6 Challenges Fast Growing Companies Face

I’ve mentioned Inc. magazine www.inc.com several times before. It’s a great resource.

There’s a well-researched article in the current issue about 6 challenges fast growing companies face. They’re all about execution – and if the owner doesn’t deal with them well any one of them can be fatal.

1. Your business outgrows its staff. One or more hard working, loyal employees who had the skills required to make a great contribution when they joined the company can no longer deliver. Owners are torn, knowing that the business wouldn’t be where it is without Joe or Mary – but that they just can’t cope and are hurting the company now. The solution needn’t be just to let them go but the owner needs to deal with the situation quickly and honestly.

2. You wait too long to hire.  A classic dilemma. Hire people before you need them and you add to overhead and risk having to lay them off if the orders you thought were coming don’t. The alternative is to risk service and credibility if the business does materialize. One solution – hire all-rounders who you can train and slot into more than one position.

3. Your business lacks the right systems. Two potential causes here. Either you don’t implement processes and systems quickly enough or the system you chose doesn’t work as advertised. I know which one frustrates me most – the latter. There’s nothing worse than dealing with implementation problems and delays – so have a solid contingency plan in case it happens.

4. You run out of money. We’ve said it before, and I’ll say it again, the most important document for a business owner is a cash flow forecast. Keep it up to date, study it often and it will provide the information you need to stay out of trouble. Because growing companies have to invest before invoices are cut, never mind paid, they become less, not more, liquid.

5. You can’t keep up with demand. This is the most dangerous point for fast growing companies according to the article. The owner takes on debt to finance additional capacity – or people – and the demand doesn’t appear. According to the author the best solution is to manage growth so that it happens in small rather than large increments. But that’s not always easy to do.

6. The problem is the owner. If you’ve built a company – i.e. been successful – why would you have to change? That’s a reasonable question. But I notice, after 15 years of working with business owners, that the ones who grow their companies successfully are the most open and willing to change themselves. If the business can outgrow an employee, why can’t it outgrow the owner?

You can read the full article 6 Classic Ways to Crash Your Company here.

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Tags: cash flow, company, debt, demand, execution, forecast, Jim Stewart, owner, People, ProfitPATH

Comments

  1. Jason Daly says:

    Fantastic points Jim… many of which I have witnessed first-hand throughout my 10+ years of entrepreneurship.

  2. Jim Stewart says:

    Jason, thank you – and thanks for sharing your experience! Jim

  3. Excellent six points, Jim. I would only add “Failure to delegate authority” to your list. Too many business owners try to keep all authority in their own hands, while assigning responsibility to others–a recipe for disaster. A business owner in a growing business has to learn to trust the judgment of the people he/she hires to run departments and divisions, and not second-guess them or override their decisions.

  4. Jim Stewart says:

    Peter, thanks for taking the time to comment. Your point is a good one too – even a key point. I’ve come to the conclusion, after working with business owners for 15 years, that their willingness and ability to change themselves is perhaps the single biggest factor in the company’s future success. Jim

  5. Kerri Salls says:

    Imperative 6 lessons for business owners anywhere on the continuum. Thanks for the recap.

  6. Jim Stewart says:

    Kerri, thank you. Jim

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