome: Under Welch’s leadership, GE’s market value grew from $12 billion to over $400 billion. His mission-focused approach, combined with decisive action and empowered leadership, cemented GE as a global powerhouse.
Your Leadership Challenge
Take a moment to reflect on your organisation. What is your mission right now? Can you distil it into a single, clear objective? Share it with your team and align your next key decision to this mission.
What Is an HR Business Partner, and Why Do They Matter?
What Is an HR Business Partner, and Why Do They Matter?
An HR Business Partner (HRBP) is a strategic role within the human resources function, designed to embed HR expertise directly into the business. Unlike traditional HR roles that focus primarily on administrative tasks, compliance, and policy implementation, HRBPs are intended to work closely with specific business units or departments. Their purpose is to align HR initiatives with the organisation’s strategic objectives, ensuring that people strategies directly support business performance.
HRBPs are there to provide tailored HR support to business leaders, acting as advisors on workforce planning, talent management, organisational design, and employee engagement. The goal is for HRBPs to build strong relationships with the teams they serve, enabling them to deliver insights and solutions that improve performance, enhance employee experience, and drive value across the organisation.
In theory, the role of the HRBP represents a significant evolution in how HR contributes to business success. By working alongside operational teams, HRBPs should bridge the gap between traditional HR priorities and the real-world needs of the business. However, the effectiveness of an HRBP depends entirely on their ability to understand the business they are partnering with, which is where challenges often arise.
The Advent of HR Business Partners: Bridging the Gap or Widening the Void?
While the introduction of HRBPs was a step towards aligning HR with the strategic goals of businesses, the role often falls short of its potential. All too frequently, HRBPs lack the operational knowledge necessary to genuinely partner with the business units they are assigned to support.
I often encounter HRBPs who have little understanding of what the business department they are supposed to partner with actually does or how it operates. They lack insight into the department’s day-to-day challenges, key performance drivers, and operational realities. Instead of closing the gap between HR and the business, this disconnect can inadvertently widen it, creating frustration on both sides and undermining the very purpose of the role.
Upskilling HR Business Partners to Understand the Business
While it may seem obvious that HR Business Partners (HRBPs) need a deep understanding of the departments they support, in practice, this level of integration and knowledge-building often doesn’t happen. Many organisations assume that HRBPs can gain the necessary insight simply through conversations or high-level briefings, but this approach rarely provides the depth required to make a real impact.
Because HR professionals tend to be people-oriented, it is often assumed they will fit right in and that the department will welcome them with open arms. On the face of it, this might even appear to be the case—initial relationships may seem smooth, and the HRBP might quickly establish rapport. However, even with a warm reception, the HRBP will be far better placed to support the department if they are fully immersed in its operations. This means not just attending meetings and shadowing team members but, where relevant, aligning their working patterns with those of the department. For example, if the department works shifts, the HRBP should occasionally work shifts as well. By experiencing the realities of the team’s schedules, challenges, and culture firsthand, they can gain insights that are impossible to achieve from a distance. This level of commitment demonstrates to the team that the HRBP is invested in understanding their world, building trust and credibility while equipping them to provide more effective and tailored support. Without this level of immersion, even the most personable and well-intentioned HRBP will struggle to move beyond surface-level engagement.
Why Qualification and Business Acumen Are Non-Negotiable
If you are investing in HRBPs, you must insist they are genuinely qualified to partner with your business. This doesn’t just mean being proficient in HR processes; it means having a deep understanding of the business itself. An effective HRBP should speak the language of the teams they support, understand their pain points, and propose solutions that make both operational and commercial sense.
Some of the best HRBPs I have encountered didn’t come from a traditional HR background. Instead, they started their careers on the shop floor or in operational roles and later retrained in HR. This experience gives them an invaluable edge: they’ve lived the realities of the business, understand how it works, and can connect with frontline employees. They don’t just bring theoretical HR knowledge—they bring practical insights that translate into meaningful, actionable support.
In contrast, career HR professionals without this exposure may struggle to gain the trust and credibility of the teams they support. This isn’t a criticism of HR expertise, but rather a recognition that to truly partner with the business, HRBPs need more than HR knowledge—they need business acumen.
