Growth can be characterised in several ways – sales, profit, employees, but whichever way you look at it the underlying driver is likely to be that the founder wants to look beyond funding his or her lifestyle and set their eyes on value creation.
It all begins with the owner-manager taking the leader’s role. He or she will undertake activities based on the desire to make their dream happen; they will take calculated risks, work hard, control pretty much everything, and aim to have fun. They will gradually assemble tools and methodologies to help them work smarter not harder. And they will be driven by achieving results that demonstrate value is being created.
But certain pressures start to build as they move from comfortably funding their lifestyle. Some of the warning signals are:
- Not enough time
- Pressure on product and market development as customers demand more of you
- True experts needed to fill big gaps in functional expertise
- Competitive heat as others respond to your presence
- Your people don’t feel empowered but you don’t think you are micro-managing!
- No one shares your sense of urgency
- The business is beginning to control you rather than the other way round
- Management information is becoming neither timely, relevant or meaningful
- Product and client profitability are becoming unclear
- Cash management is getting more complex
You may recognise some of these!
There is also a Darwinian process at work. Darwin realised that life forms needed to reproduce to survive, and that regularly there were more than the environment could support. A lack of resources put pressure on population size, which led to increased competition, and some would not survive. Furthermore, those who died were not totally random; the more suited were the more likely to survive. So there was a “weeding out’ of less suited organisms leading to the survival of those better suited. In other words Darwin deduced that organisms evolve over time.
We therefore have two separate ‘streams’ to consider:
- The growth stages of our business
- The evolution of the founder’s role at each stage
Note – we already believe that it’s not how fast or smart we are…it’s our ability to adapt that determines whether our business – and ourselves – will survive!
We will look at these stages in future articles, but for the moment let us just consider some of the characteristics of successful business, who have figured out the need to evolve and adapt. Typically they:
- Have a clear strategy and vision
- Know when and how to exit their business
- Organise their business around systems, not people
- Know how to recruit and retain people
- Know their market position or niche
- Have an efficient “sales machine”
- Plan and control their finances
- ‘Manage’ rather than ‘do’
- Have an effective board structure
- Seek advice
You may want to benchmark yourself against these and check how you are doing.