There are four key stages to developing a long-lasting business which provides success: launch, growth, sustain and scale. It is important that new business owners understand that while each of these stages may happen after the next, it is best to structure your business so that you can smoothly transition from each stage to the next.
Failing to Plan for Long-term Growth
In Australia this year more than 21,000 brand new businesses opened their doors for the first time. They were started by people seeking to do good things and to create their own financial futures. Yet, it’s important to realize that many of these 21,000 businesses weren’t designed with growth in mind.
A failure to get the basics right during the launch phase of a business can quickly mean that the business will be over. Without allowing for rapid, sustainable growth, a business can end up running out of money and failing to secure the resources it needs to create that growth. This in turn will lead to the failure of the business in the first 2 years.
While it sounds like a trivial problem, it’s anything but trivial. 90% of businesses fail in their first years of operation. While not every business fails due to the failure to plan for sustainable long-term scalable growth, many of them do. It is my mission to try and ensure that as few businesses as possible fail to clear this important hurdle in their development; after all, it’s the rare business owner who doesn’t want their business to grow and succeed, right?
The Good News – Start With The End In Mind
The good news is that the earlier you plan for growth, the easier that it will be to ensure that you scale your business in a way that works best for your level of resource and finance. Where do you want to end up 5, 10, 20, 30 years from now? Knowing where you want to go is critical to your launch strategy. Avoiding going broke isn’t a question of ripping up all your plans and starting again but rather giving those plans a once over with scalability in mind and modifying them a little so that you can look forward to a brighter future.
How do you do that? You use processes to support your desired outcomes for your business and your life. If you’re unsure of how that might work within your business, you don’t need to panic. I’ve spent the last 10 years working with companies to help them create the processes that will suit their circumstances and their businesses.
What To Do
Success is not a dirty word and it’s easier to achieve than many people believe. I came from nothing on the streets of Mumbai to running a successful coaching practice in Australia because of focus and simple processes I implemented in my life. I can help you do the same.
What Growth Really Means and Why It Can Be Trouble
We began to look at the four factors which are needed to build a successful business: launch, growth, sustain and scale. Last time, we took a quick look at launching a business and what can be done to make sure that you’re preparing your business for the maximum success by developing processes early in your business lifecycle to enable expansion, growth and scalability.
Today, I’d like to talk to you about growth and why growth isn’t always the right thing for a business even though it’s the outcome that many entrepreneurs focus on.
Growth is often defined by business people as some sort of percentage increase over the previous period. That might be as simple as a 5% year-on-year increase in sales or a 10% increase in profits in the next quarter. The trouble is that while growth can be a very positive thing on the surface without the right preparations for your business – it can be severely problematic.
Why? Think about you. How many hours do you put into your business? If you’re a hardworking entrepreneur that answer is often a shockingly high number. Of course it is. It’s your business and it’s your name over the door, you want it to succeed. This is fine but it presents a problem with growth.
If you’re already working as many hours as you can, how will you work more hours when your business grows? Of course, you can’t. So, what would you do instead? Hire somebody? Where will their wages come from? When will you interview them and write their job description? How will you bring them up to speed with what they need to do?
You see without a strategic plan for growth, many small businesses find themselves at this kind of juncture. There’s a defined need for people to help their business grow but they lack the funds or the resources to put those people in place to make their business growth sustainable.
This doesn’t need to be the case. Smart business people aren’t looking to work themselves into an early grave or to try and create an endless amount of time to devote to their businesses; they are looking for a way to ensure that they can grow their businesses so that they don’t overwhelm them.
They do this by planning for growth. Simple strategies can be put in place by any business owner to ensure that growth is easy to manage when it’s the right thing for that business. It’s OK if you don’t know how to do this, that’s where I come in.
I’ve been helping Australian businesses, for more than a decade, to get that strategic planning right. I help you look at your business and choose the strategies that work for you and which are most likely to have the best outcome for your life as a whole and not just as a business person. After all, we don’t start businesses to run businesses, we start them so that we can develop some control over our lives don’t we?
