Meeting the Challenges of Growing Your Business
In his new book—“Growing an Entrepreneurial Business: Concepts & Cases”—University of Virginia professor Ed Hess tries to “make the growth process even easier to navigate for entrepreneurs.” Examining 54 high-growth entrepreneurial companies in 23 states, big and small, known and not so known, he found many similarities. But he believes that it is their approach to growth that dictated success. Here are 11 growth challenges facing today’s entrepreneurs:
1. Managing cash flow. This could probably be 1, 2 and 3. Entrepreneurs often get “overly engaged in the joy of growth and lose sight of the need to manage cash on a daily basis,” Hess says. “Cash-flow management during growth periods is critical, because in many cases growth requires investments in people, technology, supplies, etc., ahead of the receipt of cash from customers…I can’t help but stress the importance of cautiously managing your checkbooks, credit cards and online accounts.”
2. Spending too much time putting out fires. Hess does not believe that the entrepreneur should be the one always fixing things. That takes away from planning, processes and looking ahead. He believes that you should get away occasionally to think and plan. “It is very difficult to find the time to do all that when your time is eaten up mediating employee conflicts, correcting inventory orders, calming angry customers and so on.”
3. Growth means change, and change is risky. Entrepreneurs who understand this and the challenges that come with it are the ones with the best chances for successful growth.
4. Learning to effectively delegate. Many entrepreneurs have been used to doing everything themselves. Hess says that you “must evolve from being a doer to a manager of employees and then eventually to a manager of managers (a leader).” This means giving up a little control which may not be easy.
5. Transitioning from owner to leader. So now it’s starting to become just as much about others as yourself. They’re looking to you for guidance, support and learning, because they want to grow too. “Coaching takes patience and a degree of personal, emotional intimacy that many entrepreneurs are not able to achieve,” Hess says.
6. Getting overwhelmed by growth. Hess believes that too much growth too quickly can lasso the new entrepreneur. “To properly manage company growth, successful, experienced entrepreneurs recommend the ‘gas pedal’ approach—when you start to feel overwhelmed, let up on the gas to allow processes, controls and people to catch up.”
7. Knowing when to say “no.” “I’m just a girl who can’t say no,” Ado Annie sings in “Oklahoma.” She would never make it as an entrepreneur in Hess’s world. “The problem is that too many entrepreneurs…end up trying to do too much for too many, which dilutes their focus and often the quality of their product or service.” Say no sometimes.
8. Understanding that upgrading never ends. Hess makes it clear that you will not be managing the same company at 10 employees that you will be at 25 or 50. “When these changes take place, entrepreneurs often realize their hope of having a smooth-running machine is an elusive dream. Learn to manage these changes properly and you can keep the ship pointed in the right direction.”
9. Hiring smart. Successful entrepreneurs will be confronted with lots to do all at once. The temptation is to hire people quickly to help; this is a mistake, according to Hess. “In my research, bad hiring practices often continued when entrepreneurs tried to hire managers who needed to have functional or technical experience.” Multiple interviews, different interviewers, trial periods, mentors and hiring referrals all will help this process.
10. Creating a high-performance “family.” You want loyalty, trust and people who can excel. What if someone can’t? Says Hess: “The entrepreneurs I researched learned that you can have a ‘family’-like culture and high performance by having clear job expectations—a fair, transparent and frequent feedback process” and a fair chance to improve or step into a larger role.
11. Growth should be a strategic decision. Maybe it’s better not to grow right now. Assess the risks. “Base your goals around how you can constantly improve your business,” Hess says. “When you do this, you will be able to meet the challenges of business growth head on and with great success.”
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