Managing a company through fast growth isn't easy.
Entrepreneurs who hunger to hit the $100 million mark after
reaching their first $10 million in sales are often overpowered by
both internal and external obstacles. What seemed like a natural
progression turns into an insurmountable summit. Some give up and
decide to stay where they are. Others have the desire and stamina
but can't let go of control and make room for the necessary
additions to their staffs. And they all face threats from external
obstacles like economic downturns, industry realignments and
shifting customer needs.
But companies do make it. AT&T, Microsoft, Cisco and the
like weren't always revenue behemoths. Somewhere along the
line, they made the decisions and changes that took them to the
top. So how can you join the ranks of these superstars?
Start with this inarguable notion: During the growth from $10
million to $100 million, you will give up control-at least
some of it. Think "professional management." The reason
is simple: Growing tenfold usually takes outside capital-lots of
it. Many companies go public or bring in investors to get capital,
so the founder has to lose a percentage of ownership. Some make it
through and continue to grow. Most do not. According to the growth
consulting practice at Deloitte & Touche, the average sales
growth rate for all companies, public and private, with less than
$100 million in sales is flat to negative.
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So how do you beat those odds? While there is no one single
factor that explains the success of companies that have grown to
$100 million, certain themes recur. If your goals for revenue
growth are in the stratosphere, take note:
1. Hire Good People
Owners of $100 million companies invariably point to the great
people they've hired-specifically, the professional management
teams they've surrounded themselves with and given partial
control of their businesses to.
Ralph Rubio and his father, Ray, started Rubio's
Restaurants in 1983. By 1994, they had reached $10 million in
sales with 13 restaurants in San Diego and two in Orange County,
California. Aside from Rubio and his dad, the business also
employed his brothers and sisters. "It was a nice family
business," explains Rubio, 45, president and CEO.
But they made the decision to grow that year, and they needed
professional management to pull it off. The new COO came from a
long career at Taco Bell, the CFO came from Carl's Jr., and the
new vice president of product marketing from Food-maker (now Jack
in the Box). "I know the key to success is to surround myself
with great people to free me to do what I do best [which is
advertising and marketing]," says Rubio. Rubio's
Restaurants now number more than 120 and extend throughout the
West. The company expects to cross the $100 million mark in sales
in the 2000 fiscal year.
Debbi Milner, president and CEO of Long Island City, New
York-based Jade
Systems Corp., underscores the philosophy of delegation. She
and her husband, John (currently COO and CFO), 41, opened the doors
of their IT solutions company in 1993. They ended that first year
with sales of $14 million. "Until this year, we existed on
four hours of sleep a night," says Milner, 42. "Now that
we have a senior management staff, I've cut my hours
back." Cutting back for Milner means stopping after a 10-hour
day . . . and still hitting $100 million in sales.
Experts say the transition to professional management is the
most significant factor in a company's "coming of
age." Thomas L. Doorley III consults with growth companies as
a partner at Deloitte & Touche. Doorley's practice tracks
the top growth companies in the world and uses the research to
counsel companies on practices and beliefs that sustain long-term,
value-creating growth. As Doorley explains: "When a company is
little, they can trade on that fact. They can attract good people
by describing their intimate culture. A company comes of age when
the founders no longer have their hands on every aspect of the
company-when they have to rely on secondhand information."
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