Each stage in the growth of your business is clearly recognisable and relatively easy to “diagnose”. Having read through the following paragraphs, you should have a fairly good idea as to which stage your business is at. Once you have an idea of where you’re at, take a look overleaf at some of the challenges you’re likely to encounter as you grow, and start thinking about how you will address these.
Your BDO adviser can help you at every step of the process, so don’t be afraid to ask for help, guidance and advice!
Dreaming up the idea of a new business, developing plans and defining start-up requirements.
Initiating the business plan and inspiring others in order to establish a presence in the market. This is the implementation of the dream.
Attacking the first problems of growth and coping with adolescence. During this particular stage the business unquestionably has the systems to survive and it can provide a good living for its owners. However, it is not robust enough to sustain a major change in its market or operating environment and its long-term prospects are limited by its cashflow and customer base. As a business passes through this stage, the pressures of growth accelerate. Wise and well advised owners begin to anticipate the next stage. For others, the accumulating pressures can lead to anxiety rather than action and result in stagnation and even failure.
Maturing the business with an emphasis on establishing controls, systems and methodologies. Management is professionalised in order to deal with the size and complexity of the customer base or the organisational structure of the business.
Overhauling the organisation with a clear focus on objectives. The business is more competitive and has a strong customer and marketing orientation, but there is a sense of ‘missed opportunities’ and a consequent drive to optimise performance. Teams and individuals are often held accountable for results and are offered appropriate incentives.
Networking the units of the business. Strategic processes have become as important as tactical ones. Maintaining and developing a corporate image is important and, by now, earnings are often being managed for a diverse stakeholder group.
Diversifying into new products and markets. Driving growth through strategic alliances and commercial inter-dependencies which enable rapid responses to market opportunities in a fast-changing world. The culture of organisations in this stage is highly focused. The means by which they operate - and the markets in which they choose to do so - are highly flexible. In this stage, the rate of growth, year on year, will often decelerate as a function of the size of the business.
Dominant Business Perspectives: Stage by Stage
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Transitional Issues
▶ Overcoming gaps in knowledge
▶ Establishing business focus
▶ Improving business plan
▶ Securing finance
▶ Company formation
▶ Establishing premises
▶ Establishing customers
▶ Practical issues: basic systems for income/expenditure; meeting customer/client promises; dealing with admin
▶ Lack of focus
▶ Getting enough cash to pay bills
▶ Dealing with the unforeseen
▶ Taxation issues
▶ Identifying need for and recruiting staff
▶ Ignoring IT
▶ Quality of product/service
▶ Low customer awareness
▶ Competitor reaction
▶ Need to assess situation – plan with benefit of real business knowledge
▶ Not robust enough to survive changes
▶ No contingency planning
▶ Identify skill deficiencies
▶ Constrained by initial IT selection
▶ Admin overload
▶ Inadequate communication
▶ Overdependency on founding team
▶ Management surpassing leadership
▶ Losing entrepreneurial spirit
▶ In a rut: directionless
▶ Losing touch with market
▶ Executives not incentivised or motivated correctly
▶ Lack of organisational flexibility
▶ Innovation dampened
▶ Inappropriate performance indicators
▶ People skills
▶ Business could run away with its own success
▶ Overpromise – underdeliver
▶ Burn out (people and concept)
▶ Lack of corporate governance legislation
▶ People skills
▶ Nobody “owns” the business
▶ Business too rigid to be responsive
▶ Highly bureaucratic
▶ Missed opportunities in marketing
▶ High turnover of high quality staff
▶ Image becomes “staid”
▶ Internal territories
▶ Efficient financing
▶ Economic / export issues
▶ Cumbersome hierarchy
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