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.

How a Strong Culture Improves Your ROI with New Recruits

How Strong Is Your Business Culture?

Over the last couple of weeks I've had a number of discussions about how to integrate new people into a business, or "onboarding" as the Americans term it.  Where discussions got interesting was how a business’s culture or lack of it, influenced the speed with which new staff became integrated.

So how does culture influence post recruitment integration and what else if anything will have an impact? My experience with high performing businesses has confirmed the importance of culture in the process. The reason for this is that taking on new staff can be seen as the key battleground between the existing culture of the business and the culture of the new hire. The stronger the business culture then the more influence it will have and either the new hire will integrate quickly or leave.  Those with a strong culture will quickly show new starters that they will not be able to change or modify the culture. This can be seen most obviously in the military where new recruits have no input at all and must submit completely to the prevailing culture.

Those, however, with a weaker cultural tradition will have greater difficulties in getting new hires to conform, resulting in increased costs of integration and greater disruption to the business as new hires continue to argue their corner.  This is because those businesses with a weaker cultural tradition will have greater difficulty in persuading a new hire to conform to the way they do things, mainly because they don’t have clear processes or a strong philosophical underpinning as to why things are done in a particular way. Faced with inconsistencies and often contradictory assertions of the recruiting business a new hire with a strong personality may be able to readily persuade existing staff members that they have a better way. This state of affairs can easily upset existing settled staff who were happily doing things the “old way”.

Nevertheless, culture on its own will not do the job, although it helps by clarifying your approach. Just as important, however, is having a good description of not only "why we do the things this way" but also "how we do things here". I describe it as the big colouring book for your business. You might call it an operations manual or a knowledge bank. Whatever you call it having a written process is infinitely better than a verbal explanation.

There are two key reasons for this, first people tend to argue less if something is written down. It gives the words a level of gravitas that is seldom achieved with the spoken word. Second, is it allows the new staff member to try things out without the same high level of reliance on, interaction with, and consequent disruption of existing staff when you are reliant on verbal communication.

  

If, therefore, you are embarking on, or are indeed in, a period of high growth the strength of your cultural values and your ability to create a written operational manual will be significant factors in integration of new people and therefore your ability to maintain your growth.

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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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The Five Most Common Mistakes when Buying or Selling a Business

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For most business owners buying or selling their business is a rare event indeed. In fact many owner managed businesses do it only once, when they exit their business to retire. Like most things in life the first time you do something is the occasion when you make the most mistakes. If you are selling a business you can't afford to make mistakes because its the only chance you'll get.

When buying a business  making a mistake can leave you not only seriously overpaying for a business but having a management headache which may take years not months to put right and in the meantime will seriously damage the prospects of your current business.  

It may be some comfort to know that it is not just smaller businesses the make horrendous mistakes, big businesses all too regularly fall into the same trap. I know from personal experience the the business I worked for in my last corporate role was purchased by another company and the acquisition almost brought the acquiring company to its knees, because as far as I could see it made two of these common mistakes.

Mistake No1 Getting emotionally involved with the sale.

SOLD! (Photo credit: my_new_wintercoat)

Lets face it, its exciting to be buying or selling a business and it requires a lot of management time. For the vendor selling a business  there is the prospect of making that exit and having the money to retire. For the buyer there is the undoubted prestige of acquiring a business and the prospect of a big jump in company size or new geographic coverage.

The result for the unwary buyer is that in buying a business they get duped into paying too high a price because they get wrapped up in the chase. For the novice seller the process of selling the business gets dragged out over a long period of time, causing them to take their eye off the day to  day management of the business, often leading to a downturn in its fortunes and so its ultimate price. 

Mistake No 2 Not Having a Walk Away Number

Negotiation Cartoons: Positions Vs. Interests (Photo credit: jonny goldstein)

Buying or Selling a business involves negotiation, in order to make sure you don't pay too much when buying a business or get paid too little when  selling a business you need to establish 1. what is the value of the business and 2. what is the maximum you'll pay or minimum you'll accept. Once you've established this you'll be much better placed in the negotiation and you'll be less likely to make mistake No1

Mistake No 3 Not understanding the Impact of Culture 

This Ladies and Gentleman is the big one, of all the issues that get overlooked culture stands head and shoulders above everything else. Good businesses have strong cultures, their staff have bought into the fact that their way is the right way. Now imagine what happens when these staff are told, that their way is no longer the right way and your way is the right way. Yes that's right they'll find every reason to demonstrate the flaws in your system and why your way is not the right way. Worse they are butting up against your staff who are equally convinced that your way is the right way. So you tend either to have a very difficult integration problem because you now have two opposing camps or you have an attrition problem as the staff from the acquired company leave.

The seller will of course say that culture isn't a problem, because to him it isn't. Either there isn't a problem with culture or its too late for you when you find out there is as he's already got his money. Why don't people address this problem? Firstly because so many don't even recognise it as an issue and secondly because the have made mistake number 1 and are looking for reasons to buy rather than looking for issues.

