Life in the Fast Lane
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You want your business to be a success from day one-with customers beating down your door and the media reporting on your explosive popularity. Or do you?
While a growth explosion in your first year of business can be an ego boost, it can also be a huge challenge. Jerry White, director of the Caruth Institute for Entrepreneurship at Southern Methodist University in Dallas, suggests that entrepreneurs take inventory of their own businesses before deciding on a growth plan. "You can do in five years what it normally takes 15 years to do," he says. "But don't sign up for that if you don't know what you're getting into."
Growing fast can be extraordinarily lucrative, though, and that's one of the biggest pros. But according to White, your growth plan should largely depend on your personal goals. Do you want to revolutionize the industry? Perhaps quick growth on a grand scale is for you. Do you want a lifestyle business with flexibility in your hours? Then you should probably plan for a more steady growth pattern.
For Professional Sports Tours/Big Blue Travel, a New York City company that plans tours for sports fans and sends them to big games and sporting events around the country, a first-year growth explosion was in the cards. Founder Michael R. Martocci knew he wanted his business to be in high demand-but even he was taken aback by the $3 million his company grossed in its first year of business back in 1995. His first tour was a package for a big game between the New York Giants and the San Francisco 49ers. One radio spot later, he had 600 customers clamoring to sign up. "Initially, we didn't have the staffing to handle everybody," he recalls. "So each day-each hour-we were hiring new people."
That's one of the biggest challenges for fast-growth companies-outgrowing staffing and systems just as you're getting them into place, says White. "And growth consumes cash fast," he says. Overestimating the amount of capital you'll need to accommodate rising orders is important.
It was a bit easier for Martocci, 42, because he partnered with a travel agency he had previously worked with and was able to use a lot of its resources. "I got a little bit of a break. To be able to get the clout of their purchasing power helped me get the best deal out to my customers," he explains. And the rapid growth hasn't fazed Martocci's company at all-annual sales exceed $15 million.
If, on the other hand, you'd prefer a slow and steady growth plan, you can model yourself after Michael Rose of Omega Plastics LLC in Erie, Pennsylvania. When he founded the custom plastic injection molding company in 1998, he planned to grow slowly. "We chose it because it's a safer route for the business," says Rose, 33. "We also feel we can [better serve] our customers."
Rose was concerned about not outgrowing his staff or capabilities before the company was ready. He's even turned down business opportunities to keep growth on a more even keel-and his customers appreciate his honesty.
With sales at about $700,000 annually, Rose sees growth on the horizon but is steadily planning for it. "You'll probably be presented with the opportunity to grow rapidly, but there's an engineering and labor crunch that goes with that," he says. "And if you don't execute properly on a large project, you can endanger your business."
There isn't one right way that will work for every business. "Know yourself, know your goals, know your ambition," says White. "Let that influence your vision. Don't let an article or some high-powered success story cause you to embark on a growth rate that is not [compatible with] who and what you really are."