How To Grow Your Business Effectively
In the small business world theory doesn't often pertain to entrepreneurs.
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
In a previous article entitled 'Get Stuff Done', I noted that Launching a business and turning it into a revenue-generating enterprise is daunting. Becoming self-sustaining and profitable all the more so. And, that is just the warm-up drill; the real chore is to stabilize, manage and grow that business in an ever-changing world.
The word "growth' can be misleading and have multiple meanings. An entrepreneur can grow -- what began as a one-man show -- organically to a two-man or twenty-man team; both are growth. regardless of the speed or size of the growth however, a small company can only grow to a certain point before they hit a glass ceiling. When you reach it you have a lot of decisions to make.
To step beyond that glass ceiling and continue a growth trajectory may require an entire reconfiguration of your company. This includes structure, systems, and people.
When speaking with startups and SBE's [through the years] I'd often advise them to skip past all the business theory rhetoric and focus on the core fundamentals; built a process, develop a marketing strategy, ignite sales, be able to deliver on service/ product promises, and administer the overall company.
The degree one has to go in setting up the business scalability really depends on how large one wants to grow.
In the small business world theory doesn't often pertain to entrepreneurs. What looks good on paper doesn't always translate to the practical daily challenges of an entrepreneurial business; it pertains more to company with 50, 100 or more employees. That "s why according to an article in 2013 (Bloomberg) eight out of every ten new businesses fail in the first 18 months of operation: a whooping 80 per cent.
If, however, you've managed not only to survive, but grow your startup, and ready to take the next step, some business theory principles take on new importance. Structure takes on new meaning. Where as before you could wear multiple hats and juggle things behind the curtain -- with your customers only seeing the precision in front of it --, that is a much more difficult parlor trick to manage in a larger enterprise. Structure pertains to several different things you will have to invest in, including, but not limited to:
- Systems: the right operational software applications to manage information and automated tasks.
- Management: the right people to build and manage sales, marketing, services & administration.
- Protocols: a systematic way of interacting with clients, vendors, management, and the processing of information so that nothing gets lost in the cracks.
- Collaboration: contractual arrangements where the sum of the parts is greater than the individual parts (and finding good collaboration partners is like building a business unto itself.
When I ran my freight logistics business in the 1990s, we achieved near perfect delivery schedules for eight years precisely because of a strong set of protocols. We had an "if - then" approach, with contingencies already planned for any occurrence.
It was this set of protocols that allowed us to move MSC out of four warehouses [containing 12,000 SKUs] off Long Island New york during Labor Day weekend, know where (which pallet on which truck pulled by which tractor] every product was throughout the move and complete the move in sixty four hours.
Before you make the jump above the glass ceiling, consider whether:
- the market size of your niche target audience is large enough to support your growth,
- that you have the capabilities to fund [expansion, cash-flow] such a growth,and;
- that you have the personnel to manage the growth without negatively affecting service.
If you still want to go forward, then consider these five key points:
- The keys to success begin with your customer. You need to understand them, understand their needs, their wants, and be able to deliver that -- to make their job easier by dealing with you.
- Define what differentiates you from your competitors in the marketplace. Perhaps you can deliver a service faster, or cheaper, or maybe you're just more likable than the competition and through intense entertainment you'll gain customer loyalty.
- Break down your value proposition to 8 words; clearly and succinctly be able to express what makes you and your business valuable to the customer.
- Recognize not only what you do well, but also what you don't do well. You may be a visionary and terrible manager, or great manager that lacks long-term top level thinking. In an interview with Robert Branson, the founder of Virgin (records, airlines, mobile etc) he responded [when asked what makes him successful] that "I surround myself with people smarter than me." Let go of the ego and build a solid team of smart and actionable individuals.
- Make sure you have a revenue model that works; that your profit margin will support a path of growth, inherent with all the potholes that you'll hit: slowed-cash flow due to managing more clients, time restrictions on where you can devote your time because there is so much more to do, attracting and securing good talent that understand the company vision and mission.
Many entrepreneurs are misguided because they read a book and with a 1.2.3. blueprint business theory that they believe that this will equate to success. Regardless of whether you're below or above the glass ceiling, success is borne from the ability to adapt in real time, to adjust to the almost daily hurdles you'll face and have to navigate. This may mean changing your short-term agenda to achieve long-term goals.
Deciding whether to grow a business beyond the growth ceiling and its current profit level is a big decision. If, for example, you're an entrepreneur that earns a good wage and is thrifty enough to build a personal lifestyle and long-term security that fulfills your needs, you may not need -- or want -- to grow the business beyond that.
As a young man I was driven by ego and the need to show off what i'd built. So my business operated from a 250 square building on 7 acres. Our offices were grand, the overall building impressive. And, I some days started work at 7:30 am and didn't leave to almost 10:oo pm.
Because of the nature of my particular niche service, I could earned the same bottom line earnings with a five man team in a 2,000 square foot office, and worked a lot less hours. So you need to recognize what drives you. If I could go back and do it again, I'd probably have stayed in the 2,000 square foot office, saved more, lived better, and worked less.
It was 10:00 pm at night and I was still in the warehouse making sure a shipment that had to be in Chicago the next day was loaded and ready to go. My secretary, knowing I wouldn't leave till it was done, simply noted -- "You know, when you're laying on your deathbed, the one thing i'm pretty sure you won't say is I wish I had spent more time at work." I now second that opinion. Don't lose sight of life in pursuit of glory and wealth.
People will tell you that to launch a business requires vision, passion, and dedication to power your way through. But it also requires courage, the courage to take a leap of faith in yourself, and sometimes in others that you're relying on.
If you're ready to take that leap of faith and reach for the stars, be prepared to fly or die.