Building Better HR Business Partners
To realise the full potential of the HRBP role, organisations should:
HR Business Partners have the potential to transform the relationship between HR and the business, shifting it from a source of tension to a powerful driver of organisational success. But achieving this requires more than good intentions—it requires ensuring that HRBPs are equipped with the skills, knowledge, and mindset needed to truly partner with the business. When done right, HRBPs can elevate both HR and the teams they support, creating lasting value for the entire organisation.
Navigating Trust, Betrayal, and Resilience in Leadership
Navigating Trust, Betrayal, and Resilience in Leadership
Starting with Empathy: “What’s on Your Mind?”
Leadership often begins with empathy. When coaching, I always open with the question, “So, what’s on your mind?” This simple question sets the stage for open dialogue and helps clients explore their challenges. Recently, during a coaching session, one of my clients, James, who runs a professional services business with a turnover of £2 million, shared a deeply personal and troubling situation. He explained that he was being taken to an industrial tribunal by an employee he had supported more than any other team member. The employee had not only named him personally in the claim but was also attempting to sue him personally for alleged misconduct.
James was devastated. He had mentored this employee, taking her under his wing and treating her with exceptional care. He even shared text messages from her, where she expressed gratitude, stating he was the only boss who had treated her with respect and inclusivity. Yet now, she was accusing him of being a bully, discriminatory, and prejudiced—the very opposite of what he stood for. When I asked James if he had documented any of these positive interactions in the form of performance reviews, he admitted he hadn’t. This lack of documentation meant he had no concrete evidence to back up his support for the employee, leaving him vulnerable in the dispute. This betrayal had shaken him to the core, to the point where he considered closing his business.
This guide explores the complex emotions leaders face when trust is broken and how to navigate such situations with clarity and resilience.
The Devastation of Betrayal
Being taken to an industrial tribunal by someone you’ve supported, mentored, and even protected can be one of the most emotionally jarring experiences a leader endures. It feels deeply personal because leadership is personal. You’ve likely invested your time, energy, and perhaps even your heart into building a team and a business that feels like a family. But when an employee, particularly one you’ve gone out of your way to support, turns against you, it shakes the very foundation of that trust.
Let’s address some critical truths:
Understanding these dynamics doesn’t excuse negative behaviour but helps frame it within the broader context of human motivation and psychology. This perspective can equip leaders to respond with greater resilience and less emotional reactivity.
What Do HR Always Tell You?
As a professional leader, it goes without saying that performance improvement is a large part of your role. This is not just about satisfying HR requirements but about effectively leading your team. By taking performance management seriously and changing your mindset from seeing HR as a bureaucratic necessity to viewing it as a performance-enhancing function, you can transform HR into a force multiplier for your business.
HR professionals consistently stress the importance of proper processes for managing employee performance. We know we should follow these processes, but often HR systems can feel cumbersome and disconnected from business priorities. My processes, however, are specifically and directly linked to business goals. Here’s what effective HR practices look like:
By following these practices, you not only enhance individual and team performance but also build a robust file of evidence that could be crucial if disputes arise. This documentation is not just good HR practice; it’s the right thing to do for your business. Clear expectations and accountability improve operational efficiency and create a culture of trust and fairness.
The Legal Landscape: Can an Employee Sue You Personally?
In the UK, most employment disputes target the company rather than the individual employer. However, under certain circumstances, personal liability may arise. For instance:
How to Regain Trust and Confidence
The emotional fallout from such events can lead to a loss of faith in employees and even in yourself. However, as a leader, your ability to rise above personal setbacks is critical.
Final Thoughts: Building Resilience in Leadership
Leaders carry a heavy emotional burden, and betrayal can amplify feelings of doubt and isolation. However, moments like these are pivotal in shaping your leadership journey. Resilience doesn’t mean ignoring the pain—it means acknowledging it, learning from it, and using it as a foundation for growth.
Your business isn’t a family, but it is a professional ecosystem that you’ve nurtured. Protect it with the same diligence you’ve shown to your team, and remember that setbacks, while painful, often lead to reinvention and renewed purpose. Ultimately, leadership is about balance: understanding human nature, setting boundaries, and maintaining your vision through adversity.
The Hidden Cost of Remote Work
The Hidden Cost of Remote Work – Why Leaders Are Losing Their Influence
In the era of remote work, many businesses celebrate flexibility as a productivity win. But for leaders, there’s an unintended consequence: the dilution of their influence. Without regular in-person interactions, leaders lose opportunities to connect, align, and inspire their teams in ways that foster performance and growth. This guide explores why business leaders are losing their impact and how this affects team cohesion, performance, and culture.
