As we all know, new companies are created every year, while others close down. However, one statistic seems to be under the microscope. Did you know that many businesses that grow fail or even go bankrupt? How is it that after such a success, these businesses are disappearing? To better understand this widespread phenomenon, read this article on pitfalls and solutions for managing business growth.
Managing the growth of a business: a challenge of scale
Before going any further, let’s start by proving that managing growth is a real problem for many companies. In this study (Insert http: / / fortune.com / 2016 / 3 / 7 / fast-growth-companies-fail /) conducted by the Kauffman Foundation and Inc. Magazine, the investigators looked at a list of 5,000 fastest growing companies. They followed up with the companies 5 to 8 years later.
The result? More than 2 / 3 of these companies had reduced their operations, gone bankrupt or were sold at a loss. The results are rather disturbing, but not so surprising! Indeed, managing a company’s growth is an art. It is a crucial time that is often very complex.
Why? Let’s say right away that this is not a problem related to a lack of customers or completely ineffective production methods. On the contrary, a company that is experiencing strong growth is a company that receives requests and that has been able to deliver the goods up to now. In fact, the difficulties experienced during growth usually occur at two key points.
Managing chaotic business growth
What happens when demand increases in a short period of time? When the customer base exploded when you were more or less expecting it? C ⁇ is often where the first growth management issues can arise. The company must then manage overload, understaffing, inadequate processes to deal with increased productivity, etc.
For the company, this is the beginning of a harmful gearing. Essential employees become overworked. If nothing changes, they leave their positions and the manager is left high and dry. Customers who don’t receive their orders on time are left unsatisfied… You get the picture? It quickly becomes catastrophic.
The problem here is that the company has failed to create sustainable processes and become self-sufficient. Managing the performance and growth of a business is really quite a challenge. You have to be mentally prepared and well-informed. And when you’re not, you have to realize it. Being able to recognize when you need help. Of course, you should also know that there are experts to help in this situation, such as business analysts!
Reflexes that hinder the growth of a business
Even when a company is able to stay afloat during a period of strong growth, there is a good chance that it will catch up soon after. Why? Because its managers were caught up in a whirlwind and didn’t make sustainable choices. They were mostly reflexive and did not choose in-depth thinking.
Here are a few mistakes that are often made in managing the growth of a business.
To remain a prisoner of operations management:
Whether it’s a growing business or not, managing operations is often like managing a perpetual crisis. And that’s perfectly normal. New challenges are emerging, emergencies are emerging and solutions must be found. This reality cannot be avoided: operations management will always remain operations management!
Here, the manager’s mistake is to remain at the heart of this entire administration. Instead, we need to create a management team that will take over and invest in tools that will improve productivity. This is a priority, as it then allows the manager to plan the growth of the business.
Don’t follow the market or plan ahead:
When he is caught up in day-to-day management and spends his time putting out fires, the manager sees less. The economy is changing, its market is evolving, its competitors are trying out new strategies… However, he is having a hard time following this new information and adjusting his vision accordingly. He simply cannot plan how to manage the growth of his business in the medium and long term. It loses sight of the reality of the market and then bases its decisions on erroneous facts.
Choose the status quo:
Obviously, a manager who does not take the opportunity to change his or her outlook will not change at all. Sometimes it will simply be because of its inability to keep up with the market. Taken in the management of its operations, it will miss great opportunities or witness a slow decline in profitability. In short, he was distracted by the day to day and was unable to manage the growth of his business.
But sometimes we also see managers who choose the status quo in good conscience. Why? Because they’re scared. Fear of losing what they’ve managed to acquire. Fear of change, of daring, of transforming their methods or offering new products. Their recipe has worked once and they hope it will work forever. Of course, this approach is not at all realistic. Sound management of a company’s growth requires new strategies!
Managing growth in a business, an art to master
If you’re an entrepreneur and you’re successful and growing, a performance optimizer can help. For example, WizeBA Inc. has helped many SMEs develop the IQ business to perform and deflect the challenges of growth. This management has resulted in greater success and ease in business. Because surfing is good, but not always in business. You have to anticipate and control the wave to go far.