By Bruce Hakutizwi
If you’ve ever tried surfing—or if you’ve watched a good surfer in action—you know that there’s a very thin line between riding the perfect wave and wiping out most heinously. The difference comes down to timing, finesse, balance, and, to a large extent, luck. More succinctly, it comes down to control.
The same idea can be applied to business, and specifically growing your business.
The Myth of Rapid Growth
To the uninitiated, the idea of a startup growing very quickly seems like the ultimate entrepreneurial dream. To go from maxing out your credit card to get things started in your garage, to a multi-billion dollar IPO in 24 months, is the stuff American Dreams are made of, right?
Sure, it’s happened. And yes, for the rare few who have experienced and survived it, startup success can be like a fairy tale. But the truth of the matter is that more often than not, uncontrolled, rapid growth—too much success, too quickly—can end up destroying a company rather than launching it to permanent success.
For every AirBnB, there’s probably a dozen Zyngas out there that bet it all and lost because they grew too quickly.
Creating a Controlled Growth Strategy
This isn’t all to say that, if you’re starting a new company or want to scale your existing business, you’re bound to fail. On the contrary, if you can go into your efforts to grow your business strategically, with full understanding of the dangers of uncontrolled growth, you’re in an excellent position to make a success of it.
To create a growth strategy that is designed to produce controlled and scalable growth, here are the steps you’ll need to follow:
Identify your growth goals: Are you pursuing growth for growth’s sake, or do you have a concrete goal in mind? Are you looking to grow your customer base, your product line, your brand value, or some other aspect of your business? And why?
Define success: Once you establish why you want to grow the business, but before you start working on how you’re going to do it, make sure you fully understand what it’s going to look like when you succeed. That way, not only will you know when you get there, you’ll have a much clearer picture of how to go about it.
Establish controls: Before any major decisions are made—investments, acquisitions, staffing influxes—set some ground rules that will help keep those decisions within reasonable and strategic guidelines. For example, setting a minimum ROI level to justify every decision, or a minimum revenue level to sustain every investment.
Involve staff and partners: A valuable growth strategy needs to be understood and supported by everyone in the organization—both to ensure that everyone’s decisions and actions are in line with the strategy, and to make sure everyone understands the risks and rewards involved in each step of the strategy.
Hustle: When you get down to it, once you’ve established a strategic and controlled foundation for growth, it’s hard work that’s going to bring it to fruition.
M&A Versus Organic or Internal Growth
For multi-billion dollar corporations, mergers and acquisitions (M&A) are generally the fastest and most effective means of producing growth.
For small businesses, the idea of “acquiring” another company sounds like a pipe dream for “some day” but not a realistic growth strategy. In reality, though, if you think about it as buying another business, growing through acquisition becomes far more realistic.
While it may be possible focus on organic growth, leading to the eventual opening of another location, that’s a long, slow process for most small businesses.
Buying out a competitor, with a steady and profitable stream of customers, can present the opportunity to grow much faster, but in a more controlled fashion.
Likewise, if you’re running a small manufacturing firm that has successfully introduced a disruptive product into the marketplace, you can focus time and energy on research, development, and marketing to introduce a second, related product to the line and grow the business internally that way. Or, you have the option of potentially purchasing another company that already produces a similar or complementary product that can be rebranded to join your successful product line.
In both these cases, controlled and sustainable, scalable growth can be achieved by buying another business rather than building up your own.
When Selling Your Business Provides the Ultimate Growth Strategy
A final consideration, that should be included in any conversation about controlled business growth, is whether or not selling your business is part of your growth strategy.
For many serial entrepreneurs, an exit strategy that includes selling the business they’ve built is an automatic part of the company’s startup phase. For small business owners or owners of a family business, it’s not often considered until it suddenly becomes necessary due to financial or personal reasons.
But preparing well in advance with an eye toward eventually selling your small business can also be a key aspect of your controlled growth strategy.
For example, you may have ideas in mind for growth that don’t make financial sense for you to personally pursue, but that would be feasible for someone in a slightly different position. Perhaps that’s your ideal buyer.
Or, you may recognize that the company you’ve built would stand a better chance of surviving and thriving in current and future market conditions if it was acquired by a larger competitor. Perhaps selling your business is the smartest growth strategy you could pursue.
There are plenty of different roads that can lead to profitable growth for a business that is run well with a staff that works hard. If you’re working to grow your own business, focus on making that growth controlled and strategic, and you’ll be in a great position to identify which road is best for you and your business.
Bruce Hakutizwi is the U.S. and international manager of BusinessesForSale.com, a global online marketplace for buying and selling small- and medium-sized businesses. With more than 60,000 business listings, it attracts 1.4 million buyers every month.