A 100-year crisis, the global novel-coronavirus pandemic, offers opportunities for the technology industry.
Tech companies have been adept in responding to the economic and health challenges—managing cash flow and a now-fully-remote workforce of highly skilled talent.
The industry that invented agile practices quickly realigned their business strategies, found new market opportunities, and innovated marketing and sales tactics appropriate to changed dynamics.
Scale ups and mature technology companies responded to the crisis as though they were startups—revisiting questions familiar to early-market entrants with a similar impulse to business resilience.
Maximizing on opportunities to emerge from crisis, C-suites, management teams, and software engineers collaborated on what their businesses could look like during the pandemic—and after it ends.
Tech success post-COVID
Technology companies that haven’t yet defined their new normal can do so by answering a series of critical questions:
- What will your team of highly competitive talent look like in six months—and how will you retain employees accustomed to a culture of open-concept collaboration (and perks, from snacks to hackathons) not possible during the pandemic?
- How do you rethink operations for recovery and for growth?
- Will your business (continue to) scale—and does it need a support structure, back-office capacity?
- Are you satisfied with the data you are using to measure your successes—and is it effectively informing strategic decision-making?
Answering these questions and making corresponding business adjustments poises tech companies—and the technology industry—to lead the post-virus recovery.
Five growth strategies for tech companies—and how BDO can help
The pace of a company’s trajectory toward the next normal depends on their next steps.1. Business resilience
The opportunity: Increased reliance on technology caused by the COVID-19 crisis (for instance, new dependence on software and solutions that support a fully remote workforce) creates opportunities for tech companies to grow—and increase revenues.
“Companies that have a digital-first strategy win on three fronts—customer, employee, and shareholder—by aligning with all of their expectations for a modern, agile, and cost-effective business model,” advises Eric Matusiak, National Retail Leader at BDO.
Business as unusual—technology-dependent adaptations in response to the global pandemic—will define the next normal.
The challenge: Capitalizing on immediate opportunities—and scaling up.
The next steps: BDO helps technology companies focus on the actions that maximize ROI—we offer software solutions that accelerate business and enable data analysis, as well as financial modelling and value enhancement.
2. Cost-effective, flexible growth
The opportunity: Rapid growth is critical to take advantage of pivotal, still-emerging market opportunities. Before the COVID-19 crisis, and after it, value is not created by having a strong finance team—value is created by having a strong finance function.
“Now more than ever, businesses have to financially manage their business to ensure that they have sufficient runway to get through this crisis. The businesses that do this will be better poised for successes when the economy comes humming back,” says Kelly Johnstone, a BDO partner focused on outsourcing and financial advisory for small- and medium-sized businesses.
Now, agile companies are outsourcing all from payroll to CFO services in order to grow—unhindered by the slow pace of hiring.
The challenge: Building value at the speed of the market—not the pace at which you can develop your team.
The next steps: Map out processes that don’t need to be developed in-house. BDO offers outsourced bookkeeping, managed services, CFO capacities—and infinite flexibility to support tech companies.
3. Funding for growth
The opportunity: Accessing funding to drive growth.
“We help companies raise money,” Peter Matutat, BDO’s National Technology & Life Science Leader, observes, “and we have a particular expertise in SR&ED and government programs.”
“The injection of capital into the industry will be an interesting challenge moving forward. The activity of angels and early-stage venture capital (VC) went quiet at the beginning of the COVID crisis—but, according to some reports, it has picked back up again,” adds Craig Mulcahy, whose specialization is SR&ED and government incentives.
Craig offers some confidence: “I think the big VC dollars always find the strongest companies, and there is lots of opportunity for tech companies to take advantage of programs offered by the federal and provincial governments.”
Since the start of the COVID crisis, the most important government-funded program for tech companies has been the Canada Emergency Wage Subsidy (CEWS).
Ongoing government funding that is not a response to the coronavirus crisis segments into four main categories of activity—innovation, people and training, green technology, and export activities. There are hundreds of federal funding programs.
“Most tech companies are innovative, and can take advantage of the innovation programs,” Craig observes. “The flagship innovation program in the tech space is SR&ED—SR&ED is the largest innovation program in the country by far.”
The challenge: Finding—and accessing—the sources of funding critical to growth.
The next steps: BDO can help tech companies innovate their funding strategy—finding funding assistance, accessing best-fit government incentives, and planning for tax implications.
4. Strategic mergers and acquisitions (M&A)
The opportunity: “Adjustments to the market only come around once in a while, and if you’re thinking about supercharging the growth of your business, or repositioning the business, it’s definitely a buyers’ market. There haven’t historically been a lot of opportunities like this. It’s a once-in-a-decade opportunity,” says Michael Morrow, Corporate Finance National Leader at BDO.
Well-positioned tech companies, especially, have an opportunity to take advantage of all from core to transformational M&A—and to grow exponentially.
The challenge: Developing and executing an inorganic growth strategy.
The next steps: BDO can develop an M&A strategy—helping tech companies align business ambitions with targeted acquisitions, then supporting them through execution, from diligence through integration.
5. Potential exit
The opportunity: The still-robust M&A market has created opportunities not only for tech companies, but for those who run them.
“It’s important to always be thinking about the next phase of your company—and of your career,” Peter advises. “What do you really want to do next? We’re here to have a conversation, to help you think about your strategic options—then to help you execute on them.”
The challenge: Finding appropriate partners to help you decide what’s next—and make it happen.
The next steps: BDO can help you rethink the future of your company—advised by professionals with deep experience of all phases of the business lifecycle, who are also attuned to your needs as individual.
If you decide to sell, improve operations to make your company sale-ready—supported by BDO’s Transaction Advisory Services.
The first step
BDO professionals have the savvy and the experience to help tech companies, and their founders, scale up and lead the recovery from COVID-19.
Tax to outsourcing, corporate finance to consulting, start the conversation about how to grow your business post-COVID with the professional whose expertise most closely aligns with your immediate business needs.
Jeff Chapman, Managing Partner, Financial Advisory Services
Ryan Farkas, Partner, Corporate Finance (funding for growth)
Kelly Johnstone, Partner, CFO/Controller Services (outsourcing)
Daniel Ma, Partner, Financial Advisory Services (valuation, financial modelling)
Eric Matusiak, Partner, National Retail Leader (software solutions, reporting analysis)
Peter Matutat, Partner, National Technology & Life Sciences Leader
Craig Mulcahy, Partner, SR&ED and Government Incentives (funding for growth)