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What Do High Growth Businesses Do Differently?

Over the past 5 years the importance of the “High Growth Business” and how this relatively small group of businesses disproportionally impa...

Friday 24 June 2011

Managing A High Growth Business : Matching Your Organisation to Your Sales

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 Growth Businesses Organisational Stress Points
This is the first in a series of posts concerning the successful management of high growth businesses. One of the most common problems high growth businesses face is how to match organisational growth with sales. 

The Problem 

Simply put sales can grow discretely and tends to be quite smooth as shown as the red curve. Organisations growth, by contrast, tends to be much more lumpy. This is because a certain staffing complement has a finite growth capacity and beyond that point just adding people doesn't help. In fact at some point adding people reduces performance. What is required is an organisational restructure which will create a step change in a companies ability to support its growth. However this is not easy to accomplish because most SME's address this problem too late. This often results in business growth reverting to the typical "lumpy" organisational restructure rather than a smooth increase. The reason for this is that sales now have to wait for the organisation to catch up so you tend to end up with a year of rapid growth followed by a year or even more of no or even negative growth.

Typical Situations

Smaller Businesses tend to rely too heavily on a few key people, this results in a stagnation of performance of the remaining staff who have little or no chance to develop their skills. So when the time comes to reorganise the business owners or management are reluctant to make the step change necessary to reorganise the business because they cant see who, apart from the usual suspects, who will be able to take on additional responsibility.  What this results in is either a re-oganisation which is often half hearted or too late.  To provide a sporting analogy, hammer throwers are always told that they must remain ahead of the hammer. So as they speed up their revolutions in the circle they can properly time an effective throw. Small businesses rather like a novice hammer thrower end up behind the hammer (read sales growth)  losing control and finding out the hammer is in the wrong place.

The Solution

"Stay ahead of the Hammer!" 

Some key actions:

Always! Always Always! Implement a reorganisation ahead of its need. This gives you time to fine tune it is also the only way you can main that rapid growth.

Establish a model for organisational growth. That is how will your business deal will sustained and rapid growth. Your plan must also be able to estimate at what point (size of revenues) will you be needing to consider the next reorganisation.

Reorganisations must have longevity. Typically a major reorganisation should last about 24 months, with interim adjustments taking place yearly.

Recognise that reorganisations get bigger as you get bigger, so have a post reorganisation quality control process.

Let me know what you think

Exigent Consulting provides specialist services for High Growth Business Business Turnaround, and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business. 

Tuesday 14 June 2011

Taking Your Business to the Gym: Getting Your Business Vision

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The importance of your Business Vision

In order to build a business that will growth rapidly and sustainably you must first get "that Vision thing."  George Bush Snr most notably suffered from his lack of what he called the vision thing,’ a clarity of ideas and principles that could explain his philosophy. Without a solid and well thought out vision your chances of it acting as the beacon of your company’s aspirations and intentions will be short lived.
Your Business VisionImage via Wikipedia

Understanding and developing your Business Vision

For most people realising what their vision is and then putting it into words is a daunting task. I don’t think it helps when you hear examples of the visions for well known companies like Disney which is “to make people happy”. Many people I speak to are put off by the prospect of matching such examples. Don’t be put off, we can’t all be Disney.

Your vision is about your values. You could see your vision as how the future will change as a consequence of your actions. It is vital that you understand that your vision must have permanence and should not change over time.  A good way of developing your vision is to describe it in a few words for example you might descri
be it with words like, ethical, profitable, fun, focused, detailed, customer centric, national, regional, global, local, quality, price-conscious and so on.

Resisting pressure to change

Inevitably at some point either you or more likely your employees or customers with put pressure on you to change your vision as it won’t suit them. This is the first test of its strength and your commitment. Your vision was set out because it reflects your personal aspirations about what your company should be. If you compromise then either you don’t really have a vision and your company is just a surrogate for a paid job, or more likely you lack confidence in your own view. Don’t weaken, by following your vision it will help you quickly decide which business opportunities are right for you and which not.

