Four ways to get out of the detail and concentrate on driving growth

One of the biggest issues for a high-growth business owner is learning how to relinquish day-to-day tasks

 so that they can take a more managerial and leadership role. Many businesses live right on the edge of capability and disruption from the slightest unforeseen issues can cause the leadership to fall back into the business detail.

Why?

There are a number of reasons why this happens, the two most common that I come across are:

A failure by the leadership team to understand what their role is. The result being they get involved in everything

Not understanding the difference between a cost and an investment. High-growth companies are profit conscious, but sustainable growth requires proper investment

There are, however, some simple techniques leaders can use to help them avoid these growth limiting issues.

1. Fit for purpose, not perfect

When we start a business we do everything, from washing up to board meetings. As the business grows then we learn that we can’t do everything and so we have to give tasks to other people; we delegate.

This in itself can cause a problem. Why? Because as business owners we’re typically overqualified to do the jobs we’re delegating, which often leads us to have an unrealistic expectation on how certain activities should be performed.

Let me give you an example. A director for a multimillion-pound removal business insisted that he should produce the route planning for his drivers. One day I asked him why he didn’t delegate the task as it was a job that in most businesses would be done by a lower level person. In any case, most of the work was shouldered by the route planning software. His reason was that the people he delegated this job to didn’t do it as well as him. So he saddled himself with a completely unnecessary task for two hours every day.

I went on to ask how much he would expect to pay someone to do the job. ”No more than £25,000,” he said. “And, you pay yourself?” I asked. His reply was “over £100,000 Laurence, and you know that".

“Yes I do,” I said. “So, why are you paying yourself £100,000 to do a job that you’d only pay £25,000 for someone else to do.”

At this point, the penny dropped and he got one of his managers to take over that responsibility. Many times the people who take over a job from you won’t do it as well as you, but they will do it well enough for you not to have to take it back.

2. Question what you are doing

Michael Gerber talks about “getting out of the box”. What he means is, you can’t operate at multiple levels in an organisation at the same time and be effective. For example, you shouldn’t be the sales person, sales manager and sales director. You need to divest yourself of the sales person role before you can properly accept the sales manager role.

My route for achieving this often complicated goal is to ask yourself: “Would I give this task I’m doing to a director of this company?”

From the answers build two lists one under ‘Yes’ and the other under ‘No’.  Next, take the ‘No’ list and start to group tasks into common areas (it’s much easier to do this from a list rather than off the cuff during a busy working day).

In a growing company these tasks won’t add up to a whole person’s job, nevertheless, you may well be able to give these connected tasks to others in your business freeing up valuable time for you to spend on more important activities. Rinse and repeat on a regular basis as your business continues to grow.

3. Give yourself a job description

Write down what your role entails and stick to it. This will prevent you from accumulating lots of other tasks which lower your productivity and eat away at your valuable time.

Review it every six months or so and make any changes necessary, trying always to focus more on strategic tasks.

4. See people as an investment!

Many high-growth businesses are under-resourced. This is often because owners see new hires as a cost. Much of this is because we don’t look at people as an investment in the same way we would machinery or another physical asset.

The issue here is to understand that they are an investment and they can deliver value considerably greater than their salaries. Their greatest benefit is that they give those in the rest of the business time, a commodity that is in desperately short supply in most high-growth businesses.

Here are two examples that illustrate what I mean. A high-growth construction business had been plagued by slow payments, but the owner refused to spend £25,000 on a credit control person because he didn’t want to add to his overheads. When he finally relented, the credit controller reduced outstanding debts by almost £400,000 in their first four weeks, eliminating the company’s cash flow issues.

The sole director of a high-growth services business was being overwhelmed with demands on his time resulting in missed meetings and half completed jobs. After a lot of pressing, he reluctantly agreed to hire a personal assistant. His assistant’s organisational skills transformed his ability to perform by managing demands on his time and controlling his diary. He no longer misses meetings or deadlines.

So, don’t be too afraid to try. Sometimes even the best thought out investments fail, but that doesn’t mean you should stop investing. I do realise the difficulty in saying to someone that they haven’t worked out for you, but hiring people is never perfect and the risk of failure isn’t a good enough reason not to hire at all.

