EAST GREENWICH, RI – Top independent consultants believe successful businesses need to make the effort to prepare appropriately for the challenges posed by a growth economy, according to The Society for the Advancement of Consulting® (SAC).
A Greater Challenge than Downsizing
"The vast majority of my clients are experiencing rapid growth," points out Lisa Anderson, known as The Manufacturing ConnectorSM and President of LMA Consulting Group, Inc., Claremont, CA. "Although far more exciting than downsizing, planning for growth can be the greater challenge."
"Start with your people. If you have the right team, you'll succeed. Consider your people to be your #1 asset. Next, make sure your capacity is ready to support growth. Are your people, processes, systems, plans and priorities aligned with growth? Build flexibility into your plans."
"Cash flow can make or break success when it comes to growth. Track critical metrics and adjust accordingly. Last, but not least, remember to align your extended supply chain. Customers, suppliers and other supply chain partners must be prepared to grow with you," Anderson adds.
Strategy Drives Growth
"Mid-market companies can grow dramatically when they avoid incremental thinking," said Phil Symchych, president of Symco & Co., a Regina, Canada based consulting firm that helps owner/managers of mid-market companies to accelerate profitable growth. "Growth goals should never come from the finance department who add a few points to last year's results. That's not growth; that's just math. Growth should always be driven by strategy."
"One service company grew annual revenues from 20 to 35 million in one year. That's 75 percent growth. They focused on the four key growth drivers: business strategy, management, resources, and metrics to drive growth," advised Symchych.
"Proactively thinking and acting like a much larger company will get you there much fast than trying to grow by a few percent per year. Ask yourself, what does our business need to look like to be twice as big and twice as fast?'' Symchych recommended.
Planning Ahead is Critical
There are three major steps effective leaders take to best prepare for the challenges of growth, says Dr. Karen Wilson-Starks, President of Transleadership, Inc.
First, implement effective systems. Once you scale the business to higher levels of production or service, systems matter. Their absence will show in inconsistent fulfillment or inability to make good on promises to clients.
Second, share the workload. Select talented people and delegate the work. Many businesses fail when leaders don't know how to transition from doing it all themselves.
Third, plan for the next step. "While the team is working ‘in' the business, effective leaders transition to working ‘on' the business. They think strategically about next steps, new innovations, new markets, and future positioning," according to Starks.
"Planning ahead and sharing the workload may involve consulting with competent outside professionals who can more quickly and successfully align the business for stellar growth," she said.
Growth Builds Complexity
An organizational architect with 30+ years as an entrepreneur, Voss W Graham of Memphis, TN, notes, "While revenue is usually the focal point for small business growth, other complex issues have emerged. Complexity occurs with the addition of people to the enterprise.
"If an entrepreneur wants to build a business to create long-term wealth, he will need to hire people. The struggle is how to hire the right people and when to hire them.
"The final issue is adapting their leadership style – from dominant to facilitative and back. An additional factor is focusing their energy – revenue, process or people. The entrepreneur needs to provide certainty and predictability as the business grows. Find a research-based growth matrix to guide decisions and choices for growth," he adds.
Are You Prepared to Handle the Challenges of Growth?
"There are three important questions the CEO of a growing company must answer before letting the growth celebration begin," says Rebecca Morgan, Founder of Fulcrum ConsultingWorks, Inc. "First, do you have the liquidity to support increasing sales? Focus on shortening your cash-to-cash cycle in order to ensure you do."
Morgan, known as the Oracle of Operations,SM adds, "Second, can your infrastructure support growing sales while maintaining service levels and profitability? Your bottleneck could be equipment, engineering, a supplier, or other assets key to buttressing growth. Aligning operations with the rest of the business is the only way to ensure profitable growth."
"And third, are the sales actually good sales? Not all are good, and those should not be accepted or celebrated," Morgan reminds us.
Avoid 1 of the 3 Biggest Mistakes in Growing Your Business
Gary Patterson, President and CEO of the FiscalDoctor® in Atlanta, GA, notes that leaders told him they made it through the downturn by cutting: first fat, then muscle, and then bone. Those companies are now surgically deciding on where to increase funding, assign key people and how to shift strategic focus.
"As a crucial part of those decisions, he has found that one of the three biggest problems in growing your business is addressing opportunity costs. These companies need to consider what assets should be sold, even at a loss, in order to generate funds for growth opportunities."
"After all, what growth-oriented organization has enough money, people, and time to support the available opportunities? If those discussions have too high a political cost, consider bringing in outside support." Patterson suggests.
Growth in Charitable Assets
For those who divert some of their assets to the creation of private charitable foundations, growth creates a different set of challenges.
"Private foundations are required to give away at least 5% of assets, so growth requires a plan for increased charitable distributions," explains Kris Putnam-Walkerly, president of Putnam Consulting Group. "It may sound easy, but giving money away effectively is a challenging task."
Putnam-Walkerly advises foundation trustees to plan for growth by exploring needs in their communities that most closely align with the foundation's mission, determining where the gaps are in meeting those needs, speaking with others who provide support in the same or similar areas, and planning strategies to address challenges so that impact will be maximized. "This could require hiring additional staff or ensuring that existing staff have the appropriate training and tools to handle a larger grant budget," she says.
Growth to Great
Dr. Maynard Brusman, a consulting psychologist, executive coach and emotional intelligence-based leadership development expert, notes, "Business growth is a blessing, but it can also be stressful when deciding how much additional talent you'll need to manage that growth. Consider hiring a chief operating officer and/or chief financial officer if you're growing fast—even if only on a part-time or consulting basis. Get comfortable in your critical leadership role as the strategic thinker —in other words, the CEO."
According to Dr. Brusman, "Some business leaders are so confident in their abilities that they don't consider getting an outside opinion. With growth, new and unfamiliar challenges emerge. Mindful executives will talk to a seasoned consultant to discover issues, i.e., culture change, they may have overlooked. Emotionally intelligent leaders know that engaged people need a sense of purpose to be part of a greater cause and a more noble endeavor."
Don't Forget to Think Ahead
Too many businesses focus on execution during growth phases and not enough on planning for the future, according to Linda Popky, president of Redwood Shores, CA-based strategic marketing firm Leverage2Market Associates , and author of the new book Marketing Above the Noise: Achieve Strategic Advantage with Marketing That Matters.
"The best time to think about the future is when you're very busy today. That's the right time to build the marketing initiatives that will help you generate new leads and fill the pipeline for the future.
"Be careful not to forget your existing customers!" she warns. "Too often, growing organizations are so busy focused on the customers they've just acquired that they forget to maintain and strengthen the relationship with those who are already their biggest fans."
Avoid the Plateaus
According to SAC CEO Alan Weiss, PhD, "Growth isn't always about expansion; it's often about maintaining the status quo.
"Yesterday's leaders often disappear into the pack because others are growing faster in knowledge, brand, market flexibility, service, and talent. There are no plateaus in successful businesses," Dr. Weiss notes.