The challenges, like the opportunities, for private companies today are numerous and varied. Do owners ever find time to reflect on whether they are running a business or growing a business?
From the outset, it’s important for business owners to acknowledge that there are significant differences between the two. It all depends on your vision; do you want to take your business to the next level, or are you comfortable with where it is and want to focus more on maintaining its current state?
To answer this question, you have to consider some others first:
- Where do you want your business to be in 5–10 years?
- Do you want more clients, offices and employees?
- What is your business transition plan?
- Do you have a strategy in place to preserve or grow value?
- Do you have the capital, time, resources and leadership to keep your growth plans on track?
If you are gearing your business up for growth, consider the following 10 tips:
1. Encourage ownership and entrepreneurial spirit
When looking to grow your business, you’re unlikely to have the time to stay too close to your key staff. It’s important to provide those key people with an autonomous environment to work in and empower them to make decisions consistent with your plans. This can result in team members having a sense of ownership and accountability and feeds entrepreneurial spirit (and often, some great ideas).
To evoke the entrepreneurial spirit from your staff, provide them with “freedom within boundaries.” This is where considerable freedom is given to key individuals within the limits of agreed areas of responsibility. It’s a non-hierarchical approach designed to encourage a sense of ownership and entrepreneurial endeavor in individuals while also giving them ownership of the risks and rewards of their efforts.
Ultimately, “freedom within boundaries” creates an entrepreneurial culture and grows a dynamic team, which will be fundamental to (and may accelerate) your growth plans.
2. Take time off the “dance floor”
When growing your business, it’s important to regularly make time to consider where you want to be and what’s changing around you rather than always being bogged down in the details. Essentially, you need to spend less time dancing and more time looking down from the balcony at the dancers to assess whether there is a better way to do things. On the dance floor, you’re consumed in the day-to-day running of the business, but on the balcony, you can take a step back from the details and take a clearer, more strategic view of what’s going on in your company and your industry, helping you work out what you need to do to achieve your business goals.
3. Get your strategy right
If you are clear about the strategic direction for your business, then the structure of your organization also becomes clear. Private businesses that are geared up for growth and scale are usually structured around the opportunities available to them as opposed to their processes.
Strategic plans are useful but should never be prescriptive in growing your business. In five years’ time, your business will most likely look meaningfully different compared to the five-year plan you create today. Even the best laid plans can change, and our experience of working with private businesses is that you shouldn’t always have to stick rigidly to your original thinking, often because you (or your team) will come up with better ideas. Iterative planning is important, and forward-thinking organizations are expected to continually change. Be flexible and take advantage of opportunities that present themselves to you in growing your business.
4. If it works, do it again … and again
If you find something that works, scale it up and move it through your business. You don’t need to keep reinventing the wheel; if you find a process that works, it’s likely more efficient for your business if you replicate it. Understanding and mapping out business processes is important so that you can see where your staff is spending their time. Gaining efficiencies within your business can assist your overall growth.
5. Be confident about your value proposition
If you’re confident that you have researched the market, understood the opportunity available to you and have your strategy right, you have every reason to be confident about your value proposition. Your value proposition is a clear, concise and compelling description of what your business does — which, at least in part, is better than anyone else. Believe in your strategy and execute it with conviction.
6. Grow your revenue line faster than your cost base
This may seem like an obvious statement, but someone who is simply running a business will probably focus on bringing costs down. Those focused on growing their business will focus on growing revenue faster than costs and will constantly look for new and better ways of generating revenue. This may involve understanding the real value drivers of your business and include looking at its operational efficiency.
7. Have a positive mentality towards change
Those who run a business have a tendency to focus on problems and what’s not going well. In this case, change will need to be justified. However, if you are growing a business, it’s important to focus on the positives and what is going well. The bias in this case will be towards saying yes, and it’s the decision to stop that has to be justified. When growing a business, change is fundamental.
8. Resource up
Those running a business will focus on the cost of a resource, ensuring no waste and maximizing the value from existing staff. When growing a business, the focus needs to be on ensuring the availability of resources to get the job done, especially if you believe you have your strategy right. Don’t be afraid of investing in valuable (not just “any”) resources; it leaves no way for key staff to blame failure on the business and lack of support. Obviously, getting the right people in the organization is critical, too.
9. Cultivate a “no-blame” culture
Everyone makes mistakes, and that’s okay — providing they can learn from it. Those running a business often focus on minimizing mistakes, but if mistakes are of a sensible size and do not get repeated, this can be an investment in education. There can be a culture of continuous improvement in a growing business.
From another perspective, potential buyers of a business expect to see that mistakes have been made, lessons were learned and appropriate changes have been put in place to further “sure-up” the business going forward — there is real value in this.
10. Recognize and reward your people
If you are growing a business, it’s important to recognize people within your team — whether through remuneration, bonus or profit share structures, or incentives. If you are running a business, you may want to control those rewards or place limits on them. However, those growing a business should have an awards structure that truly reflects outcomes and not limits, as well as empowers your team and gives them increased accountability.
As you can see from our 10 tips, there are distinct differences between running and growing a business. It’s important to have a vision, be clear about your strategy and structure your business for growth. Finally, adopt an entrepreneurial culture and empower the individuals within your team to each be accountable for the expansion and development of your business — their success will be yours.
To learn more about how you can grow your business using strategy, culture and talent, contact Wipfli.