One might think that a rapidly growing business is a bonanza, but that is probably when the “one” isn’t actually in the rapidly growing business. Although growth is the Holy Grail for most entrepreneurs, it brings some problems along for the ride – and it seems like there is not enough time to deal with them. Are you losing sleep over business growth?
There are four general categories that can be sleep-busters when your business is in full-on growth mode (people, strategy, execution and cash), and we’ll touch on each of them here. Your company may be stuck in only one of them, or you might be battling on all four fronts. Regardless, there are solutions to all of them.
Growth and your team
It’s a common issue in rapidly expanding businesses that the senior team is not big enough to encompass the increase in the variety of expertise the business needs. Part of the goal here is to help the business run without you being the essential hub of all activities. You need to fill the right seats, AND you need to fill them with the right people. It is a growth make-or-break decision to add a member to your senior team, because if they do not fully share the company’s core values and commit to its goals, your plan is in jeopardy.
Take your time in your search. Your best candidates align with the company’s values, and expand your capabilities in strategically important functions. If you are tempted to compromise on values for the sake of skills, don’t do it. Your selections are demonstrating company culture that reaches every corner of the business. And a bad hire will cost you valuable time fighting fires.
Avoiding the commodity trap
A sound strategy for your business is one that exploits your core competencies to differentiate you from your competition. It’s hard to fund growth when your undifferentiated business has to play “sharpen the pencil” on prices to win customers over Brand X every day. You need to determine what your core customer is looking for, and then create a plan to deliver that in spades. Part of what your core customer is looking for is your product or service, but they also have expectations about what their experience with you could or should be.
How far out are you planning? If you’re only looking at the next year, you’re probably reacting more often than you’re deciding and executing. Differentiating factors aren’t developed overnight, so you need to be looking out 3 years and even at your 10-year really big goal (BHAG) for your business. The longer view creates the context within which you align shorter term decisions.
Avoiding cash starvation
When you have to produce more, and more quickly, you need to bring in more raw goods, to invest more in labor, etc. to fulfill higher sales levels. That means you may need to secure some short term working capital to bridge the timing difference between when you incur your costs and when you receive the revenue from sales.
The most desirable situation is when you can fund your growth from internal sources rather than relying on bank financing or other external sources of capital. To do so, look at places where you can make even a 1% change. You can increase your prices by 1% without raising customer eyebrows. You can seek to decrease overhead by 1%, or reduce the cost of your raw goods by that same percentage. And of course you can look at making improvements to your processes to decrease the timing differences between costs laid out and revenue coming in.
Tightening up execution
How frustrating is it to make big plans, only to have them fall flat or become moot points because of a lack of execution! It’s not enough to exhort team members to perform, or only to try to jazz them up through motivational speeches. Your business needs accountability processes that include communication protocols, well defined job responsibilities, goals, and key performance indicators. A team performs best when it knows how it is progressing toward established targets.
Also in execution, your company can only grow as fast as it pulses. The rhythm of your business is established and maintained through routines and disciplines that make problem identification, solution development, and decision making streamlined and fast.
Summithrd has recently become part of ProActive Leadership Group to provide leaders in rapidly growing mid-market businesses with process and tools to achieve their growth goals without losing sleep. Contact us about doing a Complimentary Organizational Health Assessment for your business.