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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 29 July 2011

Managing Fast Growing Businesses: The Planning Process

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Cost-Volume-Profit diagram, decomposing Total ...Image via Wikipedia
Managing Fast Growth
Whilst planning is important for all businesses it is vital in a high growth company. More importantly planning needs to be more thorough and detailed than in companies where growth is at a more leisurely pace. Its obvious really, issues come at you faster and more frequently in a high growth scenario and you and your management team need to be ready to deal with it. You can’t do this in a purely reactive mode, you and your management team need to have explored in detail the key linkages in your business and have some understanding of the potential stress    points as well as solutions for different scenarios.   If this seems a bit of overkill, it isn’t. Having been in the senior management team of a business that grew from 250 to 3500 staff in less than 10 years I know the pressures consistently fast growth puts on an organisation. One of the key reasons why so few businesses can consistently manage a high growth rate is because of this management commitment. It also demands that owners/directors have confidence in their management team and that they are able to properly delegate responsibility to this team.

So How Much Detail is Enough?

The answer is as much detail as you can get. The more detail you can obtain the better. I’m not just talking about P and L information but key metrics that drive the business, for example production metrics, recruitment metrics, detailed overhead costs, detailed variable costs, machine performance, average earner income, average earner output, recruitment costs, sales cycle length, average order value, and so on.  The benefit of this information is to provide you with a very detailed understanding of your business. It also offers you a broad range of levers to use in guiding your business through the inevitable ups and downs of life. Most importantly it gives you a number of early warning indicators that if acted upon will require only a gentle nudge on the tiller, rather than a last minute heavy handed yank.

So Now You’ve Got it What Do You Do With It?

Business Information SystemsImage via Wikipedia
Managing Fast Growth
Once you have all this information, you develop a reporting mechanism/model which requires all 
key members of your management team to understand report and manage their functions or business using this standard. This is vital to provide the management team with the same business information where ever they are in the organisation, it also means that whatever job they do they can quickly get to the key information because they will be familiar with the format. In a high growth business, management regularly move around a so need support of model so they can quickly get to grips with their new position as the information and its format will be the same. 

In a personal example I was relocated from the UK to Australia. When I arrived I was able to get up to speed very quickly because the model used down there was exactly the same as that which I used in the UK! 

It should become the basis of your regular management meetings as your knowledge of the model increases you will be able to more accurately predict company performance and be better able use the information to avoid difficulties.

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.