Thinking About Sustaining Your Business Long-Term
We’ve already examined the first two parts of the four key stages of business growth, launch and grow and today we’re going to look at sustain before we visit scale in the last part of this series. We have already seen that the earlier that a business plans for success the easier it is for a business to succeed. Now let’s take a look at the third part of the journey to success:
Sustaining the Business
With growth often comes change. That’s not to say that change is a bad thing, in fact, for many business owners the change that comes with growth is why they went into business in the first place, it’s the time at which their bank accounts should begin to swell and the business should become a dependable entity. Unfortunately, change is not always well received within a business structure.
Take the famous brand Zappos, for example. In 2015 their management team found that the growth of their business meant implementing some dramatic changes in their hierarchy system including the elimination of many management positions and corporate titles. Sure, the brand survived the changes but many of their original team did not. Nearly 15% of the workforce quit during this time of transition. That led to a lot of unnecessary recruitment and the associated costs of that recruitment during a high-stress growth period for the firm.
The Zappos team hadn’t planned for sustainable growth and when the growth that the owners had been looking forward to finally arrived; their business wasn’t ready for it. Fortunately, they had plenty of cash in the bank to ride out the transition. Many other businesses can’t survive such dramatic changes in circumstances and growth not only becomes unsustainable but can lead to the demise of the business.
Forearmed is Forewarned
The right time to consider sustainability of the business during periods of intense growth is before that growth arrives. It’s hard to make clear and rational decisions in the heat of the moment when the order book is swelling and there’s a long queue of customers on your metaphorical doorstep. It’s much easier to prepare while it’s still quiet and ensure that you have a strategy for sustainable growth ready to roll out when it’s needed.
So don’t delay, the right time to start planning for growth is today not some undefined moment in the future. It’s fine if you don’t know how to get that planning started, you can talk to me. I’ve spent more than a decade helping Australian businesses from the biggest to the smallest make sure that their futures were looking bright and optimized for success.
Scalability Where The Best Businesses Excel
Thank you for coming back for the last part in our series; growth vs scale. We’ve looked at the first 3 phases of running a successful business launch, growth and sustain and now we’re moving onto the final phase – scale.
What many business people struggle with is the difference between growth and scaling. They feel like they should be the same thing don’t they? There is, however, a key difference between the two concepts and once you have a handle on it, you’ll understand why the most successful business are more interested in scaling than they are in growing.
Growth is all about adding percentages here and there around the business. It’s not concerned with sustainability or who will do the work or how much it will cost to do that work; it’s measured as a single percentage add on to a single measure of your business. Growth is normally a factor of turnover.
The trouble is, as we have already seen, growth can cause issues within a business. Instead of being an automatic factor of success it can end up consuming all the time, resources and money within that businesses without delivering sustainable benefits in the long-term. In short, growth for growth’s sake can kill a business.
Scaling is different. It’s a process driven approach to growth. No longer is the business concerned with growth for growth’s sake but only with growth which can be managed. Growth that requires a similar amount of resource and effort for a greater return is preferred to growth that requires ever growing amounts of resources, management and money. That’s because scalability is the ultimate objective for successful businesses.
Scalable growth is sustainable. It’s the kind of growth that means you retain your sanity as your business grows and don’t end up trying to work more hours than a week has to offer to keep up with the changes in your business. It means that your financial resources are brought to bear when they can achieve defined return on investment rather than supporting turnover gains that end up costing you more money than they bring in.
It’s Never Too Soon to Think About Scaling
The right time to consider how you will scale your business is not when you’re undergoing huge amounts of growth; its’ before you even get to that level of growth. Ideally, it’s a strategy you have in mind from the day that your business launches. After all, if you’re going to be scaling your business, wouldn’t it best if your business was designed to scale? So that when your start to succeed all the processes and procedures are in place to make you succeed?
If you want to ensure that your business will scale but you’re not certain how that might look for your business. I can help and have helped dozens of other businesses like yours over the last decade prepare for their success.