The document discusses the challenges of rapid growth for small companies transitioning to medium size enterprises. It identifies tendencies like loyalty to comrades and task orientation that work for startups but hinder larger organizations. Specific challenges are listed in leadership/management, financial management, organizational structure, and product/service offering areas. The document then provides strategies and solutions to overcome each challenge, such as creating budgets and cash flow tracking to manage finances, assessing skills needed and hiring/training employees to manage people, and partnering for resource-intensive services to offer quality products.
When management opens the books and reveals the financials to the workforce, it is a sign of good faith, entrusting employees with the tools to make business improvements. It is also evidence of a commitment to collaboration, giving employees the broadest and deepest exposure to major changes in the business.
Many small and medium sized enterprises [SME] owners already know what needs to be done to grow their business but lack the time and/or resources to bring about the necessary changes.
Others may simply be reluctant or restrained by tradition to make a shift.
Change is difficult.
This series attempts to help answer the question, "How will owners [like me] make the necessary changes to aggressively grow their business in 2014 — and beyond?”
Many small business owners dream of growing their business to satisfy the needs of their customers. However, a business with a steady inflow of new customers must consider its capacity and capability to deliver to these customers. Scaling a business means setting in place the processes and systems needed to support seamless growth.
When management opens the books and reveals the financials to the workforce, it is a sign of good faith, entrusting employees with the tools to make business improvements. It is also evidence of a commitment to collaboration, giving employees the broadest and deepest exposure to major changes in the business.
Many small and medium sized enterprises [SME] owners already know what needs to be done to grow their business but lack the time and/or resources to bring about the necessary changes.
Others may simply be reluctant or restrained by tradition to make a shift.
Change is difficult.
This series attempts to help answer the question, "How will owners [like me] make the necessary changes to aggressively grow their business in 2014 — and beyond?”
Many small business owners dream of growing their business to satisfy the needs of their customers. However, a business with a steady inflow of new customers must consider its capacity and capability to deliver to these customers. Scaling a business means setting in place the processes and systems needed to support seamless growth.
The Importance of Business Acumen: One Manager's JourneyParadigm Learning
Business Acumen, knowing the business of your business, is a key ingredient to providing excellent human resource capability within an organization.
In this presentation, follow Ted as he learns how business acumen affects his role as Operations Manager. You will see the value in why all managers - and employees for that matter - should have a keen sense of business acumen.
Key Customer Account Management is the master-key to quantum sales improvement and retention of key customers.Yet few companies are able to convert good intentions to effective programs. Dr Wilfred Monteiro India's leading sales performance guru share a few insights and ideas.
Why is a great company culture so rare? How can you make sure your organization has one? The good news is that creating an inspiring and sustainable culture is not as hard as you might think. Dr. David “Doc” Vik reveals the keys to success in The Culture Secret.
A remarkable culture begins with visionary leaders who help their teams take a holistic approach to creating engagement inside their companies and sharing it with customers. Discover how to take culture beyond casual Friday and into more meaningful conversations like:
•Driving Vision
•Defining Purpose
•Clear business model
•Unique/WOW factors
•Meaningful Values
•Inspired Leadership
•Great customers and customer service
•Brand enhancement
•Experience and the emotional connection
If you don’t think you have to focus on attracting—and retaining—the best employees in today’s hypercompetitive war for talent, you are living in the past. The employees and customers of today have a choice and a voice. The secret to culture is simple: take care of your people, never stop innovating, and leave customers wowed. Build a better culture to secure the future for any organization
An investor's least favorite statement -- Oops Wrong CEO -- and You Need More...Leslie S. Pratch
While you own a company, you need the right people to execute and adjust the plans that will achieve your financial targets. When you go to sell, the team in place must be strong enough to convince buyers there's still substantial upside ahead. Managing human capital proactively and systematically can prevent problems and make your investments much more valuable.
Experiences in my profession are shared. I will be requesting like minded people for a collborative activity. Job Knowledge is certainly essential but more than that a person behind the job skills is more important.
The Importance of Business Acumen: One Manager's JourneyParadigm Learning
Business Acumen, knowing the business of your business, is a key ingredient to providing excellent human resource capability within an organization.
In this presentation, follow Ted as he learns how business acumen affects his role as Operations Manager. You will see the value in why all managers - and employees for that matter - should have a keen sense of business acumen.
Key Customer Account Management is the master-key to quantum sales improvement and retention of key customers.Yet few companies are able to convert good intentions to effective programs. Dr Wilfred Monteiro India's leading sales performance guru share a few insights and ideas.
