Managing growth starts with a solid understanding of where your company is in its lifecycle. Business growth consultant Bob Beale of Beale International describes a business lifecycle framework that is helpful in understanding and addressing the issues surrounding business growth.
Phase 1: Start-up - The start-up phase is characterized by developing products and services, finding customers and establishing infrastructure and systems. Owners and employees typically work long hours for relatively low pay, and the founders are hands-on in the business.
Challenge: For most businesses, the growth challenges come down to cash flow, leadership and management. The company either figures out how to solve these problems with financing, new systems and new hires, or it becomes what Beale describes as a "permanently small business."
Phase 2: Expansion - Companies at this stage have often expanded to multiple locations and have more specialized employees. With systems in place to better manage personnel, inventory, sales and marketing, growth is typically fast and constant.
Challenge: Managers want to be able to make their own decisions regarding growth at this stage. But they may not be allowed, due to an overly controlling founder/CEO. Or they are so technically oriented that they aren't really qualified to make these decisions. Reporting, facilities and controls often suffer because of this ineffective decision-making process. Beale notes that if the company is not able to address these problems, it will likely stagnate and may eventually wither and die.
Phase 3: Profitability - By this third phase of growth, a company's niche is well defined. It has an efficient management team in place and has an identity beyond the founders and current managers. Growth is moderate and manageable, cash flow is strong and profitability is good.
Challenge: With growth comes a magnitude of potential problems — from outside factors such as government regulation and unions, to internal ones such as bureaucracy and aging systems. Beale notes that comprehensive strategic planning can help support growth and change in established companies. Focused strategic and operational plans facilitate decision making and help keep the profits coming in.
Now What? Wherever you're at in your company's lifecycle, remember that you are not alone. Your trusted advisors at CNB know the ins and outs of your business and can help you plot a course for success.
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