The first thing to understand about preparing a business for high growth is that there are two main ways in which high growth happens within a business. The first is that it’s part of your strategy. If this is the case, you make sure you have everything lined up, you very purposefully work for that high growth and you will have thought about all the things I’m going to discuss in my blog.
The second, and there are a number of companies who fall into this category, my own previous company included, is that you build your company for a period of time and then you have a realisation that you have a great platform for growth. You can see the opportunity; for instance you might have moved into a slightly different, more niche area and realise that it is ripe for exploitation and development.
Those are the two main scenarios: you have an aggressive plan that you prepare for and want to enact, or you have grown your company organically at a steady rate to the point where you have everything, or at least a lot of it, lined up and ready to go.
That means you have a really solid base for high growth already, which just needs a little bit of fine tuning to prepare it for the next stage in the company’s development. Either way, the same principles apply, even though in the first scenario everything is very purposeful and deliberate and in the second scenario some of it will have happened organically. Whichever scenario you are in, the key thing is to line as many ducks up as you can.
Fundamentally, you need to consistently generate enough sales, maintain your quality because your reputation is everything, and be confident that you can maintain the momentum throughout the growth stage. This will take quite a bit of preparation, either through years of organic growth and slowly fine tuning a well-oiled machine; or through very deliberate, very rapid decision making and strategizing that allows you to roll out this high growth in a sustained and aggressive manner.
So, what are the ‘ducks’ that you need to have lined up?
Finding the right people
Having the right people is the most important thing. It’s a topic I’ll talk more about in my next blog looking at the cultural platform. But from the perspective of preparing your company for a high growth phase, you need the right people in your team.
The people were one of the reasons I felt comfortable that my company was ready for a high growth phase. Of course, the opportunity was there, that’s a given. But the people are the building blocks you need to make the most of that opportunity.
Start with the senior team
Building a senior team ahead of the high growth stage is really important. What you don’t want to do is go into the growth stage with a bare bones team and then have to scramble around trying to find the right people. In fact, by the time you’ve found someone, it’s probably going to be between four and six months before they can even start working for you, once you allow for notice periods and all the rest of it. If you only have the bare bones of a team, you’ll be working all the hours God sends and so will the rest of the team, which will push you all to breaking point. You won’t be able to sustain the growth that’s available to you.
Thinking about your senior team carefully is essential. You need to decide who has the right mindset, who’s with you and ready for this next stage in your company’s development. You may have to make some quite hard decisions.
You need to understand that sometimes people are suitable for different stages of a company’s development. I’ve seen it firsthand, where the company simply outgrew certain people. These people were great for what my company was doing at that particular juncture, but then the company moved on and, for whatever reason, that person didn’t. If that happens, that person will be happier if they leave and go off to do something that’s more relevant to what they want to do. Allowing them to move on will also be the right decision for your company.
When you’re putting your senior team in place, you need to select people you know can cope with what’s going to happen over the next three or four years. I’m not only talking about your board members, although they’re clearly very important because they’re going to strategize and drive this growth from the top down. I’m talking about your senior team because they will generally be the ones in charge of delivering this growth.
I’ve already mentioned the importance of making sure you can generate enough sales. But that alone isn’t enough. One of the key things is protecting your reputation. You have to maintain quality throughout a growth period because if you don’t, you damage your quality and you will lose clients, probably for good.
To do all of this as a CEO, you’ll need some help. If this is your first company, you especially want some help from people who have been there and done it before.
This is where a non-exec can be invaluable. Bringing a non-exec in ahead of a high growth phase, someone who has got experience of what you are about to get into, is really wise. They can bring their experience to the table to help you avoid the mistakes that they may have made, or that they saw their bosses make. My experience of non-execs has been nothing other than hugely beneficial and I believe they can add considerable value.
They will help you make the right decisions and they’ll query things. Nine times out of 10, when they query things, your non-exec will be right. But occasionally they’re not right. As a CEO, there’s no harm in sometimes saying, ‘I understand what you’re saying, but I still think this is the right thing to do’ and just going for it. Because at the end of the day, it’s your neck on the line and no one else’s.
Controlled growth is the key
Your sales are really important for achieving high growth. Obviously, you’re going for high growth because you think there’s an opportunity, but you still have to generate leads from that opportunity and turn them into sales. That means you need to have a strong sales pipeline.
To develop this pipeline, you need to have your CRM set up with a robust process in place, you need to have all the basic stuff in place so that when you put yourself out there and people become interested in what you have to offer, the sales leads come in and those leads turn into sales; a consistent pipeline is key. And if you’re growing that needs to increase, increase, increase. But you’ve got to have a plan to do that.
What you want to avoid is having a three-year plan, but one year in you run out of momentum and take your eye off the ball on sales because you’ve been concentrating on delivery. You’ve got to maintain that momentum. But also, you’ve got to maintain your quality so there is an absolute balance to be had. This is important: it has to be controlled growth. If you let it get out of hand and then you start to struggle to deliver, that’s a really bad thing. Equally, if you don’t have enough sales coming in that’s a really bad thing.
The skill, which is really hard to master, is to bring the right sales in at the right time. It’s almost impossible to do this perfectly, but you have to get it as close as you can to that perfection when you’re going for high growth.
What’s your Plan B?