This post was originally published in Businesszone.co.uk in July 2016.

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 impacts our economy, has become widely recognised.  Firstly, let’s just clarify what we mean by a High Growth Business. The generally accepted definition is a business that is growing at a minimum of 20% per annum with a turnover of at least £500,000. 

The now defunct, Government supported GrowthAccelerator service, recognised the importance of this group and provided financial support to stimulate further growth through business advice and leadership & management training. 

Despite its importance, there is very little empirical evidence on what businesses do that is likely to make them a candidate for high growth and how they maintain a high growth state.

However, a report published in the USA by Hinge Marketing as recently as February this year, at last, gives us some empirical insight into the workings of these businesses. It looks only at service businesses, but the results are from a sample of over 500 firms.

I don’t propose to give a blow by blow account of the report but rather pick out some of the more interesting findings. There is a link at the end of this article for those who want to read the report in full detail.

One of the most surprising findings was that High Growth Businesses were 45% more profitable than their no growth counterparts. Put another way, High Growth Businesses in this sample had an average profitability of 19.9% compared to 13.7% for No Growth Businesses. 

This finding seems to defy gravity as conventional thinking tends to suggest that in the high growth phase, businesses substitute top line growth (turnover) for bottom line growth (profit). The report itself doesn’t analyse why but having thought about it a bit, I’ve a couple of suggestions. 

Firstly, High Growth Businesses tend to be better run. In order to sustain high growth, the leadership team needs to have a detailed understanding of how different aspects of the business interact. That tends to mean that they are more efficient as a business including delivery and managing creditors. On the other hand, I know from personal experience that many High Growth Businesses can also be rather chaotically run and certainly aren’t then efficient.

Secondly, could be the adoption of technology. By employing technology appropriately, you can substitute new recruits for capital investment. This means that you can reduce the level of recruitment for any given level of growth. In my experience it is the need to recruit, and recruit heavily, that impacts profitability because it often takes several months for new starters to add value to the business. 

I don’t have a clear answer as yet but do hope it’s something that is followed up in a later survey.

The survey also looked at how firms differentiated themselves: this also generated some startling differences.

In response to the question “What are your five most favoured differentiators?”

High Growth Businesses listed;

Our marketing/ business development approach

Our culture

Our business model

Our use of technology

The quality of our people

No Growth Businesses listed;

Our commitment to results

Where we are located

Awards we’ve received

Our reputation

The specialised services we offer

What is blindingly obvious is that these two groups focus on completely different things and if you wish to embrace high growth there may need to be some significant shifts in your way of thinking.

Let’s now turn our attention to how the two groups approach marketing. The survey uses the idea of Total Marketing Effort, which represents an approximation of the sum of explicit marketing costs and implicit costs such as time or diversion of expertise. The rationale behind this is that no marketing is free because marketing time often competes with billable time.

In respect of total marketing effort, High Growth Businesses investment are slightly less than No Growth Businesses at 55.7% to 58.8% respectively. This may also be somewhat of a surprise as I suspect many would expect High Growth Businesses to be spending a lot more on Marketing. 

Logically then in order for this to be true, High Growth Businesses must have much more effective marketing. I think this goes back to a point I raised earlier that because they have a much better understanding of their business they get more “bang for their buck” out of each pound of investment than their No Growth counterparts.

What is more, High Growth Businesses invest their spend very differently. High Growth Businesses spend much more on digital marketing. Comparing these two groups again, High Growth Businesses only spend 40% of their marketing effort on traditional marketing compared to over 50% by No Growth Businesses. By contrast, High Growth Businesses are much more heavily invested in digital marketing, where they spend 60% of their effort. 

Also, as you might expect because they are more rigorous in measure relevant metrics than traditional businesses. Typically High Growth Businesses monitor at least 4 separate metrics where No Growth Businesses monitor just over 3. This might be for two reasons, firstly, digital marketing is easier to track, therefore building reliable metrics is simpler. Secondly, though perhaps a more circular argument, is that they run their business more effectively which means they’d rather spend their marketing investment where they can monitor its performance which would bias them towards digital marketing.