Mistake No 4 Underestimating Management Effort

Buying a business is just the first step, now you've got to integrate it with the rest of your business so that means addressing, culture, strategy, planning, financial systems, sales, customer relationships a new organisational structure to mention just a few. The management effort to achieve this is considerable even if you have willing staff , so don't be surprised if it takes 6 months to a year to get it all bedded down. This effort is considerable even if the new acquired company is small in comparison to yours.

 Mistake No 5 Buying a business that is too big or too small

This tends to relate to the problem of biting off more than you can chew. Remember the bigger the business you buy in relation to you the acquirer the more political clout it will have and the more concessions you will have to make, and the longer integration will take. The more your management is focused on the acquisition the bigger the risk that they will let your core business slip and then you have a really big management headache, that is, trying to integrate the new business and recover your own.

The other side of the coin is that you waste your money on something too small which won't payback a recent return on all the management effort required to integrate it into your existing business.

Once you understand these problems you are on your way to avoiding them and making your acquisitions a success and not a millstone.

Related articles

• Join Merrill DataSite's Webinar on February 14th: Avoiding the common pitfalls in M&A transactions
• Why Networking Helps You Sell a Business
• Common Mistakes in the Sale of Business and How Advanced Planning Can Fix Them

• 10 Questions You Must Ask Before Buying a Business

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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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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1 Day High Growth Training Course Harrow London 26th September

High growth knowledge pilot course on 26th September in Harrow. It is an intensive 1 day course designed to provide coaches and consultants knowledge of what it is like to operate in a high growth environment, what pressures it puts on Owners and company management and some best practices to enable businesses to operate successfully in that environment
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The Stresses and Challenges of Managing a High Growth Business

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Choosing to follow a path of high growth is not always a conscious decision. I have met many businesses who find themselves in a phase of high growth and whose owners are looking around wondering how they got there. However in order to continue to achieve high growth they must get to grips with the business and understand why they are successful. This can be stressful in its own right because, if they don’t know why they are successful, they won’t know what to do to rectify the situation if things suddenly start to go wrong.

Operating in a high growth environment is living with relentless pressure, as high growth will seek out any weakness in a business and magnify its defects until resolved. The pressure for all high growth businesses owners is akin to that of patrolling the perimeter of a large defensive position, where one is constantly on the lookout for breaches and attempting to repair them as quickly as possible to prevent further problems later.

One of the most common causes of stress is where the owner is not in full control of the business. I often recognise this when the owner comes out with statements like “I feel the business is running me” or “I’m running through treacle, the harder I work the less progress I make”. As decisions and issues pile up, the business owner starts to become more and more reactive and as such, loses the ability to direct the business. Sadly this situation, if left unchecked, has only one result. There will come a point where the backlog of issues create a tipping point and the wheels come off; often in the most spectacular way, with growth hitting a virtual brick wall resulting in little, none or even negative growth in the following 12-18 months.

Another common reason for stress in high growth businesses is that the underlying rate of growth in the business tends to towards a similar rate of change as new positions, recruitment, and management structures are implemented to support the underlying growth. This means a lot of decisions have to be made to drive the business forward and the business owner will, without doubt, make some bad decisions. This in itself creates the need to take more decisions to correct mistakes. Many business owners need to realise that it is more important to make a decision even though it might be wrong, than to sit on it and hope the problem goes away. It never does, and like many things in life, consciously doing nothing only makes the situation worse.

The key challenge for any high growth business is for the management to be able to look forward and foresee potential issues and problems. In order to do this effectively a number of things need to be in place, the business needs sufficiently detailed information to understand and monitor the key linkages in its business and that this information is available in a timely manner. By that, I mean very quickly. In the business I worked in, for example, we had what we called a flash (rough cut) sales figure for the previous month available on 1^st of the following month. Detailed management accounts were available by the end of the first week of the following month.  For many businesses this might either been seen as the Holy Grail or unnecessary, but it is fundamental to the success of a high growth businesses.

One of the less obvious but nonetheless significant challenges to assist management to look forward and make the appropriate decisions is one of culture. A healthy culture is absolutely fundamental to a successful high growth strategy, as individuals and teams need to grow rapidly to support and continue to promote the strategy of business growth. Staff and management will be in an almost continuous state of learning and development – that means more mistakes. In order to learn and develop, the culture must promote a team approach and not condemn people for getting things wrong. In a recent article I explained at last that there were hard numbers which reinforce what we always suspected; that healthy cultures deliver better business performance.

This article might have given you the impression that you would have to be slightly mad to want to choose a high growth strategy. There is no doubt that a high growth environment is a challenging place to be, it does however have its rewards for those who successfully master the conditions. Those who succeed in a high growth environment represent the best of business leaders and managers and whilst successful high growth businesses represent only 6% of all businesses in the UK, they contribute 45% of UK employment growth. Such companies are a vital resource, that need to be supported and encouraged and whilst difficulties are many the potential rewards are much greater.

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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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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Managing High Growth: Using Your Culture for Competitive Advantage

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In my earlier piece about the importance of culture in high growth businesses I talked about how culture is considered a soft skill and that most business people tend to ignore it, mostly because there is no imm

Aleutian Cultures (Photo credit: Travis S.)

ediate quantifiable benefit and of course because it involves dealing with people. That's for HR people isn't it?