One of the challenges if you don’t find that balance is that sales can exceed recruitment. In this case, you need to have a plan B.
If you’re in a situation where you’ve won a lot of business but can’t take on enough people quickly enough, you need to maintain your reputation in the marketplace and look after your customers. One of the best ways I’ve found to do this is to reach out to your competition. Speak to your competitors – the ones you know are doing a good job – and tell them that you’ve got too much work on at the moment to take this client on.
At Cake, we had great relationships with most of our competitors. We exchanged work with them when we needed to. Sometimes they’d be busy and we could cope with the extra work; sometimes we’d be busy and they could cope with the extra work. This was all based on mutual respect and cooperation between competing companies. It was something that worked really well for everybody.
The key to making this approach work is to form good relationships with other companies working in your area and make sure it’s reciprocal. In my experience, money doesn’t change hands when you hand the lead over. It’s a gesture of goodwill. The idea is that it’s reciprocated at an appropriate point further down the line. I’ve found that’s the best way to work.
Of course, some companies will never reciprocate, in which case you don’t pass on work to them again. But I would say the vast majority of companies are quite happy to work in unison. Even though they are your competition, it can be friendly competition, cooperative competition.
Have a recruitment plan
Recruitment is another important consideration when you’re preparing for high growth. The recruitment market generally in the technical arena is tough at the moment. UK tech is growing, particularly in the northwest and in Manchester. We’ve got all sorts of companies moving to Manchester at the moment, competing with us; Amazon, Google, Hewlett Packard to name but a few. They’re all fighting for the best people. In my next blog I’m going to talk more about culture, which is incredibly important as a differentiator. But when it comes to preparing for growth, you need to have a plan for your recruitment pipeline.
At Cake, we got to a point where we were a team of about 40 people and we needed to get to closer to 80 people, so we hired an internal recruiter. That was a really sound decision. You have to do as much as you can. That means all the right stuff in terms of putting your company out there on social media. We always managed to recruit great permanent staff because of the way that we projected ourselves into the marketplace. But if you haven’t got that you’ll probably need a couple of good recruitment companies behind you to help you grow., which will hit your bottom line.
If you have to involve recruitment companies, and we never did in terms of recruiting permanent staff, although we used them for contractors, you need to make sure that you have decent cash flow and enough capital in place because they don’t come cheap.
However you decide to recruit, you’ve got to have a plan. It’s got to be robust,and it’s got to keep up with the momentum that your business is gaining. The key is always trying to recruit ahead of what you need as opposed to recruiting behind when you’re in a high growth phase. I mentioned this briefly, but I’m going to mention it again: Only grow within your means so that you protect your reputation.
Don’t overlook the office
Office space can often be an overlooked factor, but it’s one that can impact your ability to grow. What you can’t do is start to cram more people into an office space that clearly isn’t big enough. You need enough meeting rooms and enough desk space. If there are too many people in a confined space then it’s not good for anybody.
Think carefully about your office space because, much like recruitment, this is something that takes time to get right. Finding the correct office, getting it fitted out and having everything done is probably a six-month process. You need to think about it well ahead of your high growth stage, and factor it in.
Either you have a plan to move to a bigger office, or you already have the space you need and you grow into it. Look at whether you have the ability to extend that space if necessary, such as by hiring more office space on another floor in your building, for example. Just make sure you have a plan to cope with physical expansion.
The value of a Financial Director
Last, but by no means least, you need to consider your financial resources. What I mean specifically is making sure that you have enough money available to do everything you need to before you enter your high growth phase.
Recruitment costs money. Office space costs money. Wages cost money. Training costs money. The likes of new licences and software cost money. New equipment for people to work on costs money. You need to make sure you have thought long and hard about how much money you are going to need over the next couple of years and that you have it lined up and ready. I can tell you now that banks and financiers don’t appreciate last minute, desperate calls for funding because you’ve run out of money.
Cash flow is king. Don’t underestimate its importance. You can be profitable and have high growth, but then you run out of money and your company goes bust. All because you didn’t have your finances in line. My recommendation is to always have a specialist in place to help you with this.
When you’re small you cannot afford a Financial Director (FD). Even when we had 70-plus people working at Cake, we didn’t have a full-time FD. But we did have a part-time FD who was absolutely invaluable in terms of presenting the correct financial information in the form of management reports and ad hoc stuff that we needed, based on certain scenarios, so that we could plan correctly from a financial viewpoint and particularly re cash flow. Having that cash flow and the amount of capital you need to fund the high growth phase is absolutely vital for this stage of business development.
Establish strong foundations
You can’t just focus on one of these areas. You’ve got to have everything working in perfect unison to achieve sustained high growth, and that means planning. Your recruitment might be too slow; your sales might be running away with themselves; you might run out of office space because you’ve underestimated how much space you need. There are a whole bunch of things that can hinder your ability to cope with growth. Plan for them and protect your reputation at all costs.
Ultimately, you need to be happy that you’ve got a solid platform for growth. That means you’ve got a strategy in place, you’ve thought about all the different scenarios that can happen and you have tried to keep everything on track as best you can. Of course things are going to happen and you’re going to have to deal with them in true entrepreneurial style. But don’t procrastinate. Deal with issues immediately.
With a solid platform, a bit of tenacity and common sense, you can absolutely achieve high growth.