Business Growth: Play Chess...Not Checkers
You’ve launched your business, proven your products and services and have celebrated several solid years. Remember how stress-fully exciting it was when you launched your business? As the founder, you had your hands full and had to oversee every aspect of your business from sales to janitorial!
After celebrating success at that level, continued growth can be tough. To do so, it’s important to start to prepare yourself and your budding company for growth. Without careful preparation, it can lead to serious burnout, extended growth plateaus and sometimes financial distress.
There comes a time in many business’s life span that it becomes too large for one person to effectively manage. As a business owner, you need to start building a business that can be successful without you.
In his book, second stage entrepreneurship, Daniel j. Weinfurter outlines several steps to take to manage this second stage growth.
1. Know where to find growth capital – Growing a company takes money. If you want it increase sales, for example, you may have to invest in increased inventory, equipment, and employees to support that growth. In most instances, just because sales grow it doesn’t mean cash is immediately increased due to a lagging cash cycle. How are you going to support the need for additional cash? Planning for the correct amount of financing with favorable terms is not something to be done in an emergency. And, never fall into the online lender trap!
2. Form a Board of Advisors - When you started your business, you had an idea to do things differently and better. You wanted to break the mold. This is great early on but to really scale a business you need to surround yourself with advisors who can help you professionalize your business and help keep you accountable.
3. Hire people smarter than you - It’s tough to hire someone who could actually replace you but if you truly want your business to scale, you need people who have the right skills, experience and passion who can help innovate the business to the next level.
4. Hire Leaders Not Followers – you can have the smartest people on hand but unless they are decisive leaders who can innovate as the situation dictates you won’t scale.
5. Separate Sales from Marketing – Often lumped together, each are specialized functions. Marketing focuses on things like branding, packaging, positioning, pricing – the overall concept of the company’s products and services. Sales focuses on customer relationships, fulfilling customer needs – basically making the sale. While there is some overlap in skills, each are specialized.
6. Focus on overall customer experience – Rapidly growing companies get this way because they make it easy for customers to do business with them. They devote resources to optimize the customer experience and turn each customer into a referral partner.
7. Create a Positive Culture – know what your values are and why they are important in your marketplace. Drive those values throughout your company through positive behaviors.
8. Leadership is not the same as Management – Leaders provide the vision and drive of the company. Management makes sure that things get done. Valuable companies separate the two functions so that the founder can step out of the business
Turning your budding small business into a valuable organization with true staying power is a skill that has to be learned. Sure, some small business owners don’t want to grow their business into the next Amazon or Papa John’s. But if you do, you’ll need to work to learn the skills necessary to build a professional organization. This is especially true if you want to pass on your business to family or if you plan on selling it at some point. Focusing on building a valuable business is good strategy.