Most business owners accept those business axioms. Unfortunately, they’re wrong. “At best those beliefs are half-truths and at worst they’re pure fiction,” says Ed Hess, a business professor at the University of Virginia and author of the new book Grow to Greatness: Smart Growth for Entrepreneurial Businesses (Stanford University Press, 2012). “Growth can be good and growth can be bad.”
Basically, Hess argues that everything you know about growth is probably wrong. Yikes! So how can you tell the difference between “good growth” and “bad growth”?
Here are six surprising truths about what growth is really about:
Truth #1: Growth is change (and change isn’t easy). There are limits to how quickly any person or business can deal with change. Growth forces you to install more procedures, controls and measurements which must then be taught to employees. Growth also forces you to change what you do. Sustainable growth requires the right leadership, the right environment (culture) and the right processes.
Truth #2: Growth is evolutionary. Your business model and value proposition must pivot to keep up with change. Anticipating and responding to constant changes can require making some difficult decisions along the way. For example, businesses that grow rapidly must often change management.
Are you prepared for something like that? Managers who operate effectively when the business is just starting out might not be able to adjust when things get more complex. The job simply outgrows their skills. This is yet another important factor that you must be prepared to deal with as you think about growing your business.
Truth #3: Growth requires continuous learning and improvement. You and your employees must be constantly open to learning, adapting, experimenting and improving. No matter how big you get or want to get, continuous improvement is required. “In my research of high growth companies, I found that one factor they all share is a ‘be better’ DNA,” says Hess.
Improving your product or service, how you deliver it to your customers, and every customer touch point is necessary to stay in business and to grow your business. The good news is that continuous improvements lead to more loyal customers who can be your best advertising.
Truth #4: Growth requires focus and setting priorities. Owners of growing businesses must learn to focus on what is most compelling that makes the business different from the competition. But every small business has limited resources and time, so to grow successfully you must identify and spend your time on only the key areas that can drive success.
And keep in mind that in order to set priorities wisely, you need concrete and useful data about your business, and you must clearly communicate your priorities to others.
Truth #5: Growth may require a new recipe. Growth requires implementing processes, which are like recipes for baking a cake. They are the step-by-step instructions for how to do something and are necessary to minimize mistakes, install quality standards and deliver products and services on time.
“Processes are the ‘how’ part of doing business,” says Hess. “As businesses grow, entrepreneurs lose the ability to be hands-on with everything. There’s simply too much to do. So, the challenge is to increase the probability that others will do what you want done. To accomplish this you need processes.”
Truth #6: Growth creates new risks. Growth stresses people, processes, quality and finances. It can dilute your culture and the value you deliver to customers. Understanding these risks is critical to managing the pace of growth and preventing it from overwhelming you.
“To get a better handle on growth risks, consider how your position in the marketplace will change as you get bigger,” says Hess. You will probably enter a new competitive space, facing bigger and better competitors than before. Those new competitors may be better capitalized than you and able to engage in price competition, driving down your margins.
The good news is that you can minimize risks by planning for growth, pacing growth, and establishing controls and processes ahead of time. By simply thinking about what might go wrong, you’ll be ahead of the growth game.
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About the Author: Daniel Kehrer, Founder and Chief Content Officer of BizBest Media, is a senior-level leader in digital media, content development and online marketing with special expertise in startups, SMB, social media and generating traffic, engagement and leads. He holds an MBA from UCLA/Anderson and is a passionate entrepreneur (started 4 businesses), syndicated columnist, blogger, thought leader and author of 7 business and financial books.