When 8020 Consulting reviews growth-stage portfolio companies, a consistent pattern emerges across industries. Promising businesses with strong market traction often lose value through operational inefficiencies. The phenomenon, known as operational drag, functions as a hidden tax that steadily erodes unlevered rates of return while management remains focused on the next revenue milestone.
Entrepreneurs chase revenue growth at any cost, expanding sales teams rapidly and ballooning marketing budgets to capture market share, while the infrastructure to manage this growth lags behind. As Amish Patel, an 8020 expert consultant, explained, "The biggest source of drag here is on the SG&A budget. Entrepreneurs are visionaries; they don't always necessarily have the sight to see what cash is doing."
Growth stage companies become victims of their own success. Revenue climbs, but margins compress. Headcount swells without corresponding productivity gains. Manual workflows multiply as departments work in isolation. What started as rapid scaling transforms into organizational bloat, creating drag that compounds month after month.
Embedding strategic finance talent solves the problem. These professionals can diagnose inefficiencies early and eliminate them before they become systemic. Modern finance professionals use sophisticated tools like cost-to-serve analysis, unit economics modeling, and scenario planning to identify where operational drag hides. They integrate RevOps and FP&A functions to provide unified visibility across the entire value creation process.
In this article, you’ll learn how strategic finance can uncover and eliminate operational drag before it stalls your company’s growth.
Where Operational Drag Comes From
Portfolio companies often fall into the same trap. Founders identify market opportunities and respond by hiring aggressively, expanding sales organizations, and enlarging marketing budgets. On paper, revenue projections appear promising. In practice, the underlying economics frequently reveal a different reality.
That reality hits when the math stops working. "Companies tend to get top-heavy on payroll because they’re bringing in a lot of people, or get a little expensive on marketing. They don't tend to have enough revenue to offset that." Expenses grow faster than revenue, creating a gap that widens each month.
Manual processes compound the problem by adding hidden costs that most leaders never see. Teams operate from different spreadsheets and systems, with sales working from one database while finance uses another. Simple decisions require multiple meetings and email chains because nobody has real-time visibility into performance.
The challenge increases as companies mature. Early-stage businesses can justify operational inefficiencies as the cost of moving fast, but larger organizations have no excuse for tolerating waste. They've successfully built revenue engines while neglecting the operational foundations that support sustainable growth.
Spotting Inefficiencies Early with Cost to Serve & Unit Economics
Many portfolio company leaders remain focused on top-line growth while ignoring the costs that steadily erode their margins. Cost-to-serve analysis addresses this blind spot by capturing every expense required to deliver a product or service to each customer segment. Freight, warehousing, allowances, and slotting fees often accumulate unnoticed until profitability declines.
Amish Patel notes, “Freight and warehousing expenses are often overlooked in the rush to move product. Leadership may celebrate a major account without realizing that allowances and slotting fees can make the relationship unprofitable.”
Unit economics provides an even deeper view by breaking down the business model to its core drivers. Customer acquisition cost shows what it takes to win a client. Average revenue per user highlights the value of each relationship. Lifetime value measures how customer profitability evolves over time. Contribution margin reveals which segments generate sustainable profit after all costs are factored in.
The combined use of these metrics helps guide resource allocation decisions. According to Patel, “One of the first steps is to analyze where cash is going. A thirteen-week cash flow forecast paired with unit economics provides a clear framework to understand whether investments generate the returns required.”
Finance Led Scenario Modeling for Operational Improvements
Traditional budgeting often assumes everything will go according to plan. In reality, growth-stage companies face constant change. Scenario modeling prepares organizations by exploring multiple possible futures and testing how different assumptions impact performance.
8020 recently partnered with a portfolio company to develop scenarios around supply capacity and market velocity. The team built models that shifted between base-case conditions, excess-capacity situations that enabled aggressive expansion, and shortage scenarios that required careful resource allocation. Each scenario incorporated consumption patterns from syndicated market data, giving leadership a full view of possible outcomes.
The benefits extend far beyond better forecasting. Scenario planning requires cross-functional collaboration. Operations provide capacity constraints, marketing contributes demand forecasts, and finance models the financial implications of each path. Teams anticipate contingencies before problems arise rather than reacting after damage has occurred.
