As companies grow, they go through a series of well defined transitions.
Most companies are set up as lifestyle businesses, to allow the owners to pursue what interests them under their own control. They will usually only employ themselves and one or two others or they may expand quite quickly to employ about 10 people - the size of a natural hunter-gather band.
Getting past this size means behaving more formally - complying with regulation, seeking out larger organisations to provide a base load of business, developing an effective IT infrastructure, developing as a proper business and developing a management team.
If they don't do this they will get stuck - because they are not prepared to change their behaviour. Growing between 10 and 20 is particularly hard. Only 1600 companies per year manage this feat in the UK. It's because dealing with the people issues takes up progressively more time as the business develops. We can draw on our own experience to help companies deal effectively with all of these issues.
Getting past 20 really means a management team of 4 or 5 people who can deal with vision, operations, finance and sales and marketing. However there comes another transition at around the 40/50 employee mark. By this time the company has got a good presence in it's niche and it needs to prepare itself to dominate its niche in some part of the overall world economy. This will mean investing in a truly scalable IT system, and preparing to develop the middle management structure that will form the backbone of the company's future growth - whether the purposes of the founders are to truly grow a global business or whether they wish to cash-in by selling the business to an organisation that can take the enterprise into the global economy.
Partnerships and alliances
A key task for the management of a growing business is to develop the strategic partnerships that will form the core of its future business - whether in their own supply chain, as part of a customer's supply chain or as a major stakeholder. The task includes evaluating how closely the organisations can align, in terms of culture and in terms of compatibility of systems. If you are dealing with these issues you may find the MD's guide to the networked economy useful. We originally wrote this successful booklet for Ukonline for business.
Download Succeeding in the networked economy here
Tracking the growth of value.
Most companies have little idea about how to track the growth of value. The information is reasonably available however.
Following the approach taken by the balanced scorecard, value lies in formal secured intellectual property rights, the knowledge in peoples heads and the level of their morale, the value of the customer relations and database, the robustness of the business's delivery mechanisms and the overall profitability and cash position of the business. It is a reasonably straightforward process to measure and benchmark some key indicators to monitor the overall progress of the business.
We have developed a methodology to help you with this.
If you would like to know more about these issues, they are covered in the Tranee workbook which you can purchase for £15+VAT from the link on the left of the page