Your business is experiencing strong growth – now what? Double-digit growth brings with it a host of new challenges, particularly how to effectively scale as you grow without imploding. Often growth and scaling are used interchangeably, but scaling means growing your revenue faster than your costs - IE profitable growth.
I had the opportunity in my early thirties to work for a very fast growth company. I remember hearing the founder say, "We can be as big as we want to be and grow as fast as we want to." I felt like I was riding the biggest wave you could imagine and what a thrill it was!
The only problem was, we grew too fast and did not have the right things in place to scale and handle the growth we were experiencing. Needless to say, the story did not end as well as it started, although I learned a lot. You can avoid failure if you put the right systems, processes, people and financing in place. To scale your business you need more than just growth strategies for revenue to build a successful business.
So, let’s take a look at some fundamental things to do as you grow your company.
1. Develop the right BHAG and strategies to support it.
Don’t let every opportunity that comes your way get your attention. If you have a solid strategy in place to grow the business, work it and keep it aligned with your Core Purpose. This will help you avoid some of the chaos that comes with being overly opportunistic and reacting to every new shiny opportunity that presents itself. Successful scaling is about adding the right people, resources and efforts around your growth strategy.
2. Prepare financially.
Consider how you are going to fund your growth. You have probably heard the saying, "Growth sucks cash." There are many ways to do this and each has advantages and disadvantages depending on your personality and end game. Here are just a few ways to finance your growth:
- Venture Capital
- Private Equity Investment
- Angel Investment
- Joint Ventures
- Bank Loans
- Factoring Receivables
- Lines of Credit
- Friends and family
- Improving your Cash Conversion Cycle
An entire blog could be written on the pros and cons of each option, and I encourage you to research each path as you determine how to fund your growth.
3. Scale your organization.
As you grow the organization, it will begin to look a lot different. The structure will be different from $1-10M as it will be from $50M – 100M and beyond. Developing a roadmap and breaking apart roles while defining them clearly is extremely important to manage your growth. If you don’t do this, people will begin to limit the organization's potential, and burn out if they try to manage too many activities as the company grows. Additionally, some people will not make it to the next level in an organization. It does not make them bad people, and they can still contribute, just possibly not in their exiting role. To be a profitable and successful company you need to grow faster by adding more customers faster than hiring more people.
I recommend creating an org chart for how the business looks and functions today. Then, create an org chart for the company a year out and then 3 years out. This will create a roadmap for growth. It takes time to fill key positions with A players, particularly in a tight labor market.
4. Put the right systems and processes in place.
As you grow, your systems and processes need keep up with the increase in volume. This will most likely include upgrading the software used to run the business. You may be moving from QuickBooks or Peachtree to a more robust accounting platform. You may need to upgrade your ERP system and add other cloud-based systems like Rhythm to manage your strategy and execution, and a CRM package to manage your sales process and pipeline. Computer hardware may need to be upgraded to support your new software systems. Adding a talent management system can help you manage hiring, training and employee evaluations. Use a business operating system like Rockefeller Habits, Scaling Up, EOS, the Rythm of Work, or another system.
5. Expand the physical presence of your business.
It is not uncommon to outgrow your facilities. Deciding on your plans to overcome this can go in many directions. You may expand your existing facility, buy, build or lease a larger one, or decide to expand geographically to support better market penetration. There are pros and cons of each approach and you will want to align your efforts with your revenue projections and market penetration plan to best serve your existing and future customers.
There are other factors to consider of course, but hopefully, this list gets you thinking and gives you a few things to consider as you manage your growth while scaling up.
Good luck and execute well, Alan
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Photo Credit: iStock by Getty Images
Photo Credit: iStock by Getty Images