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Five critical areas for business growth

 
It is easy to start a venture, but very difficult to keep it going and growing. At each major stage from start-up to sustainable success, entrepreneurs face tough decisions about shifting gears, making major changes, and letting go of people, partners, and products.

Inability or unwillingness to adapt to changes can land businesses in the high-failure zone. For non-profit organizations, too, clinging to the past can lead to stagnation.

To keep an enterprise on track while facing the challenges of growth requires making, sometimes, painful adjustments in the following five most critical areas:

  1. The People

One of the hardest questions a business faces is when to change its people — not just individually, but the whole mix. Founders often start with friends and true believers, who work hard because of their zeal for the cause or hope of future returns. They occupy multiple, overlapping roles. However, do the members of the founding generation have the skills the organization needs as it creates routines and requires depth in every specialty? Who can make the cut? In my many years of consulting experience, I have come across many organizations who kept the original group longer than the business could afford, and loyalty got in the way of bringing in experienced people ‘above’ the people who felt they were founders and were, thus, privileged to call the shots. For the growth of a business, it is crucial that loyalty give way to experience and expertise at the appropriate time.

  1. Finances

Every business enterprise, as it grows, has to change its source of funding. Initially, in most cases, funding is personal or from family and/or friends, but as the business grows, it will have to approach banks/ financial institutions/NBFCs for debt and angel or venture funds, private equity or public funds through the IPO route. This is a paradigm shift. The promoter must realize that moving from personal finance to investor/ public funding means a rise in accountability. This, in turn, calls for proper governance, which is a pre-condition for the growth of the business.

  1. Partners and allies

The best organizations are attuned to the need for key external relationships that provide resources and support. At the same time, entrepreneurs do not want to be captive to the needs and desires of their first distribution partners, component suppliers, source of talent, or marketing allies. It is a tricky task to draw benefits from key partners without being consumed by them - because the business might have to face damage if these parties stumble — and, at the same time, adding to the existing partner set without creating conflicts. In this regard, an entrepreneur has to consider several important aspects - Which partners should be downplayed or replaced as the organization grows? How can key relationships be managed to lessen dependence while seeking new, more relevant, allies? With growth comes the need for entirely new types of relationships.

  1. Organizational culture

Are you making explicit what the organization stands for, in different, changing stages of its growth? Are you on guard against drifting away from the organizational culture you built initially? Numerous studies show that an emphasis on organizational culture is associated with continuing excellence. Shared values, stories, artifacts and rituals within the organization provide its staff with a strong sense of being a part of a collective identity, in pursuit of the same mission even while everything else changes. Culture provides internal glue. As an organization grows, what was once informal must be documented, codified, memorialized, and passed on to new people. Savvy entrepreneurs ensure that their organizations are built to last by stressing culture. At every stage, they invest in preserving fundamental values and principles while adding new iconic stories that reflect them.

  1. Outcomes and impact

What results are being produced, for whom, and are they sufficient? In the beginning, it is enough to show that it can be done at all — to address a good cause or to prove that something works in a handful of markets. In the next phase, you might look at growth indicators — ‘We did more this year than last year’. Sooner or later, a new question arises: Are you making a difference that makes the venture more essential?

The bottom line: In addition to the challenges of innovation to ensure new offerings and new capabilities, entrepreneurs and organization founders must also be alert to the ways that the organization itself changes as a result of growth. It is important to anticipate these developments and ask the five big questions at every stage of organizational growth in order to get ahead of change and master it.

CChaitanya Shah is an SME – Financial & Growth Navigator. He can be reached csshah01@yahoo.co.in or  +91-9322232039