How to Handle Rapid Growth in Your Business

It sounds like a nice problem to have, but growth at a breakneck pace can pose real challenges to your company.
June 14, 2012

Lately I’ve been fielding an increasing number of requests from entrepreneurs who need help managing growth and expansion. Hopefully, that's a promising sign for the overall economy. Certainly, it's a “problem” that most founders will welcome with open arms.

But seasoned entrepreneurs know that the challenges of growth are very real. Upgrading your organization in times of high volume is like being asked to rebuild your car’s engine while hurtling down the highway at 80 miles per hour. Here are a few key considerations for managing the risks and challenges that can accompany rapid growth.

Stay focused on the customer experience. When operations are overwhelmed by waves of new business, remember that a positive customer experience is at the heart of every healthy venture. Invest resources–capital, people, technology, training, etc.–to be sure you deliver on your promises. You can manage risk and preserve flexibility by hiring temporary staff or outside partners to help with delivery. Most importantly, ensure that an accurate customer feedback loop is in place, so that you can understand the value customers are receiving.

Devote time to creating future value. A common ailment among startups is a near-sighted focus on daily crises, at the expense of tasks that will build the company over the long term. Come up for air and then think clearly about what a healthy, valuable business will look like 18-24 months out. What needs to be done today to build for tomorrow? What are three things I can accomplish this quarter to ensure success twelve months from now? How much of my time should I budget each week to work on these priorities?  How well does that match my actual use of time?

Cut through the financial fog. The bigger your business, the more moving parts it will have. With growth, many entrepreneurs find that they can't answer some basic business questions:  Is our pricing on target? Do we understand the true cost of each sale?  What products and clients are most profitable (and which ones are actually losing money)?  How will new investments affect future cash flows? How scalable is our business model?  Calculations that were previously done on the back of an envelope now require spreadsheets and deep expertise. It’s time to partner with an upgraded financial expert who can stay on top of cash flows, test your key assumptions against cold facts, and build a financial scorecard to steer your business forward.

Get your culture right.  Human productivity and engagement are at the heart of the healthy growth of a business. With growth, culture becomes the glue that binds your employees to the venture and to each other. You can no longer rely on that small, family-like climate of the seed stage, and must adopt new management practices to reinforce those cultural elements most desirable over the long term.  This might include crisply over-communicating company values and direction; effectively screening job candidates against company culture; orienting new employees in a consistent, engaging way; positively reinforcing behavior that jives with desired values; and holding people accountable for behavior that conflicts with core principles.

Don’t let potential acquirers sweep you off your feet. Growing businesses often attract interested suitors. Founders should be aware that these exploratory dances always require more time and energy than anticipated, and most of them will not result in an acceptable offer. Of course, you want to respond to interesting inquiries, just don't let the allure of a potential payday distract you from sharpening your product, building your customer base, and improving the health and capacity of your company. These are the only foolproof areas of focus. Paul Graham said it nicely in his 2006 essay: “The way to succeed in a startup is to focus on the goal of getting lots of users, and keep walking swiftly toward it while investors and acquirers scurry alongside trying to wave money in your face.”

What do you think? What are your lessons and ideas for successfully dealing with your venture's growth?

John Bradberry is the CEO of ReadyFounder Services and author of 6 Secrets to Startup Success (AMACOM, 2011). He helps entrepreneurs and their ventures improve performance and achieve healthy growth.

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