In business, as with most endeavors, growth is generally a good thing. But what growth looks and feels like can differ quite dramatically from one company to the next. For some, growth is a rocky road where owners and execs are often surprised by or unprepared for what they’ll encounter next and find themselves in precarious positions along the way. For others, growth unfolds along a reasonably predictable and relatively painless path.
Maximizing the positive aspects of business growth requires effectively managing through and, wherever possible, avoiding altogether the pains and pitfalls that growth typically brings. Here, we explore some of the ways growing pains manifest themselves in businesses and outline three principles for healthy business growth.
Some business owners don’t know how to grow their businesses or have no real desire for them to be bigger. “I’m not looking for growth” is an understandable sentiment as it involves less change and greater degrees of predictability, familiarity, and repeatability. More often than not, business owners do seek some degree of growth in their companies over time. As the business growth trajectory steepens and more milestones are met, the number of pressing decisions, new challenges, and new business supports needed multiply. Pain points arise when one’s trajectory outpaces readiness and preparation for it. Here’s an anonymized but actual example of how this happened for a vcfo client.
After several years in business, a company carved out a stable market niche that generated ~$5M annually. Revenue hovered around that mark for twenty years until a new entrepreneurial-minded executive joined the business. After identifying a high-potential product line not yet sold in their market, he moved to add it to the company’s offerings via their existing distribution network.
In the five years that followed, the company’s annual revenue skyrocketed to more than $42M. Leadership’s actions to manage this monumental growth were well-intended and directionally on point but resulted in new problems that the business needed to solve.
Whether the plan is to grow by 5% or 500% over a given period, owners and execs must have a solid plan for how the business will support that growth. The issues outlined in the example above set the stage for our next principle.
To smooth out the wake of issues stemming from its problematic Accounting software implementation, conversion to accrual accounting, and expanded funding efforts, the company brought in a fractional CFO from vcfo. Because the fractional CFO had previously been the CFO of a comparable company within their industry, the organization received not only the support and expertise it needed to remedy its known issues but also insight into unknown issues and opportunities. For example:
Getting advice and counsel from those who traveled the road before doesn’t extend to just finance. Seek input from other sources such as HR expertise and from leaders in adjacent businesses across the industry via trade associations, conferences, and other forums.
It’s a tough pill for some to swallow, but owners and executives also must face the fact that some of the people and processes that got the business to its present point may be unable to adequately guide it moving forward. Hesitancy to make changes and bring in new leaders often stems from feelings of loyalty and comfort with how things have historically been done and who has done them.
Adding needed expertise and experience to one’s business needn’t involve kicking tenured employees to the curb, however. Instead, put employees in positions where they can continue to develop, apply their institutional knowledge, and contribute to the company’s success. Asking a junior accountant who has only processed payroll and handled basic accounting tasks for years to suddenly add the duties of an experienced Controller or CFO to their plates doesn’t do them or the company any favors. Giving them the opportunity to learn new things will augment their value to the company as well as enhance their own career path and satisfaction.
Fractional CFO and HR leadership can help here too as they have in the example detailed above. At vcfo, we often mentor existing team members to help them evolve to a new level in finance, accounting and HR. Additionally, fractional resources can serve as knowledgeable bridges to support the company until capacity and other conditions compel it to permanently add executive roles in-house. When that time comes, fractional resources can help the company articulate the qualities and skills that will be needed in these roles as they are transitioned to full-time staff positions.
Business growth doesn’t have to hurt! A well-planned and principled approach to managing growth will help organizations to benefit from the gains while minimizing the pain. To optimize your growth;
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Are growing pains affecting your business’s bottom line? If you need proven finance and HR expertise from a team that knows how to guide organizations through growth, Request a Free Consultation from a vcfo expert. We’ve partnered with more than 5,000 businesses in our 27 years and would love to share our expertise and experience with you.