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How Do You Feel About Moving Your Business Into Advanced Growth?

Nigel Hartley
How Do You Feel About Moving Your Business Into Advanced Growth?

In the last article we talked about the natural business lifecycle and the fact that the journey is not based on revenue, profit or staff numbers but rather the feelings the business experiences.

 

We talked about being excited then frantic, investing and getting payback both commercially and culturally. 

Unfortunately, the euphoria of payback doesn’t last. You may be temporarily distracted (moving into that new house or touring France) but the business has built its own growth momentum, and payback can trigger a further period of accelerated growth.

This usually requires a shift in the responsibilities and required skills of the business owner. You are now responsible for a big business and the skills and experience that you used to start up and grow the business need to grow as well.

This leads to a feeling of FRUSTRATION – you can no longer understand and control every aspect of the business as you did when you were just a small team and your technical expertise was critically important. If those skills and the strategic priorities that become important are not addressed, the frustration will grow into STRESS.

And if the stress continues, you and the business will accelerate into the 2nd Brick Wall.

While the 1st Brick Wall is a confident feeling, the 2nd Brick Wall is more difficult. Only successful businesses make it this far, but by this stage the business doesn’t feel successful.

The stress has taken its toll and you feel exhausted. Good times are now “the good old days”, and you can’t go back in time!

The 2nd Brick Wall is a feeling of DISILLUSION – despite the growth and success, many business owners give up at this stage, close their doors or sell the business for a bargain price. They may know that they are throwing away years of work and a successful business, but they don’t know how to get out of the 2nd Brick Wall.

For those who do persevere, or prioritise and reinvest accordingly, the business owners enter a phase of RESEARCH in an attempt to move the business forward. Many ideas are tried; the owner becomes RENERGISED, and eventually exits the 2nd brick Wall in one of three ways.  Advanced Growth, Plateau or Decline.

Of course, the lingering effects of the last recession and other events like the Northern California Fires have had an impact. I find that many business owners have elected to focus on generating cash to make up for lost income rather than diverting some of the profits to expansion. More worryingly is the vast number of business owners whose personal wealth have been greatly impacted, can’t retire any time soon and now find themselves smack up against the 2nd Brick Wall.

I usually start a conversation with those people with, “If I could reconnect you with your vision, and significantly increase your equity over the next couple of years would you stay in the business?” If they answer yes, then we can talk about advanced growth. If not, then their business will probably plateau and ultimately decline.

This is because they have given up and have not properly restructured and invested during the 2nd Brick Wall, and despite persevering they will decline. Key clients, suppliers, and staff will leave, and the business will eventually close.

Again, this can be a legitimate choice for some businesses. Investment for the future is stopped, and the various business assets are split up and sold.

However, if you achieve all 5 of the advanced growth pillars you will thrive not survive in the future.

  1. A clear PRODUCT strategy, with evolving product extensions
  2. Agreed CHANNELS to their market, providing a consistent flow of clients and revenues
  3. A FUNCTIONAL internal structure that ensures the right person, is doing the right job, at the right time
  4. MANAGEMENT SYSTEM, at a necessary depth for strategy to be a constant evolution rather than an intermittent process, and
  5. ASSET DRIVERS. Transitioning from a P&L based business to an asset driven business requires identifying processes/IP that can be documented and replicated. If it is not documented, it is not an asset.

You have now built a business that will survive and thrive beyond your direct involvement – how does that feel? The description we hear from businesses around the world, is PROUD. It’s a humble pride from having moved through the lifecycle, faced the challenges, and lived to tell the tale.

While there are twenty different areas of your business you can address, these five pillars are a great starting point for choosing strategy at any stage.

 

 Nigel Hartley is a Business Advisor with Shirlaws and Director of Shirlaws USA where we help businesses “Grow, Fund, Exit.www.shirlawsgroup.com. You can contact Nigel on 707 573 7154 or by email at nigel.hartley@shirlawsgroup.com.

Nigel Hartley