Recently, I was asked by the Washington Business Journal to provide my ten best hints on managing growth in an emerging business. You can find that article here. I believe that the challenge of growing a business past the start up phase is actually much harder than appreciated. But, there is much less in the startup media about these issues. Actually, what happens after “acceleration” is more important and much more littered with failure. With that in mind, here are my ten keys to meeting the challenge of growth.
1. Match Money to Growth. Corporate finance is not about getting a particular type of financing as a way to signal your importance. It’s about getting capital that has the right growth expectations for your business’ likely path. Money is only a way to keep score once it’s yours. Until then, it’s a resource to get the things you need to succeed.
2. Avoid Burning Hair. If everyone at your company is running around with their hair on fire you need to get organized. Hysteria might be fun at a rock concert, but in order to build a lasting company you need to be managing for a marathon, not a sprint.
3. Control Culture to Control Your Company. Once a company grows, a level of corporate governance will be required – particularly if there are outside investors involved. Corporate governance shifts control away from the founder towards the Board of Directors. However, true control remains in the hand of the founder. Companies that do not have consistent culture will usually fail – and culture comes from the founder’s values and work style.
4. Have a Clear Vision and Share It. As a company grows, all involved need to know why they are coming to work each day. Failure to come up with a compelling vision that engages employees, other stakeholders and the broader community, is often the first slip in a downward spiral. People like to win – together – but they need to know what game they are playing.
5. Love Your Customer. Although I would wish this was obvious – for many it is not. While technology is exciting, and advertising can be clever, the reality is that if you don’t make your customers feel important to you, they will find someone who makes them feel that way. Recall that a business without customers is a hobby.
6. All Businesses are Family Businesses. The prevailing attitude in corporate America is that family is something that happens outside of the business, at best during “family time.” However, the issues of family, particularly in closely held businesses, often color behavior. Understand the sacrifices that family members make for the business’s success – at least appreciate that questions of “is it worth it?” will inevitably come down to how the folks at home feel not just the team at work.
7. Be Ready to Get in the Way. If you are successfully growing your business at some point you will become annoying to other larger companies. Be ready to survive the onslaught.
8. Know Your Number. If you overcome being annoying to your competitors, you will next become alluring. Know what your number is – what your price is to sell. Develop a sense of what your business is worth to you, both psychologically and as a financial asset. The best time to sell is when you are not intending to. So, have a view, even if you don’t think you are ready to sell.
9. Always Look Over the Horizon. It’s not the things that you can see which will kill your business – it’s the things you can’t. Your most likely competition will come from well capitalized and larger companies (see being annoying). Don’t assume that they are all stupid and slow moving. And, never under estimate the possibility that someone will out innovate you. Hard as it may be to believe – there are some folks out there that could be smarter.
10. Don’t Kill the Milk Cow. The competitive advantage that drives a business will eventually be successfully combated by others (see Microsoft or Eastman Kodak). Do not hold on too long – be ready to advance to the next innovation while there is still money in the first. Nimble innovation is the way to succeed in the 21st century, particularly in technology.