“Help! My business is growing too fast. I know growth is a good thing, but I’m finding it hard to manage. How do I scale up? I’m worried about getting it wrong.”
In some cases, businesses can grow very quickly, creating all sorts of issues and problems for their owner managers as a result. If you’ve hit the jackpot, and your product or service suddenly starts selling like crazy, how do you manage the resulting growth and scale up quickly and effectively? What happens if you make the wrong decisions? How do you manage short-term growth while protecting your business in the long term?
Challenges for owner-managers handling huge growth include recruiting the right people to help them deliver on that growth, getting rid of the wrong people, creating effective management teams and moving themselves from a role within the day-to-day operations of the business to a position at the strategic head of the company, planning for the future.
Fast growth can also create a need for external investment and shrewd decisions around intellectual property rights and patents to help the business to capitalise on what may be a small window of time before their competitors catch up.
It’s a high-class problem really, having a fast-growing business, but it is nonetheless a problem. One of the key things you have to do is put processes in place that allow you to manoeuvre a business that is scaling very fast – and that’s not easy. Processes can be challenging for any business, but processes that are fast-evolving – they are really difficult.
There is often also a leadership piece as well. A business may have been around a while but has suddenly got new opportunities that open the potential for huge growth. The same leadership style that worked for that business when it was just five people around a table that knew everything about each other isn’t going to work when the business suddenly employs 100 people who may be spread across different sites in the UK or around the world.
The key piece of advice I would give to an owner-manager whose business is growing very quickly is: ‘Don’t think you can do it all yourself.’ This is a trap some people fall into. They think they will just extend their working day a bit and they will be able to manage. They won’t. The first thing to acknowledge is that you have to do this with and through other people.
Getting the right people in the right positions within the business to help handle the growth is vital to surviving and thriving a fast-growing business. These new recruits need to be specialists in their area of expertise, more experienced and more knowledgeable than the owner-manager themselves.
Recruiting these people can be more challenging, especially if the business doesn’t have anything in terms of historic figures to show where it is heading, but the key is to get them to buy into what you are trying to achieve.
Owner-managers need to have a really clear vision of what is attractive about the business, and help people see what is in it for them as well. They need to know you’re not just talking about willy-nilly growth, but see that you have a really compelling proposition that they can sell on your behalf. You are basically selling them a future with you.
Another key piece of work is to analyse the growth opportunity itself. You need to determine how good an opportunity it is. How fast will it grow? How quickly will competitors come into the space, and how much penetration will you see in the window before everyone else catches up?
This analysis will help guide decisions you make on raising finance to support the growth by telling you how quickly you need to move to take advantage of the opportunity in front of you. Equity funding usually results in much faster growth than debt, but owner-managers may not want to end up with a smaller piece – even if it is of a bigger pie. If they are invoice discounting, they need to be clear what they are letting themselves in for, that the benefits outweigh any risks. And they need to be realistic that, as the business grows, it is not just their revenue that will increase – their costs will grow as well, and this must be taken into account. A lot of people think they can achieve a much bigger business with the same people, and the same costs. That just isn’t achievable. Be realistic, and then you can plan ways to manage it.
With thanks to Yvonne Quinn