Growth businesses are the cream. They make up the top five percent of small companies – and around 20,000 a year are started. There are several subtle differences between the growth companies and the rest. What marks them out?
The definition of a growth company will usually be based upon one of the following measurements: growth in sales, growth in employees and growth in profits. Fast-growing businesses might be aiming for sales of ?500,000 in three years from a scratch start or show sales growing at over 60 percent a year from a base sales figure of say ?100,000 or so.
The motivation of the entrepreneur, the team leader, is what drives the business. If you are looking at your business solely to provide you with an income you’re unlikely to have the oomph to push the enterprise into fast growth. The same consideration applies if you have set up your own business because you prefer the lifestyle with its attendant freedom and options to that of being an employee in someone else’s company. To make a success of founding a growth business, a driving force is likely to be that you have the ambition of wealth. You want to make yourself financially independent; you want to give yourself that quantity of ‘drop dead’ money (that is, to know you’re financially so secure that you tell someone to drop dead if you are so minded!).
Without this extra ingredient, the determination to create wealth, there may not be enough motivation to push the business into the highest level of growth. Fast growth is uncomfortable and painful. It creates pressure points and stresses internally. It often requires an unreasonable owner to dragoon unwilling employees to produce the impossible. If your aspiration is simply to create a good lifestyle for yourself, you’re unlikely to have the necessary drive to grow a business quickly.
REQUIREMENTS FOR A FAST-GROWING BUSINESS
How do you make your business fast-growing? It’s possible to identify a number of key requirements. First, the quality of the management is crucial – and that means you and your team. You need to have the character to lead your team; you need a broad set of business skills, including sales and, marketing, often gained through management experience is a large company, and the ambition to grow fast. A good education, often a higher-level qualification, also helps. If you have already run and sold a successful business, this will give you a head start for two reasons: you’re more experienced and less likely to make mistakes and you may have finance available to invest in your new enterprise.
Your team needs to be balanced: there needs to be someone who is skilled in finance and accounting, someone in marketing and sales, someone in production and so on. And it makes sense for the team to be offered incentives based on growth, such as share options or the opportunity to invest in the company.
As for the business, it is also possible to identify some factors which contribute to growth. Businesses which select a well-defined market opportunity, frequently a market niche, will find that their sales people are knocking at a door already ajar. Beware the product which is unique, but which as yet has no clear defined customer base. People must want to buy your product.
It is important to develop a culture within your enterprise which focuses on product quality and customer satisfaction. It can make your whole business much more confident to know that you are selling a product which people hold in high regard and that you have a lot of customers who are satisfied. It can be so demoralizing for employees who have to deal with a whole stream of dissatisfied customers.
Businesses which are technology based and which are constantly striving to introduce efficiencies through the clever use of technology will also have a head start on the fast-growth route. Innovative businesses, which have a competitive advantage, can also make larger strides than the average company, as long as the product is one the consumer wants to know about. Finally, many fast-growth businesses are also exporters. The UK domestic market is really quite small. So, if you have a product with global demand, the size of the market you can service would imply greater opportunities for growth.
ADAPTING YOUR BUSINESS
You can look at recruitment and training to improve your management style and team. Analyse your products to improve the quality and look carefully at your current market. Investigate the possibility of raising risk finance to allow you to grow faster. Focus on business planning and improve the systems infrastructure of your business.
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