In the pursuit of growing equity value, operational efficiency serves as both a foundation and a strategic advantage. As the second installment in our Pathways to Increasing Equity Value series, this article builds on the principles of organic growth discussed in Part I to examine how optimizing operations can amplify your business’s growth trajectory, scalability and profitability.
Operational efficiency isn’t just about reducing costs. It’s about doing what you do—better, faster and more profitably. Efficiency shows up in how consistently your organization delivers results, how effectively it scales and, ultimately, how it enhances equity value. However, achieving and maintaining efficiency is a moving target. The operational benchmarks of yesterday quickly become outdated in today’s dynamic market environment. Even if you’re operating at today’s table stakes, you’re already at risk of falling behind. Businesses that continuously refine and improve their processes position themselves not just for survival, but for sustainable growth.
Organizational Structures at Different Stages
Every organization evolves through distinct growth phases, and the structure that worked in one stage may no longer be suitable as the business matures. Just as a building with a foundation designed for one story can’t support the weight of added floors without reinforcement, a business must strengthen and adapt its structure to accommodate and sustain growth. Operational efficiency requires adjusting your organizational structure to align with your current needs and future goals.
At a macro level, there are three distinct phases of growth for a business:
- Early Stages: In the startup phase, leadership typically wears multiple hats. Agility and resourcefulness take center stage, with roles such as a bookkeeper, a generalist operations manager or outsourced IT (information technology) support meeting most operational needs. At this stage, the focus is on doing more with less.
- Growth Phase: As your business scales, revenue grows, and client demands increase, specialization becomes essential. Introducing key roles—such as a sales manager, marketing director, or in-house IT specialist—ensures that essential functions are managed effectively. This strategic shift can help maintain momentum, address evolving client expectations and prevent operational bottlenecks that can hinder growth.
- Mature Firms: As your business moves towards maturity, a well-defined management hierarchy is critical for balancing scalability and operational efficiency. This often includes:
- Leadership: Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Financial Officer (CFO) and Chief Marketing Officer (CMO) to guide strategy and drive results
- Client-Focused Teams: Account managers, producers and service professionals to boost client satisfaction and retention
- Support Systems: Specialists in IT, HR (human resources) and compliance to ensure operational efficiency and minimize risks
Failure to invest in evolving operational structures can lead to stagnation, blocking the pathways to further growth. Many founders struggle to relinquish responsibilities or hire for pivotal leadership roles, such as a dedicated CEO, yet these roles are crucial for long-term growth. While these investments may come with higher costs, they enable scalability and increase the firm’s value by incorporating a broader base of stakeholders.
Adapting your organizational structure to align with each stage of growth ensures that resources are used strategically and processes remain scalable. By proactively addressing inefficiencies and evolving alongside your business’s organic growth and growth trajectory, you can create a resilient foundation. This foundation supports equity growth and also positions your business to navigate future opportunities and challenges with confidence.
Key Roles and Responsibilities to Support Growth
Operational efficiency hinges on having the right talent in place at the right time. Defining and evolving key roles as your business grows ensures your team can tackle challenges head-on and capitalize on opportunities. Below are examples of key roles that support efficiency and scalability at various points in your business journey:
- CFO: Early on, a bookkeeper may suffice for tracking daily finances. However, as complexity increases, a CFO becomes essential to oversee strategic financial planning, manage cash flow and uncover growth opportunities.
- Sales Manager: A sales manager drives production and operational efficiency by providing focused leadership and establishing accountability. By designing competitive compensation models and streamlining sales processes, they motivate the team, align efforts with business goals and ensure sustained growth and profitability.
- COO or Operations Manager: As the business scales, this role becomes critical for streamlining processes, enhancing operational efficiencies and aligning daily operations with long-term strategic goals.
- Marketing Leadership: Whether a CMO or marketing specialist, having expertise in building targeted branding, messaging and campaigns is crucial to attract, engage and retain your ideal clients.
- IT and Technology Experts: Technology underpins modern operations. Dedicated IT professionals are vital for managing systems, safeguarding data and leveraging automation to boost efficiency.
- Human Resources: HR ensures the right talent is in place to drive growth and efficiency and helps streamline and centralize essential processes. By supporting human capital strategy and ensuring alignment with business goals, HR reduces inefficiencies and builds a scalable foundation for sustainable equity growth.
Placing the right people in the right roles at the right time helps businesses eliminate inefficiencies, avoid operational bottlenecks and build a framework for scalable growth.
Aligning Talent Acquisition with Growth Goals
Talent acquisition plays a crucial role in driving the growth and valuation of an insurance brokerage. MarshBerry data suggests that for every $200,000 in additional revenue, a brokerage typically needs to hire one more insurance broker. Depending on the firm, this figure can vary between $150,000 and $250,000.
This highlights the importance of having a well-defined talent acquisition strategy in place. A brokerage must not only be able to recruit the right talent but also understand the cost metrics that tie hiring to revenue growth. In practice, for instinct, this means that for every million dollars in new business, hiring around four new employees is often necessary to keep up with demand and support sustainable growth.
Operational Efficiency: A Pathway to Equity Value
Operational efficiency is more than a back-office initiative—it’s a strategic driver of equity value, profitability and scalability. Achieving it isn’t a singular objective; it requires organizations to continually evolve, adapt and commit to ongoing improvement. Whether you’re refining your structure, hiring the right talent or eliminating bottlenecks and key person dependencies, every incremental step toward greater efficiency builds the foundation for long-term success.
Efficient operations go beyond cost-saving measures—they are essential for driving profitability and creating the agility needed to navigate an evolving market. This second installment of the Pathways to Increasing Equity Value series explores how optimizing operational efficiency can be a powerful growth driver. The principles of operational efficiency and organic growth (explored in Part I) work in tandem to maximize equity value. Part III will dive into how capital structure can further enhance these efforts, helping to accelerate the value of your business.
To learn more about driving equity growth through operational efficiency, join MarshBerry’s FocalPoint Webinar, Pathways to Increasing Equity Value, Part II: Driving Equity Growth Through Operational Efficiency, which will be available soon. Don’t miss out on this chance to uncover valuable strategies that can elevate your business’s performance and equity value.
If you missed Part I on organic growth, make sure to read Generating Consistent Organic Growth in a Changing Market Environment from James Graham.
