“Growing a business presents a whole new group of challenges for entrepreneurs,” says Ed Hess, a professor of business administration at the Darden School of Business, University of Virginia. According to Hess, the following points should be heeded in order for entrepreneurs to prevent learning about business the hard way:
- Getting overwhelmed by growth. Growth is change. Growth requires more processes, controls, and people. Too much growth too quickly can create financial, quality, and reputational risks that if not properly managed can lead to the demise of the business.
- Knowing when to say “no.” Most successful start-ups have a plethora of opportunities. The challenge is choosing the right ones.
- Learning to effectively delegate. For a business to grow, the entrepreneur must grow. When growth begins, you’ll quickly find that you can do only so much and that you need help from others to properly serve customers.
- Transitioning from owner to leader. When you get to the point where you’re delegating tasks and relying on your employees to drive your business, you must also transition from thinking of yourself as just a business owner and start developing as a leader and coach.
- Hiring smart. Hiring mistakes are costly, time consuming, and create quality and financial control risks for small businesses.
- Managing cash flow. Many times entrepreneurs get overly engaged in the joy of growth and lose sight of the need to manage cash on a daily basis.
- Spending too much time putting out fires.
- A high-growth environment is hectic, sometimes chaotic, with multiple mistakes needing to be corrected almost every day.
- Creating a high-performance “family.” Entrepreneurs often struggle with creating a high-performance “family” or team environment.
- Understanding that upgrading never ends. The people, processes, structure, and controls needed to manage a business with $1 million of revenue generally do not work for a business with $10 million of revenue.
“Growth should be a strategic decision made only after the risks of growing and not growing have been assessed, says Hess, “My advice is that rather than focus on growing for growth’s sake, base your goals around how you can constantly improve your business. When you do this, you will be able to meet the challenges of business growth head on and with great success.”
For more information, entrepreneurs can reference Hess’ new book “Growing an Entrepreneurial Business: Concepts & Cases” (Stanford University Press, 2011).