Start-Up Growing Pains

by: Stratford Managers

Listening to the entrepreneur giving a presentation on his start-up business, I could sense his excitement and pride with their success.  After all, it was an incredible idea and they had executed the start-up phase flawlessly.  You could feel the audience getting caught up in his enthusiasm.  But when it came to the question period, some of his answers got me thinking.

This company is so busy dealing with all kinds of opportunities and issues, it’s difficult for them to recognize the signs that they’ve entered a different stage of their business evolution – the growth phase. I’ve spoken with a number of successful start-ups and there are some common indicators that it’s time to think about managing the business differently:

You’ve grown your revenues and your organization but haven’t quite hit the breakeven point. Be careful – you can’t make it up in volume if you’re continuing to add costs along the way! Once you’ve hit the growth stage you need to be making money at a reasonable level of sales.  That means getting economies of scale in R&D and production plus using more efficient means of generating new sales. Effective marketing can provide a constant flow of leads that ensures you are making the best use of your sales resources. Think about alternate channels to market as well. Can you sell on-line, for example?

Your objectives, if you’ve had time to set them, are solely revenue based. Of course you have to meet your revenue targets – that’s like breathing. But also set strategic objectives that reflect your broader ambitions for market penetration, product expansion, cost structure and organizational growth. When you’re clear on your strategic objectives, you’ve provided important guidance for planning across the company and have set the tone for your brand and marketing message.

Sales are going well so there’s no time to think about marketing plans. Actually, now’s exactly the time to build on your early sales success with a comprehensive marketing plan that keeps the leads flowing in and enables you to tackle new markets. Remember, ‘failing to plan, is planning to fail’ when it comes to growing your business.

You’ve hired your first marketing person but it’s just not working out. Did you hire a junior person to handle marketing communications tasks when you really needed a more experienced marketer to define and execute the strategy? Either way, the marketing plan will help you determine what type of skills to hire and when.

Recognize any of these situations?  If so, it’s time to start running your business with a little more structure to ease the transition into the growth phase. Rather than creating bureaucracy, some much-needed process will actually reduce the level of frustration your team faces as it struggles to cope with success. And if you do it gradually, it won’t interfere with the vibe of entrepreneurship that you cherish.

With proper planning, attention to your cost structure and go-to-market effectiveness, your short-term start-up growing pains can result in some very impressive long-term gains!

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