So what are the takeaways from this survey?

If you want to have a successful High Growth Business, then you need to take a holistic approach and look at how your business can best deliver what you are selling. The idea that culture and people can be a compelling differentiator at the strategic level might be a surprise. However, if you look at many of the highly successful businesses of the recent past, these two components have been key attributes to their success.

Marketing isn’t just about spend, it’s also about finding the right techniques to use. Currently digital marking is delivering a better ROI, however, that might just be because traditional marketing is harder to measure, not that it’s less effective.

We are a specialist High Growth consultancy. Using our Seven Steps programme we can help you set your business for long term High Growth. For further information please go here 

This article was originally published on BusinessZone.co.uk

For a full copy of this survey go to Hinge Marketing

The High Growth Challenge: Are You Winning on the Cultural Battleground?

Every business has a cultural battleground, for most the battle is little more than a skirmish. Even that, for many businesses, is something they struggle to win. For High Growth Businesses, winning on the cultural battleground is vital to their survival.

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Are You Winning on the Cultural Battleground? (Photo credit: Wikipedia)

The first question you're probably asking is "where is the cultural battleground?". The answer is anywhere a new recruit comes into contact with your company. So in a small start up it is most likely to be the founders of the business. For a larger company it would most likely be their direct reports and for a business that is bigger still it will be the next level down. In general, it tends to be at the lowest levels of the company hierarchy where most interactions take place.  The cultural battleground is where new recruits come up against your company culture and will try to add their own influence the intensity  of the skirmish will be based on their own history and closeness to your business's culture. The further away the recruits culture from yours the more intense the skirmish.

For the business, winning on this battleground is vital, after all if it cannot integrate new staff into its existing culture readily, then individual skirmishes will persist and the existing staff will become battle weary and be even less effective in protecting your culture. More importantly for a High Growth Business, at some point this new recruit will become the company's face for other new recruits, who will want to push their own cultural norms. It is easy to see on this basis, how quickly a company's culture can be undermined and changed. Very often this can happen without the senior management being aware of the issue. It will only become apparent as they see employees become less committed not only to the company's values but also those processes put in place to make sure the culture remains embedded in the business.

So far we have only looked at this issue on an individual basis, now let's imagine the problem from the aspect of numbers. For example, over the next 18 months you expect to grow from 32 to 44 people. That assumes a growth rate of a little over 20% per annum. It involves taking on 12 people at a rate of 1 person every 6 weeks over 18 months. 

This strategy carries a risk to your current culture and customer experience; unless you can convert your new recruits to buy into your culture quickly enough, to prevent them from being polluted by other new recruits.  So in this case time is of the essence. Using our previous example, if it takes you 18 months to integrate a new recruit, you'll have a business with potentially up to 12 heretics in a group of 44 as none will have yet been integrated.  Under those circumstances it would be almost impossible to preserve your cultural values and you'd certainly lose the cultural battle. However, if you can integrate your new recruits in say 6 months then you'll only have 4 heretics in a group of 44, that's a much more manageable number.  Better still with the short integration time certainly 1 and possibly 2 of those five will be very close to integration giving you a great chance of winning on the cultural battleground.

As a High Growth Business it may be that you will be taking on new people about every month for the foreseeable future. Then this becomes a real concerted and incessant battle. No doubt your success has in part been achieved by the application of your cultural values and you’ll want to protect them to ensure your continued success, then winning on this battleground is a matter of survival. In which case to support your side you need to provide your “troops” with the best equipment. That will include:

1) A clear and strong recruitment process that seeks to take on only the best talent with the best cultural fit.

2) A comprehensive operations document which describes in detail “the way we do things here” and is what I call "The Big Colouring Book" of your business.

3) A well thought out and considered statement on your cultural values. Or what might be described as “why we do things the way we do things here”.

4) An induction and integration process which enables new recruits to understand “the why” thereby making it easier to accept “the how”.

The better prepared and supported your troops the more new recruits you can manage. If you get this right you can cope with almost any number of new recruits. I can give you two examples based on my own experience:

1) A company with a planned growth of 7 new starters per month for a year with a starting number of 120.