What I wanted to share in this post was the idea that culture can be a potent weapon by giving you an important competitive advantage. If implemented and understood it can help significantly in promoting a company's growth. Your culture establishes how your company and its staff interact with one another and with the outside world (your customers and prospects). It reflects your core values and your ethics.

So how is this a competitive weapon? Well lets look at two areas where High Growth Businesses experience problems. Finding and keeping the right staff and dealing with new problems. 

All high growth businesses face many challenges which are outside the experience of the owners or the senior staff. There is naturally a high degree of risk involved in making decisions in this environment. However as a business owner you don't want to be the only person who makes these decisions and by getting your staff to face these issues it in turn develops their skills. In order for your staff to be confident about making these decisions you must have the right culture in place. That is firstly to allow them to make decisions and not be afraid of making mistakes; and secondly a culture which support risk management so decision making can be shared across the management team and moves away from blaming individuals. Having the kind of culture which supports this kind of decision making will give you a real competitive advantage.

The other area is the strength of your culture. One of the major growth inhibitors is not getting enough of the right kind of people together with the time taken to integrate them  into your business to become fully productive. Having a strong culture creates what I have termed a cultural wall it works like this.

A company'as cultural wall uses a strong culture to ensure that only those potential employees who align with your culture will stay with the company. Those who are not fully committed or are trying to change it will bounce off the wall. That is either deliberately not join or leave soon after joining. Those who align with your culture will cross the wall and feel protected. This affinity leads to significantly lower attrition and a quicker absorption of new staff bringing them up to full productivity quicker, not to mention the increased likelihood of staff putting in more effort and extra hours into something to which they feel fully committed. 

By contrast those organisations with a weak or poorly developed culture suffer from inherently higher attrition as left unchecked people develop pockets of competing cultures, which results in a generally high level of attrition, and an increased chance that new employees will take longer to get up to speed. 

It should be obvious from the above how important Culture is to a business, the quicker companies get to grips with this the better their chance of longer term high growth.

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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The 6 Signs of Dysfunctional Company Boards

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I have written in the past few weeks about the problem with board meetings and the problem with sales meetings. It was suggested to me that it might be helpful if I explained what particular issues with a dysfunctional company board and how a well run company board would operate. In this article I intend to concentrate on dysfunctional boards or boards in crisis. 

Image via Wikipedia

So lets remind ourselves what issues should be addressed at board meetings? 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, if that's what a Board meeting should cover what do we typically see in a dysfunctional or crisis board.

Number 1 is not understanding the importance of a board meeting. As individuals and owners we tend work and think at an operational or detail level and it takes some effort and often some training to start to look at strategic and policy issues at a high level. Because operational issues tend to be more immediate and therefore urgent they get in the way of longer term but no less important considerations. Boards meetings are vital to the long term health of a business and are a necessary condition if you want a business to be successful over the long run. I have seen many situations where Board Meetings have gradually been dropped because well meaning owners and managers confuse them with operations or management meeting. Often its only when a crisis hits the business that the management team understand its importance and by then it can be too late.

Number 2 is where day-to-day operations dominate meetings. This is the most common situation and is a result of the first symptom.   Typically the meeting will have no agenda and the participants will have made little or no preparation, consequently what gets discussed is what is on peoples minds at the time (management issues).

Number 3 is not having external advisers. In order to understand and address strategic issues, and probably any issue, it is beneficial to get external advice from people who are not intimately involved in the business. These people can be Non Executive Directors or external advisers.  This separation gives them the ability to make key insights  about the business and its relative performance that would not be possible from internal managers and directors, who often "cant sees the woods for the trees".


Number 4 is hearsay management. This is a situation where the business owner/ CEO makes decisions based on their gut instinct or impulse and without proper evidence. In these situations boards are often seen as a hindrance because board meetings are a forum where   members can question and review key decisions. This type of situation is often coupled with number 5 where the CEO/MD has a low opinion of the management team and doesn't see great value in their input or they don't want to be challenged. I have found this later situation common in family run businesses where the control is kept within the family irrespective of capability and the unwanted scrutiny of a board meeting is something to avoid.


Number 6 the  festering issue/disruptive director. These two often go hand in hand and the disruptive director is often a result of a long running issue that has been ignored, where he or they consider that a poor or no decision has been taken on a subject of great importance to them and despite numerous attempts the problem is avoided leaving a disgruntled board member. The result is that they will go to great lengths to try to raise the issue whilst everyone else will do their best to avoid it, as a result issue and those connected issues are not properly discussed and frequently board meetings are delayed or cancelled as part of the avoidance process. This situation is especially common where you have strong characters who will be persistent in the cause to the point of absurdity and in the long run is very damaging to a team. Often a climate of distrust will develop and worsen team relations the longer the issue is not openly discussed and some form of conclusion reached.


Whilst there are many issues surrounding board meetings don't let this list put you off, many companies have a well functioning board. My next blog post will look at what a properly functioning board look like. I would also like to take the opportunity to give my thanks to Ivor Middleton who assisted in the preparation of this article.

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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Managing Fast Growing Businesses: The Planning Process

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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?

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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. 

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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. 

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