Managing Business Growth – The Killers of Business Growth
Ask any business owner what they’d like for their business, and they’ll say “Growth”. But managing business growth isn’t just about increasing your profit margins or growing your turnover. As Pavlo Phitidis outlined on The Money Show with Bruce Whitfield, managing business growth should be about more than just adding new branches, purchasing new assets, or expanding your footprint. Managing business growth in a sustainable way means building and investing in your capacity to grow, before you grow. The true essence of growth does not lie in the numbers - your business is much like a body: it must learn skills, build muscle, and grow, before it can carry a bigger weight. Similarly, your business is much like a professional athlete, in that – to run faster, better, and further, every part of their training schedule, physique, and nutrition, must be well-maintained to enable success. Every organ within an athlete’s body must be in happy, healthy, and work in unison to enable them to achieve their goals. It’s the same within your business. The potential killers of business growth reside within these all-important variables:
Your business’ capacity to deliver
Understanding what determines the capacity of your business to deliver is the first step to investing in growth.
For a service-focused business, your capacity drivers may well be people, office space, computing and bandwidth. In manufacturing businesses, your capacity is determined by plant and equipment, space and location. Skills too are a capacity delimiter. In South Africa we suffer skills shortages that either slow your growth rate or limit your scope of services – both are frustrating tradeoffs. Money too is a capacity limiter. If your customers only pay in 60 or 90 days combined with our business unfriendly accrual VAT tax system, your growth is severely constrained by your ability to have cash-on-hand.
Ensuring your suppliers can support your capacity to deliver is also vitally important. For example, an airline relies upon stable, reliable suppliers, including airports facilities management crews, to ensure that their passengers fly on time. Without that coordinated group of effective suppliers, the airline may fail to deliver the service they’ve promised to their passengers. Your business needs reliable, effective suppliers on board too, or else you’ll fail to deliver your services to your customers, so work with them to ensure they can support you in managing business growth.
Failure to grow your capacity to deliver in synch with your business growth will lead to your business breaking, so focus on managing business growth, by growing your capacity to deliver first, and not just your customer base.
Your business’ capacity to fund
Understanding your business’ capacity entails investing in it. Once you have isolated your business’ capacity to deliver, how do you intend to fund it, and thereby expand it, so your business can grow? The process of funding business growth leans heavily on your business’ ability to deliver.
Funding is not difficult to source, so long as you are able to highlight a business history that shows momentum, growth, a growing customer base, and a true capacity to deliver. Your first round of funding will be sourced by your ability to get customers and deliver your products to them. Your second round of funding will be easier to obtain, thanks to a solid history of delivery. If you operate a service-focused business, you’ll need to find funding that enables you to expand your asset register, and team. That can be more difficult to find funding for, and that’s why focusing on ensuring your team operates in a unified, well-oiled way, is imperative. Managing business growth in a service-focused business begins with investing in training and mentoring for your team and growing in stages.
Your business’ capacity for change
As your business grows, it will also change. The way you operate, expand, and solve your customers’ problems, must transform if your business is going to grow. Your business’ capacity for change will depend highly upon your ability as a business owner to adapt to shifting external and internal environments. Your ability to adapt to change as a business owner is a key component within your business’ capacity for change. Your leadership, focus, tasks, and management must change, for your business to be able to change.
Your business’ capacity to deal with complexity
The ceiling of complexity is the highest level at which your business can operate, in terms of its nature, operations, or offerings. It’s difficult to break through this glass ceiling but being able to define it is important for managing business growth. Once you’ve reached your maximum capacity for complexity, it’s time to re-define and re-organise your business to ensure growth beyond that ceiling. We refer as this as breaking to build and covered it in previous blogs.
Your business forecasting processes
Your forecasting processes are a key tool for managing business growth. If you can’t see the wall accelerating towards you, you will slam straight into it. Being able to forecast as best as possible, and isolating potential pitfalls long before they happen, enable you to adjust your business and move smoothly through obstacles or change. Building your business in stages, just as a child grows up, will help you to define and spot critical points in your business growth journey, long before they hit. Don’t just focus on your financial forecasts; create and scale your business growth plan by forecasting your capacity to deliver.
As a business owner, you carry the load for your business’ success or failure and, as your business grows, you need to change the way you do things too. Use appropriate technology to support what you do, so you’re able to break, and re-build what you do as a business owner, so that your business can grow.
If you are a business builder, driven, ambitious and desirous of success for example, the last thing you want to hear is “slow down, take it easy” as a reprieve from the pressure you live under in building your business. Rather, you want to hear “keep your foot on the accelerator, but build it differently to scale for growth”. That is the music to the driven passionate, business owner’s ears.