“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”
We hear the statistics … the majority of companies fail (or just give up) within three to five years of incorporation.
Cash flow takes companies out of business in most cases.
In a start-up that makes sense. The idea, product, market may not work, running out of cash while trying will happen.
But in early growth or expansion phases why fail? Is it cash?
These teams spent day, and often night, building success. Struggling. Learning through failure, and succeeding. They survived start-up! It feels like they are hitting their stride, certain things get easier.
More processes, structure, sales. A bigger team to spread the workload, and ramp up potential achievements. They are working on new aspects – growth, expansion. The challenges here are different to in start-up. There can be more forward focus: “What next?”. They are progressing to “bigger and better” aspects on the business journey; looking at doing more of what was proved but also so much beyond that.
Expanding a company is a challenge. Different to a start-up. But teams do not intentionally run out of cash! Very few will just give up after slaying a start-up dragon.
These founders and management are also not walking around saying “We must not run out of cash.”!
So why “run out of cash” and fail at this stage?
Well, that is a SYMPTOM.
Every symptom can have a variety of causes, but for growth stage companies too many forget that the way things have been done to this point must change.
“What got you here will not get you there!”
A few questions to consider:
- Is it time to reorient? Where is “there”?
- What needs to happen to make it all possible to get “there”. Does something need to change or will the same start-up activities and approach continue working?
- What new things are needed to make it all possible? Do you need new markets, new people, to add or change a product, new systems or processes (sometimes you cannot do the same things and expect a different result). Perhaps you even need to consider if some of your employee team or some customers don’t fit for this next stage of growth or success. If so, they need to go and be replaced or they will hold you back, and this in turn causes frustration and prevents the growth you seek.
- Do you need more efficiency? More visibility? Consider streamlining processes, investing in new technology, adding well customized reporting that will at a glance help management to keep a finger on the pulse of the business and to react immediately if something is not going as intended.
- Do you have bottle-necks? You cannot expect one person, one machine, one supplier, or even one major customer to carry more than a fair share. It can be catastrophic to be heavily dependent if that resource or customer goes away or is unable to perform.
- Need to create authority and delegations? Appropriate delegation of authority to a second tier of managers, and getting the founder or senior management out of the majority of daily processes is advisable as the business grows. This frees them up for strategic management, firefighting if true problems arise, and to have a good overview perspective to know what is really happening for the business as a whole.
Those same information flows, processes, priorities that got you through start-up have probably now become unwieldy. Labour intensive. Creating bottlenecks and preventing you from knowing what is REALLY going on in the business as a whole.
Companies that are most responsive to change are the ones that win.
You are destined for great things. Do what it takes.
Reach us here if you would like to discuss your success and making your business even more streamlined and high performance.