Its success as a strategy is based on the simple truth that if you try to grow your company in the same way as the big guys, you can’t expect to overtake them. An innovative and success-orientated approach is needed.

That said, momentum management is only appropriate for entrepreneurs who want to make it to the top of their industry. If you’re after a fast buck or angling to sell your business three years down the line, it’s not for you.

Financial management is vital

For momentum management to work, you need to over-invest in the finance function. You need a strong, inventive financial director to plan and structure the next-but-one moves.

Maybe I’ve been lucky, but I have worked with three financial directors possessing these terrific qualities. What I find suits me is someone who:

• Is not just good technically, but an all-rounder who has good general management skills. Most emerging businesses are strong on ‘craft skills’, but weak on general management.
• Is good at negotiating and structuring deals.
• Can help with the essential ‘courtship’ with an acquisition target before a deal is struck.
• Is constantly thinking of the right means of incentivising key people, leaving space and creating the structure to bring in strong people afterwards (bizarrely, emerging businesses often forget all about this).
• Can help with relationship-building internally. This is often under-valued but is very important because the huge momentum you create when expanding quickly – and the shifts in direction that are habitually required – can generate a tremendous amount of internal stress.
• Is hard but fair, but also unbelievably honest to the cause. You need someone who can be truly objective about what is right for others and not put themselves first, despite all the opportunity they have in their special position to do so.

Keep re-investing

Momentum management is also about ploughing any money you make back into the business, especially in the early years. The sign of a medium-sized company that’s never going to be a big-time business is when it pays out all its profit each year to the shareholders.

When I started CIA, we made a loss in the first year then increased our profits for 23 of the next 25 years. Yet for the first 13 years we never paid a bonus or dividend to any of the directors (whether shareholders or not).

After a few years the other directors asked why we weren’t paying any dividends despite our success. They watched our immediate competitors, who’d started around the same time as us, enjoying a better lifestyle. Yet we were the ones starting new ventures, bringing in heavy-hitting staff and, yes, buying businesses.

With this philosophy we achieved the size and momentum to go public in 1989, 13 years after we started. We did start paying dividends then, but the lion’s share still went back into the business. We then proceeded to do a roll-up, around Europe and then the rest of the world, acquiring many of the smaller companies who had not had the same approach to investing as us.

They received a decent price for their business, but by then every pound of our profits was valued three times more highly than theirs. Our early re-investing had definitely paid off.

Investing ahead of the curve

As well as not pocketing the profits early, momentum management requires a degree of bravery and aggression in relation to your investment in your business capacity. If you assume you are going to be successful (and that is certainly the impression you want to convey), then you need a degree of excess capacity in your operation in the early stages.

Growing a business quickly, particularly when small, involves a series of step changes. It cannot be a smooth progression. For example, if you have one ‘exec’ working for you and you need to hire an extra person, it actually involves doubling the capacity of your business. But it is unlikely that double the amount of work has suddenly arrived.

Many entrepreneurs, who tend to be careful with their money, prefer to remain over-stretched and add people very reluctantly. This is not wrong, but it’s not successful momentum management. With momentum management, every time you have enough work for half a person, hire a person.

When you are bigger, with many more people, don’t do this at all; there will be pockets of capacity that you may not have noticed – not least because, as we know, work expands to fit the time available. When you are at the top, keep the organisation nicely stretched, but not to breaking point!

Micro-managing is the route to failure

Frequently, I’ve found that successful small businesses are based on an unsustainable model – it may simply be that all their personnel are freelance and there’s about to be a tightening in the market. Even more common is that the founder is a micro-manager and finds it necessary to oversee absolutely everything. Originally a laudable attitude, it inevitably becomes a huge barrier to growth. With momentum management, letting go is crucial. You have to keep growing and empowering your team; it’s the only attitude to adopt.

Chris Ingram has considerable experience of building and managing rapid-growth companies and is widely regarded as the inventor of the modern media agency. He started CIA in 1976 with three people and £10,000. It grew into Tempus Group and was sold to WPP for more than £430 million in 2001. In 2002 he launched Genesis Investments, a private equity business, and in July 2003 The Ingram Partnership, a strategic brand building communications consultancy.