Why is a great company culture so rare? How can you make sure your organization has one? The good news is that creating an inspiring and sustainable culture is not as hard as you might think. Dr. David “Doc” Vik reveals the keys to success in The Culture Secret.
A remarkable culture begins with visionary leaders who help their teams take a holistic approach to creating engagement inside their companies and sharing it with customers. Discover how to take culture beyond casual Friday and into more meaningful conversations like:
•Driving Vision
•Defining Purpose
•Clear business model
•Unique/WOW factors
•Meaningful Values
•Inspired Leadership
•Great customers and customer service
•Brand enhancement
•Experience and the emotional connection
If you don’t think you have to focus on attracting—and retaining—the best employees in today’s hypercompetitive war for talent, you are living in the past. The employees and customers of today have a choice and a voice. The secret to culture is simple: take care of your people, never stop innovating, and leave customers wowed. Build a better culture to secure the future for any organization
An investor's least favorite statement -- Oops Wrong CEO -- and You Need More...Leslie S. Pratch
While you own a company, you need the right people to execute and adjust the plans that will achieve your financial targets. When you go to sell, the team in place must be strong enough to convince buyers there's still substantial upside ahead. Managing human capital proactively and systematically can prevent problems and make your investments much more valuable.
Experiences in my profession are shared. I will be requesting like minded people for a collborative activity. Job Knowledge is certainly essential but more than that a person behind the job skills is more important.
Este workshop mostra que criar é tirar do nada, e nada é tudo que temos na crise.
Por isso, devemos seguir o exemplo de empresas que surgiram por acaso, por necessidade e até mesmo por erro.
Onde há problema, há oportunidade. O importante é observar, sair da zona de conforte e acreditar no seu valor como pessoa e como profissional.
13 lessons for sme business transformationBrowne & Mohan
Browne & Mohan has had the privilege to work with Small and medium companies that pursued business transformation to improve their market relevance and financial sustainability. In this paper, we share 13 lessons gained from successful SME business transformation.
Building an outcome driven high ownership companyBrowne & Mohan
What does it take a build company where every employee owns the quality of their outcomes and productivity , every act is purpose driven. What elements of a workplace make an employee to willingly own and contribute more to her job?. In this paper Browne & Mohan consultants presents the mechanisms that can be used to build an high ownership and outcome driven company
The second presentation in a 3 part series on Fast and Sustainable Business Growth - how to thrive, not just survive regardless of the economy.
The Course Forward is hazardous, but staying put is worse. …Applied Knowledge is Power
Access The Science of Small Business Growth to maximize your current operations.
Turnaround and succession planning methodologies, including business recovery pre-insolvency. This guide is part of the MF Turnaround Manual. The manual is designed for accounts and professionals wishing to develop operational turnaround skills.
1. Prepared by: Cameron Abram, John Henderson, Meghan Mathieson, Clarisse Ong, and May Zhang 1
What are the challenges to rapid growth?
With any challenge, we need to start by understanding the situation and the root causes of the
problem. Only then can we develop an effective action plan and execute it, iterating as
necessary, until the problem is solved.1
When a small company enters a phase of rapid growth, it is beginning the transition from a
start-up enterprise to a small to medium-size enterprise (SME). These two types of
businesses are fundamentally different, and the transformation is not easy. Start-ups are
essentially a person or group of people with an idea, searching for a successful business
model. A SME is a business executing a successful model.
Some of the challenges present when navigating this transition are tendencies that work at a
small scale but hinder larger organizations, such as:2
The above management tendencies can manifest in a number of different ways, affecting the
business’s financial management, organizational structure and resource management, and
quality of the product or service offering. These are further defined as follows:
Leadership / Management:
• Lacking strategic direction and advisors
• Lacking business or managerial skills
• Insufficient documentation for processes
• Overwhelmed by day-to-day problems and
stuck in crisis mode
Financial:
• Struggle to manage healthy cash flow levels
• Pricing structure not based on value of
product or service offering
• Difficulty creating a business case aligned to
strategy to obtain short-term financing
Organizational Structure / People:
• Informal organizational structure
• Insufficient number of employees with
required skills (technical and business)
• Insufficient employee training programs
• Underdeveloped support functions (IT, HR)
Product / Service Offering:
• Intensive R&D cycle
• No protection of intellectual property
• Insufficient redundancy in equipment /
technology (no maintenance program)
• Lack of consistent (loyal) customer base
1
Watanabe, K. (2009). Problem Solving 101. Penguin Group: New York. ISBN: 978-1-59184-242-2.
