Growing a business takes hard work, self-discipline, good team, good clients, leadership, and little bit of luck every now and then. Growing a business in a sustainable manner – by that I mean sustainable growth with profitability – takes structure as well. In every type of business, there comes a point where you, the owner/founder, simply can’t do it all any more, or can’t do it with your current team/organization. Structuring for Growth means taking the time to sit down and really plan out what your business and team will look like 3-5 years (or longer) out into the future, comparing that to what it looks like today, and developing the plan to bridge the gap.
Structuring your company for growth means a few things: Learning how to focus on the right things at the right time; Understanding how growth is likely to impact your company; and Identifying the leadership needs of your much larger organization.
In his book Navigating the Growth Curve, author James Fischer accurately describes the different areas of focus for businesses, prioritized depending on their current growth stage, calling them the Three Gates of Expansion. These gates are Profit/Revenue, People, and Process, and almost every challenge in a business is primarily the result of an issue in one of these three focus areas. Fischer also defines seven stages of growth, based roughly on number of employees, and recommends a priority order of focus based on your stage of development.
In the earliest stages of growth, the biggest focus needs to be on Profit/Revenue, as you can’t grow (or survive) without the cashflow to pay for it all. You hire your initial employees and develop your processes on the fly while you deliver your products and services as quickly and profitably as you can. Once you get enough business in the door, you utilize the team you have and begin developing some processes in order to create repeatability. You continue to grow and increase sales (and maybe profits) while adding staff to your current structure.
At some point in time during your growth, you will begin to realize that your current organizational structure simply can’t handle any more growth. More and more things are falling through the cracks, and you are often the only one there to pick up the pieces, being stretched thinner and thinner. Sometimes the signs are subtle, and sometimes they are not so subtle, but they are always there. When you see these signs, it is time to take a step back and rethink the structure of your business – from departments and product lines to leadership and management. Now is the time to get away from the office with your senior staff and trusted advisors to look into the future and define the structures necessary to sustain your profitable growth for the next 5 years.
Here are a few key concepts to think about when creating your new business/organizational structure: Span of Control; Leadership; Management; and Culture. Span of Control is the concept that it can become very difficult to manage more than 5-7 people effectively, depending on the type of work the team performs. Leadership becomes more important as you grow, as the bigger a company the easier it is for portions of the company to drift from the common goals and vision. Company leaders need to be cultivating the vision and developing other leaders within the organization to foster growth and development of people and products. Management is a completely separate skill set that needs to be present to oversee the larger number of team and the larger volume of production work being performed. Management skills range from supervision skills to performance management to statistical analysis depending on your industry.
Last, but certainly not least is your Company Culture. When a company is small, it is easy to maintain your culture and follow your core values, even if they are unspoken. You tend to hire people who share your values at the time, but as you grow it becomes more important to define your Culture more clearly, and to talk about it more frequently across the organization.
Now that you are a growing business, set aside the time to step back and consider how well you are or aren’t structured for the growth you anticipate in the next 5 years. Identify your gaps now, and put concrete plans in place to address them before they have a negative impact on your company and you personally.