Small Business Strategies: Want to expand? A plan is a must
— -- In one old commercial, a group of entrepreneurs is sitting around a computer, launching a website for their new company.
The entrepreneurs turn on the site, then wait for customers. At first, they see one or two clicks, then a few more, then many more, and then a torrent of customers.
The entrepreneurs look at one another and say something like, "Now what?"
While growing fast is the kind of problem many small businesses would love to have, it is a challenge.
It's easy — in fact, typical — to be overwhelmed. You have a lot to juggle: finding and training staff, managing cash flow, serving customers. And decisions have to be made quickly.
When talking about fast-growth companies, you're likely to picture a technology start-up zooming from zero to billions: a Google, Facebook or Twitter. But fast growth also can sneak up on long-established small businesses in nontech fields.
You can grow slowly and steadily for years, and then — whap! — you hit a tipping point. A new marketing campaign for your spa goes viral, three huge corporations hire your design firm at once, or Oprah raves about your newfangled kitchen gadget and orders from retailers flood in.
You're thrilled. But you have that nagging question: "Now what?"
How will you get the staff you need? Train them? Pay them? Where will you even put them? How will you ensure quality in your product or service as you turn it out rapidly?
And, most important, how long do you think this will last? Is this real growth or a flash in the pan?
If you're able to handle growing quickly, you're likely to create a stronger, sustainable company and make a lot more money. Handled poorly, fast growth can bring down an otherwise healthy business.
Fast growth presents many challenges:
•Staffing. The toughest problem. In a 2003 North Carolina survey of small businesses, three of the top five problems cited dealt with employees: hiring, motivating, training, according to the North Carolina Small Business Technology Center.
Keep in mind that you're going to be very busy scrambling to turn out work. How will you find enough good people, then manage them?
Many fast-growth companies turn to independent contractors, especially until they see whether it looks like the growth is sustainable. But hire a human-resources manager or consultant early on.
•Leadership. As your company grows, you may find that you can't handle all the management responsibilities yourself. It's time you learn to delegate.
You might first delegate along functional lines — marketing, operations, finance and the like. But you may find you need a second-in-command to handle overall management.
•Financing and cash flow. Even when sales increase substantially, it's tough to finance fast growth from income alone.
Typically, you need to spend money faster than it comes in: hiring staff, purchasing materials or inventory, renting facilities, buying equipment.
That requires cash flow, and you may be able to handle it with a line of credit. But if you want to seize growth opportunities, it may be time to consider an investor.
•Strategy. As you grow, you'll have lots of decisions to make, especially how to direct your future growth path: which opportunities to pursue and which to let go.
You'll have investment decisions: What activities do you want to build on? Or do you want to stash away money you're making in case the growth doesn't last?
You may want to form an advisory committee or hire a management consultant.
•Systems. Fast growth easily can lead to a certain amount of chaos.
When things are moving quickly, it's almost inevitable that you'll have a tougher time communicating with team members, managing deadlines and ensuring accountability. You will want to find people who can help you put management and collaboration systems in place fairly quickly.
•Corporate culture. In all the confusion, you still will want to build a corporate culture that attracts and retains great employees.
So be certain to communicate, pay fairly, thank and reward staff for jobs well done. Pay attention to the kind of business you're building — not just the size of your business.
Fast growth is a good problem to have. Here's hoping you have to deal with it soon.
TOP PROBLEMS OF FAST-GROWTH COMPANIES
•Hiring quality employees
•Controlling costs
•Motivating employees
•Training employees
•Wise use of capital
Source: North Carolina Small Business Technology Center, 2003
Rhonda Abrams is president of The Planning Shop and publisher of books for entrepreneurs. Her newest is the 5th edition of The Successful Business Plan: Secrets and Strategies. Register for Rhonda's free newsletter at www.PlanningShop.com and "like" The Planning Shop on Facebook for updates. For an index of her columns, go to smallbiz.usatoday.com. Twitter: twitter.com/RhondaAbrams. Copyright Rhonda Abrams 2011.