What a strong Vision gives you

Your vision determines your employees approach to business and it gives them a structure around which to work, it is the unifying force that turns individuals into a team. It also ensures that any new employee understands what is expected from him. It provides the underpinning of your company culture. It tells you customers what to expect from you. Your vision gives you above all consistency. Consistency is the mark of any successful business as both your staff and customers will know what to expect and know that they will receive it.

Inconsistency is the scourge of too many businesses and is often an indication of an absence of a vision or weak management unable to implant their vision on their employees.

Getting “the vision thing” right is absolutely fundamental to the development of a successful business, so take time to put your in place. 

Leave a comment and let me know what you think.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Tuesday 7 June 2011

Why Businesses Are Too Late in Seeking Turnaround Help

seeking turnaround helpImage via Wikipedia
We all know that addressing problems early makes them easier to solve, and even when the treatment is unpleasant, like going to the dentist by and large we go in good time. Why is it, then, despite the harsh economic conditions and the large number of business owners clearly struggling to cope; it still seems that too many smaller businesses in the UK are reluctant to call in outside assistance even when it is clear that finding solutions to the issues impacting their business is beyond them?

Most independent businesses are in the hands of its founders, consequently these more than others find it difficult to view their business objectively. Most don't follow best practice and won't have regular management meetings nor generally do they have a detailed financial knowledge of the business. This lack of objectivity is the real issue. I cant count the number of times I've gone into a turnaround to discover that the owners have reluctantly called someone in, not because the business is in bad shape, but because they've exhausted their personal wealth in propping up a non performing business and now they've GOT to do something. Sadly, often at this point its too late.

Whilst no doubt there are clear legal tests to signify insolvency, these are seldom recognised by the management. They are invariably late talking to IP or turnaround specialists such as myself for the following reasons 
1.they're emotionally tied to the company, 
2 the stigma of failure, 
3 being overly optimistic (well you have to be an optimist to run your own business) and as such you tend to overestimate income and underestimate costs,
4 poor business management. 

There is a debate to be had about the almost complete absence of any type of business related subjects in general education which I submit leaves our entrepreneurs and business owners unnecessarily exposed. Many run businesses without even the most basic knowledge of financials or business or people management, so the wonder is why more businesses dont fail!

I would also observe that whilst accountants should provide advanced warning to business owners many don't because they are themselves technicians, and they concentrate on getting accounts completed on time. Experience has demonstrated that accountants are no better at running businesses than owners of other types of business. Also, because often their relationship with their client is too weak to survive bad news.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Thursday 2 June 2011

The problem with Board Meetings....

WASHINGTON - MAY 20:   U.S. President Barack O...Image by Getty Images via @daylife
We seem to be very bad at prioritising meetings within organisations; we seem to be driven by knee jerk reaction rather than common sense, although I wonder if it should be more accurately described as uncommon sense. This is especially true of the SME sector, where board meetings seem to be the exception rather than the rule. Some of this is due to owner managers having little or no understanding of what as board meeting should cover or how to manage a meeting of this type. In my opinion a board meeting is the most important internal meeting a company can have. It is probably the only setting where strategy is discussed and policies made. It is not a place where detailed operational decisions are made, but in my experience this is all often what is discussed. This leads to confusion in the minds of participants and doubts about its importance/relevance and results in questions like don’t we cover this in the operations / marketing/ finance meeting?

So what are board meetings about? They’re the meeting that set the direction for the company, confirm policy, and directs the business response to unforeseen events either external like for example a significant change in market conditions or the arrival of a new or stronger competitor. The unforeseen events maybe internal like the loss of key staff or a major issue with sales or production. To get the best out of these meetings they should be held regularly and it should involve a review of the company’s performance.

So the problem with board meetings is simply that they’re not understood and not taken seriously so they can’t deliver the benefits to the business they should.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.