Five Key Strategies to Scale Your Business
Over an extended period of time, Alan Bush, one of our co-founders and a lifelong entrepreneur, built two financial services companies from a one person startup to multi-million dollar operations with over 300 employees. In this blog, he shares a few tips and lessons learned from his experience.
"The following strategies and advice are based on real-world experience. The issues of a 5-10 employee company are different than a 35-50 employee company, and different again for a 100+ employee company. Some answers resulted from a “good management guess” and some answers were delivered by the “school of hard knocks.” In either case, the challenge was overcome and the answer was learned via real-life experiences. Our firm is here to assist those entrepreneurs who are bright enough and secure enough to take on the world and build a better mousetrap. It’s never easy, but nothing worthwhile is ever easy."
Co-Founder and Partner
1. I know exactly what I am doing with this company. Do I really need a business plan?
The entrepreneurial owner or the polished CEO of a fast-growing company typically has a plan in his/her head and probably a written plan buried in a file cabinet somewhere. And it's working for them. However, a good business plan cannot be a secret plan; it must be 1) simple, 2) clear, 3) managed and 4) continually shared with all employees. Senior management must help develop the financial projections, and then buy into and commit to the successful execution of those projections. It takes time, effort, and commitment to get everyone rowing in the same direction.
2. How do I find employees that will ultimately perform as desired?
There are lots of hiring pitfalls. Here are two: 1) Hiring that executive with a great track record of achievement with a major corporation, and 2) Hiring raw talent because they look like a good long term adds to the firm. With respect to the highly qualified executive, can he/she do more with less in an entrepreneurial environment, or is the “lack of support”, i.e. not enough funds and staff, a guaranteed failing scenario? With respect to raw talent, who is responsible for the development and training of these “good adds”? It doesn’t happen on its own. Effective hiring and dedicated training are keys to long term success.
3. What is the most powerful employee incentive?
If there is a secret sauce to motivate key employees, there is nothing more potent than a “piece of the action”. However, stock ownership is a two edged sword-the new minority shareholder can become a nightmare if he/she misinterprets the investment opportunity as an invitation to direct the company’s future activities. There are ways to structure an arrangement which creates forward momentum without the downside of a disgruntled minority shareholder. Handle this like the porcupine makes love- very carefully.
4. How much capital is enough?
Never underestimate the continual and ongoing need for capital in a fast-growing company. Having “too much capital” may slightly reduce your return on equity, an irritation. Having “too little capital” may bring your entire operation to a screeching halt. Most companies budget for adequate capital to execute the company’s business plan. However, many of these same companies do not execute contingency planning, i.e., what happens if the business plan goes off course. Here is one simple test – if a major planned project costs twice the budget and/or takes twice as long as planned to complete it, is the company still in business? Planning and managing for the unexpected is key. Who is doing this and is anyone paying attention?
5. Who delivers a “second opinion” regarding important company decisions?
Problem - senior management sees the company from the inside- the same view as the Managing Partner/CEO. There’s a time-tested truism, “The view only changes for the lead dog…the pack is “trained ”to follow the lead.” Outside, professional consultants are not “part of the pack”. Second opinions are a critical element in the assessment of serious medical issues. Likewise, in business, timely and professional second opinions from an independent source either challenge or confirm important decisions BEFORE they are executed. Benjamin Franklin- “An ounce of prevention is worth a pound of cure.”