This week I'm sharing 10 lessons from Luke Grima, who is a partner in the accounting and advisory team at KPMG.
Growing a business from a few million dollars in turnover to $50 million, $100 million and beyond is one of the most rewarding – and treacherous – journeys a business owner can undertake. The ambition is common. The execution is anything but.
Luke works exclusively with mid-market, privately owned businesses navigating exactly that journey.
Despite being an accountant, his answers are rarely about numbers. They’re about people, structure, governance and the hard-won wisdom that only comes from sitting alongside business owners through their best decisions and their worst.
Success factors, risks and pitfalls
In a wide-ranging conversation on our Let’s Talk Business podcast, Luke unpacked the key success factors, risks and pitfalls he sees repeatedly in businesses going through that growth journey.
The insights that emerged are practical, honest and occasionally confronting – particularly for owners who believe that growing the top line is the same thing as building a valuable business.
Here are the 10 key lessons from my conversation with Luke Grima:
1. People are the number one success factor
Seven or eight times out of 10, business owners are not the right person to be their own GM or operations manager. As a business scales, bringing in external commercial expertise – people who know what good sales, operations and finance functions look like – is the single most important lever a growing business can pull.
2. You don’t know what you don’t know
Owners who’ve successfully run a $5 million business don’t automatically know how to run a $50 million one. The risk profile, complexity and operational demands are fundamentally different. Getting good advisers around you before problems arise – not after – is what separates the businesses that scale well from those that struggle.
3. Growth for growth’s sake destroys value
Most businesses, before they get proper support, will grow revenue without growing profit. Bigger revenue means more risk, more complexity and more capital tied up – but without the right people and systems in place, margins compress and the owner ends up working harder for the same or less money. Profitable growth is the only growth worth pursuing.
4. Governance is how you solve the trust problem
The reason owners hesitate to delegate isn’t irrational – it’s that they have no framework for accountability. Regular board-style meetings where each department head reports on performance, metrics and action items create the structure that allows owners to trust delegated decisions. Accountability is what makes delegation work.
5. Equity for staff is riskier than it looks
Giving employees a share of the business can work, but it frequently creates conflict around expectations, blurred roles and family dynamics. A well-structured profit share arrangement tied to net profit will often achieve the same motivational outcome without the ownership complications.
6. There are three hats in every business – and confusing them causes problems
Employee, director and owner are three distinct roles with different responsibilities, risks and rewards. In family and founder-led businesses these roles are often worn by the same person, which creates conflicts of interest – particularly between the owner’s desire to extract dividends and the director’s legal obligation to maintain solvency. As the business grows, separating these roles becomes critical.
7. Value is built by doing the right things anyway
The things that make a business valuable in a sale – good people, strong reporting, diversified revenue, solid governance and consistent profit – are exactly the things a well-run business should be doing regardless. Owners who focus on maximising profit and efficiency don’t need to do anything special to prepare for a sale; the value takes care of itself.
8. Get tax and structuring advice early... very early
Tax is the single biggest cost in a sale transaction and one of the biggest costs in business life generally. Structuring decisions made at startup – how shares are owned, how profits are extracted, how assets are protected – can have enormous consequences years later. The right time to get advice is at the beginning, not five years before a sale.
9. Document everything in family businesses
Money and succession are a recipe for family conflict. Shareholders agreements, buy–sell arrangements and clear documentation of what happens when a partner exits or passes away protect both the business and the relationships around it. Having it all agreed and in writing before anything happens is far less painful – and far less costly – than resolving it afterwards.
10. The mark of a good business is the customers it says no to
Sustainable earnings come from quality revenue, not just volume. Businesses that have the discipline to turn away customers with poor payment records, razor-thin margins or a habit of squeezing on price in tough times are the ones that protect their profitability over the long run. Revenue for its own sake increases risk without improving the bottom line.
If you are a business owner who is serious about building something that is not only bigger, but genuinely more valuable, more resilient and more sustainable, I encourage you to heed Luke’s advice.
To hear our full conversation, watch on YouTube or find us on your favourite podcast app.
