“Top Ten” Tips for Growing Companies
Growing a business is so consuming that many business owners get strung out and exhausted with the day-to-day details. Controlled growth is great. Out-of-control growth (missing deadlines and customer commitments, running out of cash … ) can be disastrous.
Here are the “top ten” tips for achieving profitable growth.
1. Implement Systems
Systems are the infrastructure for growth. Systems apply to all aspects of your business, from accounting to human resources to project management to quality control. Systems of 'internal controls' are like checks and balances that help ensure that the business stays on track.
Systems reduce stress and make workloads more predictable and manageable. They also help when you need to replace departing employees, because all the knowledge of the job does not walk out the door with the departing employee.
2. Hire Qualified Employees
Who you hire is a difficult decision. Before you start interviewing, carefully consider what your business needs. What isn’t getting done well? What’s holding your company back?
- Interviewing Dos:
- Communicate clearly what is expected in the job.
- Strive to have the candidate talk 80% of the time.
- Ask open-ended questions.
(e.g., What was your most/least successful assignment? What kind of obstacles did you encounter and how did your overcome them?)
- Listen carefully.
Is there a "Good Fit"? Is there a match between the company's job expectations and work environment, and the candidate's interests and abilities?
Growing companies need to be especially careful to protect their confidential information and intellectual property. Your systems should include confidentiality and non-solicitation agreements with your employees and “work for hire” agreements with your contractors.
3. Train Employees
Employees cannot read your mind. Hiring someone requires your investing in training and supervising that person's work. Training is critical to employee productivity.
4. Implement Technology to Support Employees and Operations
Give your employees the tools they need to do their job effectively. Flowcharting - or diagramming your current business operations - is a good way to get a visual picture of how business is currently handled. Your systems, (e.g., computer, network, applications, telecommunications, accounting) should be carefully designed and implemented to create a competitive edge. Ad hoc or poorly implemented systems drain productivity.
5. Improve Quality
Quality, delivering a consistent customer experience, can suffer with growth. It’s important to maintain quality and consistency in the delivery of products and/or services. Listing the specific steps that are followed from the start of a customer transaction through completion of an order or project helps to establish a consistent way of handling transactions and eliminating bottlenecks.
6. Plan for Employee Turnover
Would the departure of a key employee leave a project completely up in the air? Frequently, as the volume of business increases, the few employees who know how to get things done cannot sustain the pace of growth. Just adding more employees doesn't help unless the new employees have a clearly defined role. Systems, including written project plans and procedures, help new employees get up to speed quickly.
7. Increase Customer Satisfaction
Listen carefully to employees about problems and take steps quickly before customers are impacted. Once customers are impacted, you must fix the problem and learn from the experience. Customer complaints and lost customers provide valuable insight into what your company needs to do to increase customer satisfaction.
8. Increase Competitiveness
To stay competitive you need to maintain perspective on the competition. You need to see the big picture, or 'forest,' as well as the 'trees' (details & issues). Stay current on:
- What is important to your customers;
- What is happening in the marketplace;
- What your competition is doing;
- What your company is doing well; and
- What your company needs to improve.
9. Sell to new markets
Be careful not to become too dependent on a few customers or a single industry. There's a rule of thumb that 80% of your profits come from 20% of your business. Is this true for your business? Analyze your customers and determine your ideal customer profile, for profitability. Also, be prepared for the inevitable shift in the market. What if your top 3 customers were acquired or disappeared?
10. Maintain Positive Cash Flow & Control Costs
Growing businesses 'burn' cash. Running out of cash is the most common reason that businesses fail. Here’s a vivid example of how quickly cash can disappear and leave you in a crunch. Imagine yourself in a small car (revenue) being tailgated by a big truck (expenses). If revenue slows even a little, expenses (which are much harder to slow) overtake revenue, and it’s a cash crunch. So, spend cautiously. Get paid promptly (collect those accounts receivables). Expand only when revenue projections are solid. Systems help you maintain positive cash flow and control costs.
In conclusion, growing your company profitably requires building a systems infrastructure that can sustain higher volumes. Based on my experience, outsourcing is an effective way to handle certain aspects of your business as it grows, so that you can focus on your core “value added.” Whether you’re outsourcing accounting, manufacturing, or order fulfillment, it’s wise to have a contingency plan for handling any problems that may arise.
About the author:
Jean D. Sifleet, Esq. CPA is the head of the Business Practice Group. For practical information, check out Jean's articles and books which are featured on this site. For legal advice related to your business, contact Jean at 508-361-0916 or jean@smartfast.com
