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Managing a High Growth Business: The Problems of Badly Managed Growth

Running a high growth business, requires a good deal of planning, and active management. It also requires a longer term view, unfortunately in very many cases fast growth happens by accident and therefore without sufficient planning to maintain growth and certainly not as a result of any longterm view.

Never is this more relevant than when talking about plans for growth. What happens all too frequently during a period of high growth is that after a year of rapid growth the organisation struggles resulting in little or negative growth for the next 18 month to 2 years before resuming. This is extremely stressful for businesses and often results in management backing away from further high growth because of the difficulties experienced. This is an unfortunate situation because there are significant lost opportunities of deliberately holding back growth, it is much better to up-skill your management knowledge and techniques to enable you manage in a high growth environment rather than run a business where the brakes are on constantly.

These difficulties experienced in a poorly managed fast growth situation include:

  • Huge effort from owners and staff delivering little or no rewards. Typically this will be both in terms of financial investment and time. I have seen many businesses where the owners are working 6 or 7 days a week in a vain attempt to wrest back control of their business
  • Minimal or even negative financial returns as the cost of correcting the consequences wipe out most or all of the financial gains.
  • Deteriorating customer relationships because service levels don’t keep up with revenues, and it tends to be your older longterm customers that suffer the most because they recognise more acutely the change and it tends to be these highly valuable customers that go elsewhere..
  • Low staff morale, leading to lower productivity and high staff attrition which is made worse because typically that attrition is made up with a disproportionate amount of your best people. The failure of growth makes it more difficult to keep your new recruits as they immediately get exposed to your organisational failures and leave after a short period.
  • Finally lost opportunity as management adopt a very cautious growth strategy because their experience of high growth was so painful.

It needn’t be the case, making sure you manage the special circumstances that come with a high growth business you can maintain consistent growth over a longer period and consequently become a larger business more quickly and with much less pain. Whats needed to successfully manage a high growth business is the subject of future articles.

Laurence Ainsworth is the founder of Exigent Consulting a business consulting organisation which provides ambitious business owners adive and support on how to successfully manage a high growth business.

Article Source: http://EzineArticles.com

 

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