The CEO of Lego, Jørgen Vig Knudstorp, once said, "I think it is a golden rule in business that most companies don't die of starvation, but die of indigestion."
"Indigestion" is what a business gets when growth is poorly managed. Growth can be disruptive and even dangerous to a company. It can load staff with additional work, strain finances, and place demands on cashflow and inventory levels. At its best, frustrating, at its worst, fatal.
Here are five things you can do to make sure growth strengthens your business and doesn't lead you into trouble.
1. Ensure the health of existing accounts.
There's no point in trying to fill a bucket that's leaking. Make sure that growth doesn't destroy relationships with current customers. The relationships with customers that make up 80% of your revenue, must be healthy. Make a list of them. Take their temperature as often as is reasonable in your business. Bottom line, a change in health of these relationships should never surprise you.
2. Do the few things that will make the most difference.
As the business grows, workload will increase, unless you have perfectly scalable systems. With a higher work load, it's dangerous to spread yourself too thin. You can't do everything. Concentrate on doing the few things that will contribute the most to stability and visibility towards the future. As you go faster, you need better tires and headlights.
3. Clarify short and mid-term priorities.
Undirected growth can lead to an out-of-business company. We need to maintain a sense of where growth is taking us. Think of growth as holding a hand grenade with the pin halfway out: Keep your eye on the grenade; don't let worries about the distant future steal your attention. Determine the right leading indicators to ensure you're moving in the right direction, so can keep your attention on growing safely.
4. Cultivate a team of engaged employees.
Growth puts a strain on everyone in an organization. Straining employees who are disengaged creates chaos. But engaged employees can see the strain of growth as an opportunity for personal development and a stronger company. They see themselves as contributing members willing to go the extra mile when necessary. Before growth goes too far, make sure you feel good about your team.
5. Set up scalable systems.
Scalability is about getting increased output from a proportionately smaller input. Reinventing every process to keep up with growth kills productivity. Create standardized systems and processes, building your company as a consistent machine that reduces variables. Once growth stabilizes, you can focus on increasing efficiency, but there's no use in doing that while things are changing every day.
If growing your business is your goal, consider the foundation on which it will stand. Make sure you are building a machine that aligns more and more with the values of your customers. Protect your employees, yourself, and your cash.
Growth is only good when it doesn't hurt you long-term.
A strategic planner for the last 28 years, Rudy has held senior executive and C-level positions in fortune 500 and emerging growth companies. He is a sought-after executive coach and speaker at Vidal Consulting Group, developing innovative strategies and tools that allow companies to maximize operational efficiency and alignment to customer values.