2) A subsidiary which, on the back of a big contact win, grew from 28 to 81 staff in a little over 10 months. 

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

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How Poor Recruitment Kills High Growth

Recruiting is often overlooked as a major limiting factor to sustaining high growth, but it is often at this hurdle that high growth businesses fall over. To meet the growing needs of your business you will have to be successful in recruiting and retaining staff. In order to achieve this you will need to consider two critical factors. 

Poor integration of new hires is an unnecessary drag on growth

Firstly, that you have an effective recruitment process and secondly, how quickly you can assimilate new employees into the business.This post recruitment activity is a fundamental driver to sustaining high growth. Get it wrong, or do it poorly and you'll struggle to sustain any sort of growth at all.

This article is not intending to go into detail about the processes you may want to adopt but rather to highlight the implications of getting it wrong. The two issues we're looking at are recruiting the wrong people and the impact of not being able to integrate them into your business, and how these factors if not addressed act as a stall on growth.

The Recruitment Process

Firstly, as the title indicates, you should a have a process. Not a hand crafted set of actions but a repeatable process. This, amongst other things gives you consistency and quality control. When recruiting you should consider two things, how well the candidate will fit into your organisation and their capability or skills to do the job. 

I deliberately put fit first; if you are growing fast and taking people on you don't want them to be antagonising the rest of the team, you want them to fit right in. Only after you are confident of their fit should you investigate their capability.  Getting fit right first will increase the speed with which they are assimilated into the business, the quicker this happens the more staff you can recruit before they create a drag on your business.

Integrating New Recruits into the Business

Once recruited you should consider how quickly you can integrate this new recruit into your business. I think we would all accept that there is a period after you take on a new employee where they act as a drag on your resources rather than contributing to it. This is normally seen as on the job training. How effective you are in bringing new employees up to speed and integrating them into your business will determine the rate with which you can recruit to support growth. So like recruiting you need a post recruitment integration process

The two key factors in a post recruitment process are training and a culture process, which is about the alignment of values.  

If you have no post recruitment process or, more politely, an informal one, it will take you a long time to get returns from your new recruit. Typically you'll see a lot of frustration in the business as the new employee is largely left to their own devices and the necessary training comes in fits and starts with little or no coherence. This makes it more difficult for the new starter to:

1) learn enough about his job to be a net contributor to the business; and

2) integrate into the company, that is absorb and identify with the companies aims and culture. 

The consequences are often:

1) the new hire leaves because they've become disillusioned with your company (what a waste of time and effort) 

2) your existing staff see taking on new staff as a chore and therefore don't put in the effort they should, often resulting in the new employee becoming disillusioned and leaving. 

Even if they stay, the whole process has been unsatisfactory for everybody and will have inevitably consumed more resources that it should and taken much longer that it needed to. In a high growth environment it simply leads to an unacceptable drag on growth.

The culture process or alignment of values is equally, if not more important than the training. It's crucial to get new staff who share the businesses' cultural values.

I'm sure at this point there are some of you are scratching your head at the moment and are saying to themselves but I'm only looking to recruit 1 or 2 people a year; what's the problem? My answer is that whilst the numbers are low a new recruit will most likely be a member of a small team. This is where being a small number works against you. Think of the recruit as a percentage of your workforce; if it's 5 a new recruit represents about 20% and if its 10 its 10%. Now image the damage to your business if 20% of your workforce were not engaged with the business. Worse still, what if that new recruit is actively trying to promote an entirely alien set of values to the rest of your team, think about the disruption then.

To mitigate against this problem your post recruitment process must include an amount of orientation about how you do things in your business and what is and what is not acceptable. It is inevitable that new recruits are going to question what you do and why you do it, either because they are likely to have come from a business that did things differently or because they are interested in how your business does things. Either way you need to have an answer.

At some time you will get a recruitment wrong, however if you don't have a recruitment or integration process you will make more mistakes and have created a lot more unnecessary problems for your business. 

If you would like to find out more us and how we can support your business, you can contact us via Exigent Consulting or Managing High Growth,  We help business owners improve the profit performance of their business. 

