Contrary to popular belief, growth is not just limited by your ability to increase sales. It is almost always capped by many other things like management quality, financing, operations, training systems, hiring and other systematization. Many companies have gone bankrupt by simply increasing sales. When this happens without getting ahead of problems with customer service, production, working capital and financial controls, companies can not just ruin their reputations and spiral down but even go bankrupt.
If you are lucky or smart enough to have a product or service with a large market opportunity, your company’s growth will be mainly limited by your ability to hire and keep top people, especially managers. Building a high-performance and innovative culture is usually key to growth. This means having a vision of the future and solving big problems for people. And giving your employees good reason to care about their job and work too. Simon Sinek’s famous video that calls this your “Why” should be watched by all. See here.
If you have a big market, a vision and a “Why” then your growth can be planned and will mainly be limited by your management team’s ability to hire and train other quality people. And create a culture that supports growth. This means a meritocracy which is focused on results and performance, not politics.
I have found targeting 50% to 100% growth per year is not unreasonable if you have a quality team and well documented processes and systems. You need a financial plan that is conservative and plans for needed capital and expansion. Companies that grow this fast will almost always need some capital invested to hire and expand slightly ahead of the sales and support production, delivery, customer support and other operations.
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Preparing for growth must be done way in advance of the actual growth at this higher rate. It is pretty easy to grow at 10% per year, which barely keeps up with real inflation. It is far more difficult to grow over 25% per year, as just the dilution of your management team’s time and need to hire and train becomes a significant percentage of the company’s resources. The cost of this will usually exceed the company’s profit or cash-flow, hence the need to plan for getting some equity capital invested or debt. And need for a long-term plan of at least three years and preferably five years. These will evolve, but you need to finance the growth.
We have several courses on growth and the foundational requirements, you can see here: www.EntrepreneurshipU.com
Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.
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