6 Strategies for Managing a Fast Growing Company Growth is the goal of every startup but when it comes, it brings its own challenges.
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Paul Graham once said that, "A startup is a company designed to grow fast." In fact, Graham goes on to say that "if you get growth, everything else tends to fall into place." Of course, that sounds much easier said than done. If you've been part of a startup that has experienced rapid growth, then you'll understand both sides of the table.
On one hand, you have an increase in sales and are starting to make a name for yourself. On the other hand, you have to a lot of scaling, which means the inevitable organizational and managerial changes.
Regardless of how beneficial or detrimental acceleration has been, you have to be able to sustain these challenging changes. But, how do you do it? No worries. Here are some tips on how to manage a fast growing company.
1. Have a medium-term goal and roll with it.
When planning out your business, you've probably created plenty of short-term and long-term goals, but have you planned out any medium-term goals? Henry Hsu, - GM for growth and new markets at NerdWallet, states on LinkedIn that a full career plan should contain:
- A long-term vision and mission - the future state you want your career to be and how you achieve it, based on your professional values.
- A series of medium-term objectives in support of that vision. These are the three to five year milestones and goals that serve as the stepping-stones to that vision.
- Short-term "plateaus" you can seek -- skills, experiences, or accomplishments you can seek in the one year to 18 month timeframe to help you achieve the medium-term objectives.
Hsu adds that your long-term vision and mission are actually a series of medium-term objectives. When your company grows too fast, it's easy to skip these medium-term objectives because you're seemingly forced to change goals. According to entrepreneur Iain Johnson in The Times, "Many fast-growth business leaders change their goal too often, never quite completing a plan before starting the next one. So set a medium-term goal and deliver it."
2. Keep customers happy.
No matter what stage your startup is currently in, you can never stop listening to your customers. As Johnson states, "Customers have the most relevant ideas, the most immediate feedback, they are increasingly happy to help (through social media) and they pay the bills. So put in place a formal approach to listening to customers all the time and acting on their input."
Marwan Daya, an executive and general manager, adds on LinkedIn that you also need to make sure you can handle "the back-end support systems, delivery and order fulfillment units" during fast growth. In short, when customers are no longer happy with your business, you will have a challenging time retaining them.
3. Find a great mentor.
A mentor with experience as an entrepreneur or business executive can take a lot of weight off your shoulders. You have the benefit of their experiences and the advice of someone who has been there before.
Don't let your ego or pride get in the way. Some of the most successful entrepreneurs have had mentors along the way. Gates had Buffet and Zuckerberg had Jobs, for example. As Richard Branson stated, "So please, take it from me: no matter how incredibly smart you think you are, or how brilliant, disruptive or plain off-the-wall your new concept might be, every start-up team needs at least one good mentor."
4. Have the right team.
I can't emphasize this enough; having team members who are smarter than you is essential for a fast growing company. It will be your team, not just simply your product and business strategy, that will steer your company to success. While I've discussed how to build a great startup team in the past, constructing a team at this moment in your company is slightly different.
Nicole Fallon reminds us on Business News Daily that you need to recruit and hire the best people available so they can run each of their departments. By doing so, you can focus on the overall strategy.
However, it's not just the hiring a new group of people. You also have to evaluate current team members. Can your current manager handle a team of twenty when they are used to only managing five? Furthermore, you need to assure current members when hiring new people. Include them in the interview process and explain how this will affect their position.
5. Consider financial implications.
As your business quickly expands, there are a number of financial implications that you need to take into consideration. Terri Levine, a business mentoring expert, explains on QuickBooks, that she advises her "clients to collect all outstanding debts quickly, decrease prices by 10 to 15 percent, think about refinancing or borrowing money, offer customers discounts for prompt or upfront payments, and reduce costs by eliminating unnecessary overhead." Levine also recommends you keep on eye on key performance indicators, "maintain an inventory of the predictable products that sell the best," and consider signing a short-term lease if you need a larger space.
Lucrum Consulting, Inc. also adds that you should focus on the following five financial areas for managing a fast growing company:
- Create a budget for your business.
- Understand your cash flow.
- Evaluate equipment purchases based on numbers, not institution.
- Plan for the costs of employees.
- Seek outside financial help if required.
6. Subtract, while you add.
According to Bob Sutton, organizational behavior expert at Stanford's School of Engineering (via HBR), "Scaling is actually a problem of less." He adds, "There are lots of things that used to work that don't work anymore, so you have to get rid of them. There are probably a bunch of things you've always done that slowed you down without you realizing it."
Sutton recalls how former General Motors CEO Ed Whitacre slashed paperback to help revive the company and how Donna Morris, senior VP for HR at Adobe, eliminated performance reports altogether. By doing so, employees were freed of tedious work. For a startup, you could devote these people-hours to something more productive.
Another way to subtract while you add is by replacing the good with the bad. Sutton states that Cost Plus World Market, despite the store being on the brink of bankruptcy, hired greeters because it improved sales and decreased theft. Chris Fry of Twitter made team members hand over their phones during meetings. The result? Shorter and more effective meetings.
Going from bootstrapping a startup to managing a fast growing business will require changes in tactics. By applying the above strategies and learning to maneuver quickly will help your business grow and succeed.