WHEN A VENTURE NEEDS TO GROW OR NOT TO GROW
Some entrepreneurs make the conscious choice to control growth even In the face of extraordinary market demand. This is not to say that growth is slowed to single digits. Instead, the entrepreneur may choose to maintain a stable growth rate of 35 to 45 percent per year rather than subject the young venture to a roller coaster ride in the triple digits.
In general, entrepreneurs who retrain growth do so because they are in the business for the long term; in other words, they are not in a hurry to harvest their newly created wealth by selling the business or doing a public offer9ng. They also typically do not like to take on a lot of debt or give up equity to grow.
Consequently, they do not advertise heavily, and they do not aggressively seek new customers beyond their capabilities. They also diversify their product or service line from the beginning to make themselves independent of problems that may face their customers or their industries.
How, Then, Does an Entrepreneur Decide Whether to Grow or Not to Grow?
In many cases, it may not be the entrepreneur’s decision at all; demand for the product or service may compel the entrepreneur to keep up, or, by contrast, the market may not be big enough to allow the company to grow. Normally, by the time the company has reached a point where it is poised to grow to the next level, it will have a few employees and, of course, the founding team. To take that next step, some benchmarks for successful growth should be considered.
Successful growth requires leadership. When entrepreneurs start businesses, they are involved in every one of the business’s activities, but as the company begins to grow, they find it necessary to delegate tasks to others. The more they delegate, the more they realize that the job has suddenly changed. Now, they are not needed to do the tasks of the business, they are needed to lead the business – to make sure that the vision becomes reality.
Every one looks to the entrepreneur to ensure that the company survives. Leadership involves guiding the company and its people to achieve the company’s goals. To accomplish that, the entrepreneur must have the ability to inspire people to action.
In addition, employees must be given opportunities to learn and grow. A company cannot successfully grow and change if its people do not grow and change with it. Employees should be encouraged to stretch beyond what they knew when they were hired in the early days of the company, to learn more aspects of the business, and to offer input into how the business is run.
The company must have a commitment to growth. With growth comes change – new ways to serve customers, new products and services, and new processes. Growing efficiently requires the commitment of employees and customers. They have to see that the growth is a good thing for them.
Everyone in the organization must be responsible and accountable for the success of the company, and everyone should have a stake in the financial success. Rapid growth requires teamwork, and for teams to operate effectively, they must be given responsibility and accountability for what they do.
There are times, however, when saying no to growth makes sense for business. For example, the managers of a particular company learned early on to say no to clients who pulled their executive search firm away from its core values and mission. Even though the company was growing quickly, its founder noticed that its profit margin remained low and that, even as it took in more clients, the company’s earnings remained flat.
The founder pulled her team together and started asking questions. To her amazement, she discovered that everyone had a different vision of the company, and where it was going. No wonder they had problems defining the right customer for the company. Once the founder conveyed her vision to the employees, they worked together to define those customers and say no to those who did not match their model. In the end, the company grew faster and remained healthy with a more focused strategy.