Modern planning platforms such as Planful and Adaptive make scenario modeling accessible even for growth companies that once relied solely on spreadsheets. Leaders can toggle between assumptions and instantly view the impact on cash flow, headcount, and profitability. Strategies can be stress tested before committing resources, reducing the risk of operational drag caused by poorly planned investments.
Embedding RevOps and FP&A into Portfolio Playbooks
Revenue operations sits at the intersection of sales, marketing, and customer success, ensuring go-to-market teams stay aligned with overall strategy instead of optimizing for their individual metrics. Without RevOps integration, sales can end up chasing deals without thoroughly weighing profitability, marketing focuses on lead volume over quality, and customer success operates without visibility into unit economics. The result is revenue growth that creates more operational drag than value.
Successful portfolio companies embed RevOps and FP&A integration directly into their operating playbooks through several approaches:
- Unify data sources so all teams work from the same foundation rather than maintaining separate spreadsheets and systems. When everyone operates from a single source of truth, teams can make decisions based on the same information rather than arguing about whose numbers are correct.
- Build a shared data dictionary that defines metrics consistently across departments, eliminating confusion between bookings and revenue or different interpretations of customer acquisition cost. Clear definitions prevent teams from optimizing for other versions of the same metric.
- Establish regular metric reviews where RevOps and FP&A present unified dashboards that show how go-to-market activities translate into financial performance. Sales can see how deal composition affects cash flow, marketing understands the lifetime value implications of different acquisition channels, and customer success recognizes how retention rates impact overall profitability.
- Form cross-functional teams that become the mechanism for turning insights into action. "Future-ready finance talent must see across departments and become a utility player. There has to be cross-collaboration and hiring talent with the perspective of how everything ties back to business goals."
When RevOps and FP&A work together through these structured approaches, they can identify operational inefficiencies before they compound and redirect resources toward activities that drive sustainable growth.
True Financial Talent is a Utility Player
The finance professionals who drive real value in growth companies often operate very differently from traditional CFOs. They embrace AI and analytics to automate routine processes while focusing their energy on strategic decision-making. Instead of spending weeks building monthly reports, they use technology to generate real-time insights that inform operational improvements.
Strategic finance talent thinks beyond balance sheets and closing books. They collaborate across departments to understand how marketing spend translates into customer lifetime value, how sales compensation affects deal quality, and how operational changes impact cash flow.
These professionals become thought partners with other executives rather than just reporting on what happened last month. As one finance leader explained, they "have to be collaborative across the organization... their number one goal should be to drive growth."
True finance talent stays endlessly curious about driving business value. They proactively identify opportunities to improve unit economics, streamline workflows, and eliminate operational drag before problems compound. You need someone who asks why expenses increased rather than just recording the increase. Someone who questions whether marketing channels actually generate profitable customers, rather than just tracking lead volume.
The most effective finance leaders become utility players who can work across any department to solve problems. They understand that their primary job involves driving growth and supporting strategic decisions rather than maintaining accounting records. When growth companies embed this type of finance talent early, they build operational discipline that scales with revenue instead of fighting operational drag that compounds over time.
How 8020 Consulting Unlocks Real URR
Operational drag erodes portfolio performance, yet many private equity firms lack access to the specialized finance talent required to identify and eliminate inefficiencies quickly.
8020 Consulting embeds experienced professionals directly into portfolio companies. Instead of delegating critical analysis to junior staff, our tenured consultants perform the work themselves, building trust while accelerating results. Our team brings deep expertise in FP&A, controllership, operations, and M&A, and interim CFO roles to deliver immediate impact.
Our consultants identify inefficiencies ranging from bloated SG&A expenses to manual processes that drain productivity. We modernize finance tech stacks by implementing innovative platforms and AI automation, enabling sophisticated scenario modeling. More importantly, we facilitate RevOps and FP&A integration to deliver unified visibility across the value creation process.
Don't let operational drag continue hurting your portfolio returns. Partner with 8020 Consulting to embed strategic finance leadership that eliminates inefficiencies and creates sustainable value.