You’ve seen it – I’ve written it. I’ve believed it. Grow or Die. That’s been the mantra my whole business life. If you’re not growing, you’re dying. There’s a lot of truth to the idea, but I don’t think the grow-or-die mentality is correct anymore.
Growing your business is a double-edged sword. Bigger is not better, it’s just bigger. Sometimes growth is good and sometimes it’s bad. Growth takes more time, more capital, more people, better people, better IT, better controls and processes, etc.
Being bigger means different competitors and can certainly take you away from your core and true business. Business growth can mean more business risk; I’ve seen many growth companies shooting from the hip with no growth planning go out of business. They can’t handle the growth—they can’t focus on strategy and run out of cash.
Planned growth for the right reasons is the answer. Planned growth focuses on your strategy and requires continual improvements. Planned growth focuses to reduce business risk and improve your overall business value. The plan and strategy let you focus on profitable growth.
Sometimes you need to let things catch-up. Using the car analogy, you can’t always go full speed. The engine will eventually seize. Think of your leadership and growth like a gas pedal. Sometimes you punch it and accelerate, but many sometimes you need to slow down and assess the obstacles, and sometimes you cruise at 75. You don’t bury the speedometer and run full speed all the time. The engine can’t take it. Successful companies attack gross the same way.
Business growth is like farming – sometimes you plow, sometimes you plant, sometimes you water, sometimes you wait, sometimes you weed, and sometimes you harvest.
My “aha” moment came when I was reviewing a business plan for a rapidly growing company I’m just starting to work with. They were projecting growth as linear. One thing we all know is growth is rarely linear. Look at any growth company’s revenue – it looks like my EKG – up, down, flat, up, down, etc.
Growth is much easier to manage with linear growth – cash flow is more predictable which support cash uses. Nonlinear growth poses obvious cash flow issues when expenses are greater than gross margin or tied up in accounts receivable.
What’s the best way to approach growth?
- Growth is rarely linear – plan to the bumps with proper cash flow planning.
- Growth takes capital – plan for your capital needs well in advance of the need.
- Growth takes talent – You’ll likely need different people – the people that got you here, may not be the best people to take to into the future – they may not have the skill set to handle growth needs. Focus on developing people, but know you may need to make some changes.
- Growth takes better systems and process – Know your system and process weaknesses and work to improve or replace.
Need help evaluating your companies growth pattern? Contact me.