Business ownership: A focus on growth

People

What’s important:

• You can’t do it all yourself anymore.
• Don’t get over your skis.

Focus is a “nice to have” at launch. In growth mode, it is a necessity. Companies will often sell at some point during growth mode to capture the value for their owners. Value is created in many ways, but owners that are too involved in all aspects of the business often decrease the value as the enterprise can’t operate without them.

Value is created in many ways, but owners that are too involved in all aspects of the business often decrease the value as the enterprise can’t operate without them. 

Best practice

Understand what you are good at and if you are the right person to lead the organization into this next phase. Also, work to surround yourself with the right people to compliment your weaknesses. It usually requires outside advice to assess this honestly:

• Understanding your weaknesses and the most important roles you should take today and tomorrow.
• How to compensate those individuals tapped to help the organization reach its goals. What compensation is right for these people, and what sort of incentives are being offered in the market?

Process

Growth mode is going to require the organization to hit on all cylinders and, often, decentralize decision-making.

In some situations, you may find out at the last minute—or when you file your taxes—that a new customer adds another state to your regulatory footprint, adding unexpected costs that make that customer unprofitable. The data you started collecting during the launch phase can help you build models to understand trends in customer buying behaviors and forecast profitability more reliably.

Best practice

Decentralization will require communication and teamwork to ensure the correct decisions are made and that nothing is missed. A common issue in fast-growing companies is understanding the impact of a new customer on the organization. Without collaboration among sales, operations and finance, you won’t fully understand the impact of this new customer and whether the sale will be profitable.

Technology

Small businesses can scale faster and compete with bigger players in the market with the right technology solutions.

Growing businesses are especially vulnerable to cyberattacks as criminals seek to exploit perceived vulnerabilities. A cyberattack is not only disruptive, but it can also invite lawsuits and tarnish the brand. At its worst, it can even bankrupt a company.

Many growing businesses do not have the internal resources to fortify their defenses—or cannot afford them. Outsourcing cybersecurity responsibilities is often a viable and sound strategy.

Best practice

Now’s the time to invest in enterprise resource planning (ERP), customer relationship management (CRM), business intelligence, data analytics and other critical technologies that provide visibility into operations and customers and help forecast and act on data insights. Determining a cloud strategy at this time can help optimize your technology investments. Advisors can connect you with the right professionals—in finance, technology or human resources—to fill in gaps by outsourcing where it makes sense.