It can be an uncomfortable zone: you’re not really a start-up any more, but there is so much runway in front of you that it’s difficult to picture being anything but. Still, you’re beginning to manage less product and service development and instead managing what feels to be an endless list of open “to-do” items for you and your team. Congrats. That’s one of the first signs that you’ve reached the growth stage.
You have a product or service that your existing customers love and a market that wants what you have to offer. You’re operation is “stable” and there is every indication that you’re meeting customer demands. Now it’s time to shift your focus to formalizing the business – getting the right tools, people, and structures in place (without easing off the gas!) to best enable you to respond to a fresh set of difficulties to overcome. Here are some tips to keep in mind.
Narrow Your Metrics
The growth stage fundamentally occurs when the business focus is dominated by increasing demand. As this shift occurs, you’ll want to be able to focus on two or three metrics that are clear indicators of your growth. The number of new customers, order size, average revenue per sale may all be good examples, but you’ll want to develop your own. The key here is developing simple, straightforward metrics that are meaningful for your business and your team.
Once you settle on the key metrics, make them a part of every conversation because it’s time to get busy experimenting on factors that control and influence them. Over time, your knowledge and abilities will solidify – then begin adding in cost data (new customer acquisition cost, production scale breaks, average margin, etc.) A seasonal sale or order size price breaks, as examples, should yield X new customers, Y revenue, and Z profit. The result is momentum – the “Holy Grail” of the growth stage – so don’t let anything else distract your efforts here!
Keep Your Cash
A second feature of exiting the start-up phase is that your income is likely to be more consistent (perhaps even a bit predictable) as the enterprise regularly takes on new customers. So it stands to reason that you’ll also be setting your sights on expanding your operations to grow your cash flow even further. These are good things, but failing to manage your finances and expansion correctly could result in an untimely demise for your company.
Part of this lies in spending and saving money prudently, but the bigger picture is more attitudinal. Regardless of the numbers on the spreadsheet in front of you, just assume that you don’t yet have enough capital to respond to the unknowns that lay ahead. An additional challenge here is that more and more of your attention will be required to manage these new financial demands. Here’s a common example:
You’ve proven your business model works in its market of origin and you’re bringing in enough cash flow to tackle a new market with a similar strategy. Without careful planning, you run the risk of sinking too much of your revenue into this new venture. If it fails (or even lags), you may be short on resources and overextended to the point where you cannot recover.
It’s common advice that apparently can’t be offered enough: Get Quick and Careful – analyze your moves going forward, weighing risks versus rewards and putting stability and the quality of your products/services on equal footing with your desire to grow larger.
Managing Your Team
The excessive time/energy-commitment that was required of your during the start-up period is quickly eroding. If you catch yourself thinking this is simply “more than one person can handle” (or worse, you’re beginning to spend time and energy masking personal symptoms of overload), then you’re already telling yourself it’s time to make a change.
The growth stage is also marked by the need to seek out new talent to take on the tasks you are unable to. Growth stage hires are brought on to produce different results. Consider streamlining the hiring process, making it more efficient and less costly.
This post-startup phase might also involve shifting the roles of your current team or parting ways with team members who may not fit your current business goals. The individuals who got you through the startup period might not always be the best suited for what lies beyond. They may lack the passion for scaling up or the skills needed to function in the less chaotic climate that post-startup growth often brings. Being able to identify which employees to bring along for the next part of this ride and which to leave behind is just as important as getting new blood to fill your now-expanding entourage.
Begin by revisiting your culture – and remember: don’t dilute it or stray from it with any new hires. The best thing you can offer your employees is Hiring only “A” players to work alongside. As the saying goes, first get the right people on the bus.
Finally, you’ll want to reexamine your own role within the company and how you lead your subordinates. You have your strengths, but you’re fooling yourself if you believe you know everything your about your business. Turn the volume down on your ego (if you’re still listening to it at all) and yield to those you’ve hired to support you.
As we noted in Be The Outcome Your Inspiring, this is the simplest form of leadership by example: having noticeable strengths and the vulnerability to admit your weaknesses. In other words: be real. Show up prepared. Take risks. Experiment. Ask for and accept help. Celebrate achievements. Share failures. Get involved and get engaged. Be the coworker you most want to be working with. You may be surprised how much awareness this creates in others.
Have another suggestion for conquering the post-startup phase? Add your thoughts to the comments below.