Growing companies has become America’s pastime. Companies in their earliest stage want nothing more than to grow because that’s just common sense. As a company grows, it changes what it needs from its founder, leaders, and employees. Each of the three stages of growth requires very different leadership disciplines to create success.
Of course, there are many ways to slice the deck of business growth. The chart above is one method based upon the number of employees. Regardless of the analytics you use to slice your deck, the underlying business practices remain universal.
Growth Stage #1: Growth at all means. The standard startup has one or two founders who have come together to do their next “Big” thing. With some capital, they can hire a few employees to begin their exciting journey. Hopefully, they have tested their “Unique Value Proposition” at the lowest cost possible before investing all of their capital at once. During this stage, everyone wears multiple hats, including business operations, financial management, purchasing, quality control, marketing, sales, and the many other functions of a healthy business. This first stage represents serious challenges to everyone in terms of emotions and financial pressures and is compounded if the founder has never owned a business.
Growth Stage #2: Ready to scale quickly. The second stage of business provides the founder with more capital and hands on deck. Directors can be hired to take over specialist roles and often do the jobs better than the founder who was wearing five hats. This allows the leaders to become coaches to their employees who do the work, versus doing the work themselves. Reorienting the company into swat teams provides the foundation for rapid market growth. A primary key to growth in this stage is the founder’s willingness to stay out of the details and allow its directors to lead the charge. This is frequently extremely difficult for founders to let go of what they have been doing.
Growth Stage #3: Establishing a brand. The odds are against most companies reaching this third stage of business. One of ten makes it to their tenth year of business. Of those that do, only one of ten make it to year twenty. The majority of business failures occur for lack of leadership expertise and performance. Most struggle to know how to proceed to this third stage because their success can no longer be defined by what made them successful in the first place. Factors such as their first location, their first product, their first distribution system, all rarely work in this next stage.
Therefore, it becomes a “Rethink” time for the founder, and this is often painful and disheartening. The key to success in this stage is to have the ability to segment markets and use targeted marketing models to analyze the business and make high-quality decisions. At this stage, mistaken judgments are observed by all and can significantly tarnish the organization’s reputation. At smaller stages, these mistakes could be considered testing, but this won’t work in large organizations.
Each of these three stages presents different challenges, but the right organizational and customer analytics solutions can navigate each phase with success.