Managing the Growth of Your Small Business
It is exciting and scary, it is full of ups and downs, it is looking at revenue statements and thinking that all your hard work is paying off and your business is starting to blossom. With all the hard work that you and your founding team have been investing into the business you are at a point where in your stomach you know that if you are not careful that it can slip away.
Your financial person is telling you that your revenues are up but your cash is getting thin. The person in charge of operations is telling you that they need more bodies. Your sales and marketing team is asking for more funds be allocated to start a new marketing push.
All around you there are signs that the next year could be great and lead your company to become bigger and better. However, there are also signs of danger where think that a misstep could lead your dream to becoming another statistic of a small business needing to shut down operations.
As a business coach, I have seen the above scenario before and likely, you have as well. That is why managing growth is tricky. While there are lots of items to consider when managing a growing business, the following are my top four that I think every entrepreneur needs to be aware of once their business has made it over the initial hurdle and has started to grow.
- Scale your management – As growth starts to happen with your business, make sure that you have adequate management structures in place. These management structures must insure that your management team and their teams are accountable against benchmarks or KRAs (Key Results Areas). Business leaders must also periodically review the formal organizational chart to make sure they are still on task; or that the current chart is still applicable.
- Clearly define your standards and quality controls – Early in the business when it was just you and your founding team, standards for the business generally consisted of everyone verbally agreeing on how things should be done and what to do if a process or procedure went wrong. As the business starts to add individuals, what was once common “tribal knowledge” needs to be formalized/documented so the new team members have a clear understanding of what to do and how to do it.
- Checklists and reporting – As the size and complexity of the team increases, creating checklists and reports becomes important to allow the senior members of the business to manage the business and not be in reaction mode. Checklists are implemented to ensure that quality is being upheld as well as to provide a basis for weekly reporting. Weekly reporting, while not an enjoyable exercise by those who create the reports, is vital to senior managers who use the reports to be alerted to issues outside the boundaries of the established business processes and procedures.
- Run and trust the numbers – If you have proper financial controls in place, your financial numbers should be telling you an honest story about how your business is performing. As a business leader, if the reports show negative trends, I caution you to resist the urge to explain away what your financial reports are telling you. The reports exist to give the management team an unbiased story on the health of the business; so informed decisions about the future of the business can be made. When used properly, the financial reports can be a powerful tool in the business leader’s hands.
Coach’s Wrap Up
When going through a growth phase, formalizing the management team, being clear on standards and quality, creating checklists with a reporting structure and trusting your financial reports are what I consider four of the most important if a business is to grow beyond its founders and really start to take off.
Is your team prepared and ready to grow and mature with your business? What reports have you created to give you an unbiased accounting of where your business stands? How have formalized standards made it easier to incorporate new employees?