Monday, 10 February 2014

How Growing Businesses Blow Themselves Apart


Logically there are some key things that have to be going on to qualify as a growing business. Unfortunately not all of these pull in the same direction.


By definition, a fast-growth business is growing quickly; this means that there must be significant sales effort (or rather sales results) taking place. Normally bred out of the insatiable passion and excitement of business growth we expect to see all the trappings of an entrepreneurial business: a can-do attitude, impatience, speed in decision-making, speed to market, and a sales and customer-focused attitude.


To put all this in place and have it actually ‘kicking off’ is what most entrepreneurs dream of. Being on the crest of a wave. Watching the sales graph grow exponentially. How great is that.


There is, however, a problem that most people seem to forget about, ignore or sweep under the carpet. That is the boring, dull, tedious and mind-numbing requirement to put tight and effective systems and processes in place, to measure and record everything and to be generally pretty anal about everything that happens. Not a lot of fun here! At least not for the typical entrepreneur.


So, should we allow the wild and zany exploits of the gung-ho sales-focused entrepreneurs be hemmed in by the Larry Logic mindset of the systems police?


Well, obviously the answer is “no”, but how on earth do you do that?


The whole thing about putting systems in place is that they need to be seen as an asset to the running of the business. For everyone. If they make life easier for the crazy salespeople then they will use them. What they object to more than anything else is systems that appear to be there for ‘systems’ sake’. They seem to serve no other purpose than to perpetuate the myth that they are important if not urgent and cannot be ignored. These kinds of systems just drive everyone bonkers (apart from the jobsworths that set them up in the first place).


But the point has to be made. Businesses go bust because they run out of cash. The faster you grow, the faster you burn cash. Grow too quickly and you literally haemorrhage the cash. Suddenly, game over.


If the cash doesn’t get you then customer service levels and operations will. Unable to keep up with the demand, it is simply a question of time before you screw up with a customer. Big time.


And a subset of service levels is the whole people piece. Growing businesses need staff who are happy to tolerate the chaos and ambiguity that inevitably go with the growth. One person resigning or not being able to find the right candidate for a key post (at whatever level) becomes a block to progress.


I cannot count the number of times an entire growth strategy has floundered because one key piece of the jigsaw puzzle has vanished: a key member of staff moves on, cash isn’t quite what we thought it was, can’t find the newstart.


The ability to deal with all this uncertainty and put in place effective systems is what sorts out the successful from the wannabe growth companies.


But, to re-iterate, no cash = no business.
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