I believe that many of us can agree that staying the same, remaining stagnant, not having a strong desire to improve, both as companies and individuals, is not a desirable situation. Complacency can and will kill a company long before they even realize it is happening. I was reminded of this while recently listening to a CD by Jim Collins, How The Mighty Fall.
On the other hand, rapid growth presents its own set of challenges and does not guarantee success. In fact, rapid growth can often result in the demise of a once successful business. The key to growing successfully is careful preparation in three key areas.
- Cash– There is simply no substitute for cash. A company that is growing rapidly can quickly grow broke even as profit margins appear adequate. I have seen this during my years as a consultant to growing companies. Cash being eaten up even as the company grows cannot be sustained and must be reversed even if it means slowing down the growth.
- People– People on the team that were right at one stage of a company’s growth may be entirely unqualified as the business grows. This is true of every department starting at the very top. I have worked with owners that grew their companies, but at a certain level of growth, do not have the skills necessary to go forward. This is a critical stage of the company and even the owner must be absolutely honest about his own skill set and of his team, putting the right people in the right places.
- Systems– Have you ever seen an automobile mechanic, landscape specialist, doctor, artist, or musician effective at their profession not using the right tools? The answer is absolutely not, and a company, rapidly growing without the right systems ( accounting , inventory, sales, CRM, etc.) in place, will not be growing for long. Growth must be managed, measured, and forecasted carefully, and the right systems enable this to be done.
Growth can be good or bad. As Jason Fried recently said in Inc., “I’d love to see more businesses take this approach-intentionally rightsizing themselves. Hit a number that feels good and say, ‘Let’s stick around here.’ It doesn’t mean they can’t grow, but they are in control(emphasis mine) of their growth(Fried, p.98).”
*Fried, Jason, (May 2016), INC.