Tulip Media Group
Scaling Business

By Andy Buyting, Founder & CEO

Both new businesses and existing smaller businesses typically have one thing in common: they want to grow fast. Fast growth, of course, is not something as easy to accomplish as it is to aspire to. One issue that business owners and stockholders often do not take into account, however, is the problems that a company can encounter when pursuing a path of fast growth. Too much growth can actually have the counterintuitive effect of shuttering the doors on a company rather than expanding its operations. Likewise, the same problems that a company can encounter when growing too fast can prove to be impediments to further expansion.

One of the largest bottlenecks for fast-growing companies is a lack of leadership experience or management capabilities. If the growth of the company outpaces the ability of management to adapt and grow, things will begin to fall apart very quickly. Growing and leading a company with $1M in total revenue requires a very different skill-set than, for example, growing and leading a company with $10M in total revenue. The second issue is that companies rarely plan for the logistical capacity of fast growth. This problem often follows the first. When leadership is not prepared, capacity is not addressed and growth slows down. The company cannot handle the logistical or staffing demands and fails to accomplish its goals as a result.

To address the issue of leadership, leaders should always be revising strategy and educating themselves. They either need to learn the skills to manage to the next level of complexity in their business or they need to bring people in who already have those skills. Education keeps leaders thinking bigger, and that is key to success. Following leadership education, proper capacity planning must be undertaken. Understand the needs of the next year, taking potential growth into account, in terms of systems, workload, client demand, and staffing. Budget accordingly and begin looking for the staff you will need well in advance. Doing so prevents the type of ‘panic mode’ which can set in when caught unprepared by a larger demand than current capacity is capable of meeting.

In order to account for these problems and address them through planning, some companies opt to grow in specific increments, even stifling their own growth if needed in an effort to remain consistent and discipline while scaling up. Progressive Insurance, for example, during their high growth years, planned for between 20% and 30% growth each year. They insisted on at least 20% growth but would slow down top-line growth if they started reaching their upper limit of 30%. By doing so, they made sure their operations were prepared for that level of growth each year and had strategies in place to prevent the operations from becoming overextended because of higher than expected growth levels. They succeeded because they grew the knowledge, the capacity and the company’s ability to grow into the business they wanted to be in the future.

The ultimate takeaway for businesses looking to grow is that proper planning is essential. Plan for consistent growth patterns year after year and plan for what your team and strategy will look like well in advance. Growth without a plan results in a company having to play catch-up. By that point, it is already too late to do anything or make significant adjustments. Successful companies have both a vision of what their future looks like and a plan in place to meet the demands of that vision.