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Do You Have What it Takes to Run a High Growth Business?

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There is a lot of interest these days about growth in the economy and providing support for high growth businesses. The latest is the Growth Accelerator Programme, and the objective of this initiative is to drive employment growth; and this is based on one key statistic. That is high growth (read 20%+ per annum growth) businesses represent roughly 5% of all companies but drive about 50% of all employment growth.

As the economy remains sluggish, more and more focus is going to be placed on these companies as they are our best chance of dragging ourselves out of the economic doldrums we find ourselves in. Being a high growth business is not easy in fact its a challenging environment in which to live. There are none the less a lot of ambitious business owners who would like to have a high growth business.

So what are the key things to have in place to give yourself the best chance of making it as a high growth business?

The first thing is ambition, no ambition, no growth it's about as basic as it gets.

With ambition comes the drive and the will to change things and to take that step into the unknown.

Having some sort of vision for your business. Its great if you can articulate it clearly and succinctly. A colleague of mine says that if you can't describe your business (why you do what you do) in 10 seconds there you don't understand it enough. I'm not sure I entirely agree as I have met many high growth business owners who are somewhat surprised to themselves heading such businesses. Nevertheless knowing where you are going and why you are going there will provide a focus to your activities

Third is leadership. The ability to inspire others be they your staff or customers. You act as a lightning rod for their ambitions and desires and so carry them forward. Even when things look dark and foreboding people will follow you as you can convince them that this is the right way. You create loyalty amongst your staff and customers which is necessary to underpin long term high growth.

Fourth and lastly at least in my book is Management. The high growth environment is relentless is its pursuit of weaknesses in a business. To survive and be successful you need to have the talent in your management team to take the business forward. This is particularly relevant as the business owner will become more and more remote to the business detail as it grows and will become increasingly reliant on his management team to deliver the goods.   

This list is by no means exhaustive but these, are for me at least, the key attributes that a company needs to be successful as a high growth business. What do you think?

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

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Make Better Management Decisions In a High Growth Business

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The most common issue that business owners and managers face in a high growth business is the lack of time to make decisions or consider situations. As I have repeated on many occasions business owners as managers find ways to make time not by working harder but by working smarter. We all know that high growth puts relentless pressure on a business and it will seek out any weakness in management or the business and mercilessly exploit that weakness until it is fixed or it ruins the business.

The problem for management in this environment is that decisions and problems arrive all to frequently and they can't be left to fester. How does management cope with this onslaught. The answer is to try to grade the importance of the decisions they have to make. The problem with many firms is that the management team will tend to deal with the issues with giving much thought to priority. This often that means the easy decisions are made quickly but those more difficult and complex decisions are left, this results in a backlog, of often, very important issues.

Having faced this problem myself I have of found this simple chart has enabled me to get to the most important decision first, and not to get distracted by the constant stream of the quick and easy.

I give this diagram to all my clients although it is most relevant to those managing high growth businesses. The objective is to get you to think about the type of tasks you undertake and if they are really necessary.

Taking the two left hand boxes it is obvious that undertaking urgent and important tasks are necessary, and it should also be clear that items that are neither important or urgent should be ignored. However we commonly find that a surprising number of people are doing work in this category; because it tends to be full of quick, easy and repetitive tasks so that it can appear that you've got through a lot of work, unfortunately they are of little value. You should avoid these type of tasks at all costs as they are time wasters.

Of the two right hand boxes the Urgent but not Important quadrant is where we spend too much of our time. We tend to assume that if something is urgent it is naturally important. This is not the case. You should try asking yourself “what are the consequences if I don’t do this”? In a surprising number of cases the answer is not much. If that’s your conclusion then focus on tasks that are really important.

The Important but not Urgent category, is by contrast, where we spend less time than we should. A typical example is creating a strategic plan or a marketing or business plan. Yes it’s important but somehow we never get around to it soon enough because it is rarely urgent, and so we fill our time up will urgent tasks instead.

I have had many clients who have found that using this analysis before launching into their activities has transformed the effectiveness of their effort enabling them to make a much stronger contribution to the business by focusing on what is really important rather an what is urgent.

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. 

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