Startup Expansion: Does Your Business Have The Right Stuff To Grow?
Think your startup is ready to grow to the next level? The U.S. Small Business Administration confidently states that only half of all startups opening their doors this year will be around in 5 years time. This isn’t said to be negative either, but rather to warn those of you considering expansion to form a solid game plan for growth, rather than just “winging it” and hoping the stars will align in your favor.
Let’s examine a few of the more important growth-related factors your business needs to have a handle on, before you start hiring more staff, buying more equipment, expanding product lines, etcetera:
1. Founders who value the business beyond profits
Some of the best businesses in history have been formed by founders who value what they’re doing far beyond what the quarterly profit reports read. If it’s all about the money, greed and poor decision making are sure to halt the current and future growth of the company. You need to have something more than just money in the bank and your own financial future invested in order to get your business where you want it to go.
Look at Berkshire Hathaway, founded by Warren Buffett and Charlie Munger. These founders didn’t decide to form an investment firm with the sole purpose of making the billions they’re now renowned for. They didn’t do it for the domination of the investment industry as a whole they’ve demonstrated over the years either. They formed the publicly traded company because they see investing as a fun game and they like to win when they play.
Ask yourself: “What do I value about this company beyond money?” It could be changing the world with your products, or providing as many jobs as possible to a community or industry. Or, something completely unique to you and any other founders of the startup.
2. An established brand
This is important, yet should require no explanation at all. If you haven’t yet established your brand, the company is not set up for growth at this time. If you have customers and are making profits, finding an investor or loan officer to welcome you with open arms will be much easier.
3. A loyal foundational team ready to grow with the business
“Foundational” typically refers to the idea that you have members on your team that have not just been with you since the start, but people who also provide a solid foundation for the company to push ahead with. They also have to be fiercely loyal, just look at Mark Zuckerberg’s team and their unflinching fidelity.
This includes strong management that can effectively handle all areas of the business, and who have the power to accept and reject ideas without the CEO’s input. You’ll also need subordinates in place who can handle all the legwork that’s required now, and as the business continues to grow.
4. Fun, adaptable, evolution-based corporate culture
What’s the current culture around the office like in your company?
Are they bent on pushing the envelope every single day they come to work, or do they seem like a squad that’s looking for a comfortable and predictable feeling of stasis in their professional life? A bad attitude, including lack of drive or commitment to sales and after-sales service will halt growth right in its tracks every single time.
Hopefully at this point in reading this, you’re quite confident that you have the will and tenacity to push your startup to the next level. However, you need to constantly analyze where your team is at and do regular assessments on where the company’s culture is currently, before you can grow it to the next level.
How your team feels about the business’s growth makes up a huge part of any investor’s decision to invest in your continued growth, too.
5. Customers who respect you
If customers don’t like and respect you, there should be little doubt that the time to grow the business hasn’t arrived yet.
- What do customers say before leaving your brick-and-mortar store?
- What answers do you get to your ecommerce surveys about customer satisfaction?
- What is the most common feedback customer service agents say they hear about the company when talking to clients?
- What are the comments currently trending about your company on online review sites right now?
- What are your referral numbers looking like in contrast to business trickling in from acquisitions gained through other marketing avenues?
Positive public opinion about your products and services is paramount to any early-stage growth strategy. Overwhelming negative feedback is hard to come back from, let alone something to make up the successful foundation of a growing company.
6. Unwavering integrity
A startup that’s set for growth will need a strong set of ethics and ensure those ethics are always adhered to, without question. Sometimes, we become so profit driven we forget that people will regard a dishonest business in the same way they’ll regard an unscrupulous person (ie., they won’t want to be around you.)
Check out the great post from Tommy Mello in this Quora discussion. Some highlights include: Doing what you say you’ll do, even if it costs you a short term profit; maintaining communication with customers, and not making excuses; keeping costs reasonable and somewhat flexible – and much more.
7. Awareness of market conditions and ability to pivot the “right” way
Conditions, trends – basically anything that can impact your industry will impact your business. And, usually not in a good way, unless you’re lucky. However, market awareness isn’t always enough to effectively adapt to market changes. When the market changes, often you’ll have to make many internal and external changes to the business in order to continue climbing, or maintaining where you are.
It isn’t enough just to take action. Read through this HBR article to see how Firestone Tire Company fell from grace back in the eighties when automotive market preferences changed from the old bias-ply tires, to the radial tires we all now use.
Essentially, Firestone fell victim to a phenomenon called “active inertia” whereby a company tries to adapt to new changes, but doesn’t change their way of thinking or doing things (eg., embracing technology, tweaking management principles, changing out-dated production methods, acquiescing to consumer preferences, etc.)
8. Desire to grow the business
In the end, if you have no desire to grow your business, it’s probably not going to. At least not in the sustainable way that it needs to for longevity. Even if you’re growing a business for sale, value needs to be built and equity needs to be evident. This requires a conscientious plan of attack and tons of energy from you and your staff.
Without these and many other tangible and intangible growth factors which vary from one business to another, it’s safe to assume that you and your partners still have some work to do before the business is ready for its next growth spurt.
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