How to avoid a tumble when your business expands
Most entrepreneurs start out with big plans for success. But what happens when the very thing that’s the main goal — growth — also threatens a company’s existence?
Transitioning from a nimble startup with a skeleton staff to a mid-sized company is one of the greatest challenges organizations face on the road to victory.
How they manage their growth will ultimately determine whether they prosper or perish.
It’s all in the strategy
Companies move through five phases of growth, from startup to mature business, according to the Harvard Business Review.
- Stage 1: Existence
- Stage 2: Survival
- Stage 3: Success
- Stage 4: Take-off
- Stage 5: Resource Maturity
They all begin at square one, but the vast majority don’t end up becoming a blockbuster brand like Amazon or Apple. In the excitement to launch new products, grow the business and add new talent, many startups lose sight of the planning and organizational strategies that keep the organization healthy, says Survey Gizmo.
New businesses often run in perpetual crisis mode, with each day bringing new challenges that demand management’s urgent attention, reports Info Entrepreneurs. “As your business grows, this approach simply doesn’t work. While a short-term crisis is always urgent, it may not matter nearly as much as other things you could be doing,” they explain.
“Spending your time soothing an irritated customer might help protect that one relationship, but focusing instead on recruiting the right salesperson could lay the foundations of substantial new sales for years to come,” they go on to add.
Letting go of some control
As companies grow, the ad-hoc management strategy that worked well in the early days is no longer sufficient. They typically require more structure and need to pay closer attention to roles and responsibilities among the team, says Margie Humphreys, president of Watermark Partners, a Halifax-based consulting firm.
“Strategic planning for a company of any size is critical,” she says. “Even a one-person shop will benefit from a plan. Often small businesses don’t take the time to do that. It’s referred to as ‘working on the business instead of in the business.’”
That involves the owner letting go of some of the control and immediate feedback he or she is accustomed to in a small company, Humphreys says.
“When your success to date has relied on your ability to control things and be there, it’s counter-intuitive that letting go of control is now your key to success. It’s a scary step for a lot of people,” explains Humphreys, who consults on organizational change, people processes and business improvement initiatives.
Making the transition
To successfully transition to the next phase of their corporate evolution, entrepreneurs need to develop a disciplined approach to management, including leading employees, cultivating a management team and building a solid business strategy.
Rather than treating each challenge as a one-off, they need to implement systems and processes that make it easier to solve the problems in the future, reports Info Entrepreneurs.
Businesses want to grow by nature, says Humphreys, noting that the growth strategy should start with a shared perspective of where the company is today and where it wants to be.
“Communication is key. By communication I mean listen first, not tell,” she says. “Owners and managers do well to listen to what the organization is telling them — what parts are doing well, what parts are struggling, what is the collective wisdom of the organization? Harness that and you’re off to the races.”
Self-reflection and introspection
In the necessary chaos of expansion, Humphreys advises entrepreneurs to take a few deep breaths and look inward.
“Growing pains are real (and) a strategy that involves personal well-being is important,” she says. “As their organizations expand, I’ve found CEOs I work with benefit greatly from a 360 understanding of their strengths, challenges and operating style — from understanding who they are in this job and why they’re doing what they do.”
While Humphreys admits hard-driving business people or creative inventors aren’t typically the first to ask for feedback, there are enormous benefits to the CEO having a better understanding of their own strengths and weaknesses.
“Very often it’s the effects of stress that cause missteps. I’ve worked with many CEOs in the midst of expansion, who once they got their personal house in order knew exactly what to do with their organizations. The nuts and bolts of the business plans are the easy part.”
Read Part 2 in the Managing Growth Series: Managing talent and cultivating a winning workplace.