The Cost of Leadership Absence
Leaders play a critical role in showing the way and leading by example. Their behaviours set the tone for the organisation, creating a benchmark for how to act, think, and approach challenges. When working remotely, leaders lose the opportunity to:
The Subtle Art of Leading by Example
Great leaders inspire action not just through formal communication but by their presence and conduct. In an office, this might look like:
When these actions are absent, teams can feel unmoored, leading to disengagement and a loss of momentum.
The Impact of Missing Visual and Subtle Cues
In-person leadership is enhanced by non-verbal communication and environmental observation. Remote work strips these tools away, making it harder for leaders to:
Quantifying the Value of Direct Influence
Studies consistently show that the physical presence of leaders enhances performance:
The performance gains are tied to the ability of leaders to influence directly through action, presence, and interaction.
The Cost of Lost Opportunities
When leaders are remote, they miss out on the small but impactful moments that define great leadership:
Stopping and praising: Without physical proximity, it’s harder to celebrate effort or outcomes in the moment, leading to diminished morale and motivation.
Real-time coaching: Correcting misunderstandings or guiding someone toward better performance is delayed in remote settings, which may allow small issues to snowball into larger problems.
Reinforcing culture: The visible embodiment of values—whether through work ethic, collaboration, or decision-making—is a powerful tool for alignment. Leaders lose this when they operate primarily via screens.
Hybrid Models: A Compromise, But Not a Solution
While hybrid work models allow for some in-person interaction, they are ultimately a compromise rather than a solution. As a leader, I am not a fan of hybrid approaches because they can often feel fragmented and fail to fully recreate the benefits of consistent, physical presence. However, they are better than nothing, and if a fully in-office model isn’t possible, hybrid arrangements can help mitigate some of the downsides of remote work.
Interestingly, there is evidence suggesting that employee turnover might be lower in remote or hybrid firms, which could be an argument in favour of maintaining some level of flexibility:
These findings suggest that flexible work arrangements may enhance retention by addressing employee preferences for work-life balance and autonomy.
That said, while lower turnover is beneficial, it doesn’t eliminate the challenges associated with diminished leadership influence, reduced alignment, and the loss of immediate coaching opportunities. Leaders must weigh these trade-offs carefully when designing their workforce strategies.
Embracing the Challenge
Leadership is as much about being seen as it is about communication. When leaders are visible, they can inspire, guide, and support their teams in real time, creating a culture of excellence through action. Remote work need not entirely erase these opportunities, but leaders must actively find ways to compensate for the gaps it creates.
By leading by example, praising, and coaching in the moment, leaders can retain their influence and foster the high performance that comes with it. Whether through hybrid models or increased strategic interaction, rethinking how leadership is practised in a remote world is essential for long-term success.
Sources:
About the Author
Trevor is the Managing Partner of NorthCo, a fellow of the Institute of the Motor Industry and a member of the Institute of Interim Management. Trevor is a respected C-Suite leader, Chairman and professional Interim Leader. For over a decade, he has provided interim leadership solutions to private equity, venture capital, and asset-backed firms. Whether it’s to stabilise a business during a turbulent trading period, fill a temporary skills gap or support a management team to navigate challenging situations, Trevor’s wealth of experience and proven track record in delivering value creation and retention plans demonstrate his ability to lead and support operational management teams effectively. To find out more about his approach, explore his LinkedIn profile and read what others say about Trevor.
Managing Post-Funding Decisions – Avoiding the OPEX Trap
Managing Post-Funding Decisions – Avoiding the OPEX Trap
Securing an injection of funding is a pivotal moment for any business. It validates your vision and provides the resources to pursue growth opportunities. However, this influx of cash can tempt management teams to expand operational expenditure (OPEX)—particularly through increased headcount—without fully considering the financial impact.
While optimism and ambition are crucial, it’s essential to remember that increasing OPEX too quickly can erode profitability, leaving businesses scrambling to maintain performance rather than improve results. This guide explores how to make smarter, more sustainable decisions when managing post-funding spending, linking costs to revenue, and maintaining profitability.
The Challenge: The Temptation to Over-Invest in OPEX
One common post-funding misstep is rapidly expanding management headcount or other fixed costs to demonstrate progress. With the average UK management salary at £40,000, adding headcount can quickly escalate OPEX.