2
Hamm, J. (2002). Why Entrepreneurs Don’t Scale. Harvard Business Review. Reprint R0212J.
Loyalty to comrades
Task orientation
Single-mindedness
Working in isolation
Challenges to Rapid
Organizational Growth
2. Prepared by: Cameron Abram, John Henderson, Meghan Mathieson, Clarisse Ong, and May Zhang 2
How can the challenges to rapid growth be overcome?
To overcome these small-scale management tendencies and grow the company, the
founder/leader requires self-discipline and the ability to listen to and seek input from others to
shift his or her outlook and practices. Part of this process is clarifying goals (both personal and
professional), establishing a strategy, and executing that strategy, iterating as necessary to
achieve the desired outcome.
Ensuring long-term success for any business is difficult. Affirming that your company’s strategic
focus provides benefits that customers want and need is the first step in achieving long-term
success. Thoroughly understanding where your company best fits into the value chain and how
your business generates profit is the next step.
Strategies for successful growth include:3
Ways to address the previously mentioned challenges of financial management, people
management, and offering a quality product or service are discussed below:
Solution: Managing Cash Flow
Working capital (cash) is crucial for the success of any business, but especially small businesses
during periods of rapid growth. Cash is in tight supply (tied up in growing inventory and
accounts receivables) and banks are often unwilling to extend credit. If short-term liabilities, like
salaries and rent, are due sooner than payments are received for sales of products or services,
the business will fail without sufficient cash flow or access to credit.
How can small businesses manage cash flow? The necessary steps to evaluate the company’s
need for cash and then manage it are as follows:
1. Create an operating budget by evaluating expected income and expenses (based on sales
forecasts) to determine expected profit/loss.
2. Establish a month-by-month cash management system to track:
a. Starting cash (what is on hand at the beginning of the month);
b. Cash in (all cash received in a month such as sales, interest, payments received);
c. Cash out (all fixed and variable expenses such as rent, salaries, supplies);
d. Ending cash (= starting cash + cash in – cash out) that becomes the next starting cash.
3. Compare the change in cash over the month to the operating budget to identify trends
and possible causes for decreases or increases in operating cash.
3
McGrath, R.G. and MacMillan, I.C. (2005). MarketBusting Strategies for Exceptional Growth. Harvard
Business Review. Reprint R0503E.
Transforming the customer experience - what do they value?
Redefining your business’s profit drivers - how do you make money?
Anticipating and exploiting industry changes - what will happen next?
Creating a radically new offering - what needs can you meet?
3. Prepared by: Cameron Abram, John Henderson, Meghan Mathieson, Clarisse Ong, and May Zhang 3
4. Use the budget and cash flow tracking to anticipate the business’s cash flow needs and
determine how growth will impact the company’s finances.
5. Prepare contingency plans (savings, line of credit, short-term loan) by connecting with
potential lenders to address any cash shortages before they happen.
Solution: Managing People and the Organization
Shifting from an all-consuming focus on “the idea” to operating as an organization with
employees and structure is challenging. People are the heart of a business. A structure that
enables individuals to use their strengths in pursuit of the vision will increase efficiency and
morale. The leader/founder, guided by a well-defined strategy, needs to take a number of
steps to manage this transition:
1. Assess what roles and skills are needed to meet the demand for the product or service the
company is offering.
2. Determine the optimal mix of founders, employees, and partners to fill those roles and
provide those skills.
3. Prepare job descriptions and hire employees to support the most critical (and profit-
driving) areas of the business.
4. Develop a program and train new employees to ensure consistent standards and
understanding of the business strategy and tactics.
5. Prevent over-reliance on key personnel by cross-training roles where possible.
Solution: Partnering to Offer a Quality Product or Service
Hiring sufficient internal resources to provide a quality product or service may not be possible
with early-stage cash flows. Establishing partnerships with other companies to provide periodic
or resource-intensive services may be an effective way to manage growth and allow the
company to focus its limited resources on strengthening its core competencies and
competitive advantage.
1. Assess the steps in the company’s value chain.
2. Identify the profitability of each step and compare each to the resource investment
required to generate that profit based on the projected level of growth.
3. Identify external partners that may be better placed to execute a component of the
business that requires more resources than the company’s state of development can
provide.
4. Establish a mutually beneficial partnership to allow the company to avoid the aspects of
the value chain that require significant resource investment and would impact overall
profitability.
5. Focus on those aspects of the business that provide the company’s competitive advantage
and grow the business to a comfortable cash flow level that will allow additional resource
investment.