We all know the scary statistics about the volume of business failures within the first few years of starting up. There’s an unfortunately large graveyard of shooting stars that come down to earth with a sudden crash – companies that, for whatever, reason had cashflow problems, staff issues, challenges retaining customers or they just couldn’t get to profitability for different reasons. They burned up capital and their dreams went up in smoke too.
So, what is the difference between those companies that get to the next level and are able to grow sustainably, and those that cannot?
Transition and scale
I’ve recently been helping entrepreneur founders who face the challenge of how to grow sustainably and get their businesses to the next level. As businesses move from the start-up phase to the point where they are hiring a bunch of people, including senior managers to run functions within their company, the business needs to be managed differently.
How then to manage the transition from a smaller founder-led business to one that can scale-up?
Obviously, the founder cannot be involved in all decisions as the business grows, but they still need to find a way to manage the business effectively. They will need to hire and delegate some areas to professional management and they will need to put in some ‘bigger company’ processes without losing what it is that has made the business successful. These decisions can present numerous challenges for founders.
For example, you will need to first answer whether you have a business and model that can scale (and this is a big topic on its own that I won’t attempt to address here). But, assuming you are positive on the potential, some of the key areas that need to be looked at and questions answered include:
Organisational Structure and Talent
- What should the right organisational structure be?
- How does my current talent measure up to what I need for running a bigger business? Should I bring in experienced management in specific areas?
- Which areas of the business should the founder delegate and which should he or she hold onto? Note that this needs to be considered carefully, as even CEOs of huge companies don’t delegate everything.
Planning and Priorities
- Creating a credible overall business plan and financial plan will give confidence and create alignment among key stakeholders such as banks, investors, staff and strategic partners.
- A specific effort to align staff with the overall plan and their part in it. This helps your team stay connected and on the right track as you get bigger and can’t spend as much direct time with them individually.
- Be careful about being too opportunistic. You will see lots of business opportunities that might give you some growth but could distract you and your team from your core mission and away from profitability. Be guided by your plan and evaluate new opportunities carefully.
Systems and Processes
- Establishing a robust and efficient management system. In other words, a series of regular reports and meetings where business performance is monitored, issues are raised and the management team maintains alignment.
- Controls and financial management. As you get bigger, you will need more robust financial management and a control system. There may be opportunities to improve efficiency through better inventory management, cash flow management, managing supplier costs and terms, and streamlining overheads.
- If you can create more efficiency, this will free up funds, which can be invested into your growth priorities.
Self-Management and Development
- Working out where he/she should prioritise and spend their own time? Which projects or functions should they take on directly and which areas should be delegated and monitored through the management system?
- Continue to develop yourself, find ways to get new ideas from outside, this can be through coaching/mentoring, involvement with industry groups, courses and book learning.
Sales and Marketing
- Building out a robust and scalable sales and marketing structure to ensure ongoing growth – something that goes beyond the founder’s bandwidth and network.
- Implementation of industry best practices for customer retention and new customer acquisition.
Embrace Ongoing Change
- Keep evolving and create a culture of ongoing change. What worked last year might not work now or for the coming year. For example, you might have focused on winning lots of new customers in the early days. As you grow, it will become critically important to maintain and grow those customers, as well as securing new ones.
- Keep close to your market and customers. Industries and customer needs can change dramatically over time. Pick up on changes and new opportunities, evaluate carefully and adjust your business accordingly.
- Make change deliberately and for the right reasons. Keep the team aligned with changes and communicate often.
Where to from here?
There are many opportunities to pursue and directions to take, so where to start?
- Start with yourself! You must be ready to make changes. There is no way your company will scale-up if you, as a leader, are unable to be a role model for embracing change yourself. You will have to give up some things and shift from ‘doing’ to trusting and leading a bigger team effectively. You don’t want to be the founder trying to run a large company like it was still a small start-up.
- Get moving! You don’t have to do everything at once, so prioritise and focus on a few changes. Do some diligence before going ahead but don’t over-analyse, be action oriented and then course-correct as needed.
- Communicate to your team! Tell them what you are doing, why you are doing it and how they fit with this – in short, get them involved in making it happen. Too many business managers miss this and wonder why their great changes are not getting any traction.
- Get outside help! There are many important decisions to make and you will make better decisions with the help of an advisory board, an outside consultant or by involving experienced management in your efforts.
I hope some of these thoughts provoke your thinking when the time comes to grow your business. I’ve given you some nuggets from my years in leadership. Now, it’s over to you to take action.
Are you ready to scale?
Steven Norman is an accomplished frontline sales and business leader dedicated to helping B2B sales leaders upgrade their knowledge and skills, build next-generation sales teams and turbo-boost their careers. Over a 25 year career Steven has been responsible for more than US$4 billion of sales with major tech companies such as Dell, NEC and Targus across the Asia Pacific. Recent years of intense B2B sales research and analysis led to the foundation of Growth Acumen, a modern sales and leadership development advisory service. In 2019 Steven released his New Book “Future Proof Sales Strategy.” Seven steps to equip sales leaders with the tools to rise above the complex challenges facing the B2B sales industry.