Over the last 13 years of Fast Movers, BDO have heard from many different entrepreneurs on the challenges they have faced in owning and managing a fast growing business. We have distilled their thoughts into 7 tips for ‘smart’ growth.
1. Plan for scale
Sometimes for Fast Movers growth just happens, that is the luck of business, but even if it ‘just happened’, you need to be prepared. Successful businesses plan for growth and regularly measure performance and the right leading drivers of their business so that they are strategically placed to respond to threats and opportunities.
Planning helps you anticipate opportunities and issues so the growth that you do want and have is not reactionary growth that creates many unforseen issues challenges along the way.
These issues tend to in fact reduce the rate of possible growth by distracting management away from customers and innovation. In turn, this may prevent fast growth from turning into a sustained long term growth trajectory.
2. Develop systems and procedures
We have seen some businesses in recent years have expediential growth, but have not prepared for their growth trajectory. Planning for fast growth involves an in-depth understanding of your existing or planned business structure and systems and an appreciation of the points in the lifecycle of the business when significant new investment in systems, procedures and infrastructure is required to support the next stage of growth. Without the right systems in place to support growth, it is difficult to scale up in a meaningful and profitable way by continuing to do things as the business might have done in its earlier years. As the business grows up and matures and gets more sophisticated, so should its internal systems.
3. Make hard decisions early
“Things that are bad for business are bad for the people who work with the business.” Thomas E Dewey .
Sitting on issues, is not going to support a ‘smart’ growing Fast Mover, make the tough decisions early. We heard from a former Fast Mover that had had trouble with a service provider. They had hoped that the issues would resolve so hung onto the relationship, 3 years down the track they were growing faster than the service provider could support, because they didn’t make the tough choices for the fear of ‘offending’ they ended up paying for it during a ‘difficult’ fast growth period.
Underperforming staff or suppliers, clients that don’t fit your target or better still don’t align with your values can hurt your business. Make hard decisions early or face the consequences during the fast growth period – when it is harder to let go.
Financing fast growth is one of the greatest obstacles to growth for Fast Movers. Fast growing businesses are capital hungry as more of the profits are reinvested into ever increasing working capital demands. 36% of the 2018 Fast Movers survey respondents will require significant finance to support growth over the next few years.
Plan your finance options before fast growth occurs; you may grow faster than your bankers legs can carry you or are willing to invest. Consider other sources of finance early or whether there is a smarter way of growth without any additional risk from financing? Understand the growth in requirements for working capital over a 3 to 5 year horizon, then identify how you will finance your fast growth and then make smarter financial decisions.
How fast can you grow without reducing the quality of your product or service? With fast growth come strains on working capital, staff, systems and processes, and management. Sometimes when fast growth occurs the pressures show with poor quality goods and services, a tell tale sign, you may be poorly managed or ‘growing’ faster than you can support. Poor quality can result in customer loss, impact your reputation and impact your brand. Ensure you are growing only at a rate that your quality doesn’t suffer.
6. Hard work
Hard work is the key to business success. Fast growth is not for the faint at heart. If you think you work hard now, imagine doubling your workload and staff and customer management.
7. Can you and your team cope with fast growth?
When was the last time you assessed whether you had the right people doing the right things in your organisation, and forward planning your people requirements? Many businesses are constrained by the lack of good people, rather than the lack of opportunities. In fact, great opportunities follow great people and organisations. Do you have adequate resources or can you access the resources you require, when and if needed?
Ensuring you have the right mix of skills and expertise and the right cultural fit can assist with ‘smart’ fast growth. You need to be able to rely on your staff and take them for the rollercoaster that is fast growth.
Just as importantly however, you need to assess whether you have the right support in growing your business very quickly – this is where the right mentors, peers, advisers or Board members are worth their weight in gold in acting as a sounding board.
I’ll leave you with the final thought, if you want to grow fast, do it smart.