It’s vital to calculate the financial impact of these decisions. For example:
This makes it imperative for businesses to align spending with achievable revenue targets while ensuring that profitability is preserved.
The Context: Trends in UK Gross Profit Margins
Over the past three years, the average gross profit margin for UK companies has shown modest improvement:
While these figures represent a positive trend, they also highlight how narrow profit margins remain for many businesses. It’s important to note that these averages vary significantly by industry, meaning your specific gross margin may be higher or lower.
This variability underscores the importance of understanding your business’s unique financial metrics before making significant OPEX decisions.
Recognise Internal Pressures to Expand Teams
It’s not uncommon for existing management to push for the recruitment of additional subordinates after a funding round. In my experience, your management team will often be convinced they need more heads to handle the additional workload and expectations.
While these requests can have merit, it’s essential not to take them at face value. Don’t assume the need for additional headcount is entirely factual. Instead, work through the specifics:
Taking the time to evaluate these pressures critically helps avoid the “easy option” of expanding headcount unnecessarily and ensures every hire contributes directly to value creation and sustainable growth.
Challenge the Justification of Additional Costs
I often hear management teams justify a £40k investment by breaking it down into monthly salary terms—seeing it as a manageable £3,333 per month. While this might make the cost feel more palatable, it’s only part of the picture.
Instead, consider the £702k in additional revenue required to cover that £40k annual cost (based on an average 5.7% gross margin). Spread that revenue target over 12 months—suddenly, it’s a staggering £58,500 in extra revenue per month just to stand still.
When viewed from this perspective, does the investment still feel like a “no-brainer”? Reframing the conversation this way encourages leaders to assess whether the additional cost is truly necessary and whether the associated revenue targets are realistic.
Reframing the Post-Funding Conversation
Instead of asking, “What can we do with this funding?”, ask:
By shifting the focus from spending to sustainability, businesses can avoid common pitfalls and ensure that growth efforts lead to tangible, profitable results.
Practical Framework for Post-Funding Decisions
1. Understand the Financial Impact of Additional Costs
With average UK gross profit margins at 5.7%, it’s essential to calculate the revenue required to break even on new expenditures. For example:
This highlights how even modest increases in OPEX can have outsized implications for revenue targets.
2. Optimise Existing Processes Before Expanding
Use funding to address inefficiencies and strengthen existing systems before committing to increased OPEX. Scaling flawed processes amplifies inefficiencies, leading to wasted resources and reduced profitability. Focus on:
3. Invest Strategically, Not Reactively
Expanding headcount is often necessary for growth, but it should always align with clear ROI. Before making new hires, assess whether the role:
4. Link Expenditure to Revenue-Generating Activities
Ensure that every expenditure contributes directly or indirectly to revenue. For example:
5. Foster Financial Awareness Across the Team
Educate your leadership team on the relationship between OPEX, profit margins, and revenue. Encourage them to think critically about how each decision impacts the bottom line. This not only leads to better decisions but also creates a culture of accountability and strategic focus.
Key Questions for Post-Funding Spending Decisions
The Leadership Advantage: Sustainable Growth Over Quick Wins
Post-funding decisions set the tone for your business’s next phase. While it’s tempting to ramp up OPEX to deliver immediate results, it’s crucial to prioritise profitability and long-term sustainability.
By understanding the financial implications of decisions—such as the revenue required to support an average £40k management salary—you can ensure that your growth efforts are strategic, measurable, and sustainable.
At NorthCo, we specialise in helping leadership teams navigate these critical moments. Our tailored leadership and operational support services ensure that businesses maximise the value of their funding while avoiding common pitfalls.
Conclusion: Grow Smarter, Not Harder
Post-funding growth should be exciting, not stressful. By linking spending to achievable revenue targets and maintaining focus on profitability, you can avoid the OPEX trap and position your business for sustained success.
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About the Author
Trevor is the Managing Partner of NorthCo, a fellow of the Institute of the Motor Industry and a member of the Institute of Interim Management. Trevor is a respected C-Suite leader, Chairman and professional Interim Leader. For over a decade, he has provided interim leadership solutions to private equity, venture capital, and asset-backed firms. Whether it’s to stabilise a business during a turbulent trading period, fill a temporary skills gap or support a management team to navigate challenging situations, Trevor’s wealth of experience and proven track record in delivering value creation and retention plans demonstrate his ability to lead and support operational management teams effectively. To find out more about his approach, explore his LinkedIn profile and read what others say about Trevor.