Nearly every small business owner has some variation of the same dream – to grow their business. Unfortunately, only 43% of new Canadian businesses survive past the 10-year mark. Despite any amount of entrepreneurial zeal, even the best business idea can fail. And the risks are even greater for companies that are growing rapidly. If not managed carefully, their growth can actually be their downfall. Cash flow issues are common as monthly expenses exceed revenues. With so much focus on pursuing growth, the day-to-day processes can easily become unwieldy. Basic systems and manual processes that work for a small company won’t support you the same way as you add more customers, products, sales channels, etc. And the biggest risk of all is burning out your team. Higher work loads combined with inefficient processes take a toll pretty quickly. You can see why it can be so difficult to become a fast-growing company!
When we talk about fast-growing (or high growth) companies, we’re not talking solely about revenue growth. For the purposes of this discussion, we’ll use the generally accepted definition that comes from the Organization for Economic Co-operation and Development. They consider high growth companies as those with over 10 employees that grow their headcount by 20% or more per year, over a three-year period.
So, in the face of these challenges, how do you build a fast-growing company that can effectively handle a high rate of ongoing change?
1. Keep your focus on your customers
Small and mid-size businesses tend to be hyper-focused on their customers for good reason – if you lose even one customer, you’ll feel the financial impact. That’s not to say the reasons for prioritizing customer experience are entirely selfish. For many SMEs, it’s a core part of their brand and how they compete against bigger players. But it’s also easy to lose sight of the customer when you’re scaling quickly.
A Walker study done at the end of 2020 found that customer experience will overtake price and product as the key brand differentiator. You likely already have an advantage here; the key is to maintain a consistent customer experience as you grow. It can be tempting to automate as much as possible – after all, automation is a big part of scaling efficiently. But consider this example. Think about the last time you tried calling your credit card company (or any other big company for that matter) and couldn’t get through the automated system to speak to a real person. I’ll bet it left you frustrated.
Doing things that take away from the experience you’ve worked hard to create will only turn your customers off. So be thoughtful about how and where you introduce automation. If your customers are used to engaging one-on-one with your team, you may not want to move to a fully automated approach. But if your customers have been asking for a portal to view their order history and invoices, that’s a move worth making.
2. Pay close attention to the dollars and cents
Managing cash is critical for any business, but especially for high growth companies. Start by doing a growth diagnosis to understand your cash inflow and outflow and pinpoint areas where you could tighten up your financial controls. Dig into each area in detail. Look at ways you can improve receivables by reducing collection time, freezing substantially overdue accounts or offering additional payment methods that make it easier for customers to pay. On the payables side, look at reducing interest payments on overdue invoices or negotiating better credit terms with key suppliers.
Tracking all your costs in one place will help you get the visibility you need. Think about what questions you need to answer on a daily, weekly, monthly and quarterly basis, then create reports and dashboards so you have easy access to the information.
3. Build the right team to support your growth
When you hit a growth phase, it’s tempting to hire fast so you can keep things moving. But this increases your chance of making bad hires that just aren’t vetted as carefully. And they’re typically not strategic – you’re focused on what you need right now, not what you need in six months or a year. When you consider that it costs $4,000 on average to onboard a new employee, making quick hiring decisions may not pay off in the long run.
Look at the skills you already have on your team, then identify the gaps. Before you jump to hiring, ask yourself these questions:
Can our current staff be trained to fill these gaps?
Do they have the capacity to do so?
It can be tempting to zero in on the roles that tackle the day-to-day activities, but don’t overlook the importance of your management team. They’re essential to successfully leading the group through the intense growth spurts, so invest in hiring and developing a strong leadership team. According to research by Grovo, 99% of middle managers believe improvements could be made in the business by training managers to be more effective. It’s easy for ongoing skills development to fall by the wayside but creating a strategic plan for leadership growth and development can yield big results.
4. Be diligent about change management
Studies have shown that most issues with business transformation center around people. This applies to any major growth phase and the projects that go alongside it. Supporting your team is arguably the most important strategy to manage a high growth business. You can do everything else right, but your people are the ones who make the dream a reality.
Do employees understand the changes and how they will be impacted?
Are you communicating consistently throughout the change?
How and when can employees provide input?
Have you tagged champions throughout the organization to voice their support and encourage buy-in from others?
Where do employees go if they have questions?
5. Put the right systems in place
High growth companies tend to operate in firefighting mode, de-emphasizing operational improvements and investments because they take time to implement. But eventually, they all reach the same conclusion – to continue growing, they need to simplify, automate and increase efficiency. An ERP solution is a sound investment that helps you eliminate bottlenecks in your processes and do more with fewer resources. The improvements you see on the operational side have a trickle-down effect, helping you lower costs, keep your headcount down and improve your customer experience. It’s an essential foundational piece that will support each of the other strategies we’ve discussed here.
Growing fast comes with its challenges, for sure. But implementing these strategies create a solid foundation for success. As a leading North American ERP partner, we help companies create a platform for growth with the right business systems and processes. Let's chat to discuss what we can do for you.
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