If there was a guaranteed formula for fast growth, more companies would be achieving the same kind of stratospheric revenue increases seen by Box.com, Totally Money and Xero as seen on the GrowthBusiness Rising Stars 2019 list. And somebody would be getting very rich selling it. Nevertheless, entrepreneurs can help their companies develop quickly by simultaneously harnessing five key growth drivers.
Strategy
The first key business growth driver is strategy. Every fast-growing business starts with an idea, which turns into the business plan.
The strategy might revolve around bringing a new product to market, or be based on an existing product or service applied or delivered in a new way. Accelerated growth can be driven by developing more new products, and/or expanding into new markets.
People and operations
Alongside strategy, people and operations represent another key growth driver. Companies that grow fast often have a key individual driving them forward – the person with the initial vision, energy and determination to step out along the entrepreneurial road. However, growing a business fast relies on teamwork. Entrepreneurs need to draw around them a group of individuals who they can trust, who share the same dreams and apply the same values when trying to bring that dream alive.
Infrastructure
On the operations side, a growing business needs to develop an appropriate infrastructure and keep adjusting that infrastructure as the business grows.
This involves IT systems, processes, even basic office space. If you are growing fast, will you have enough room for your expanded team in six months’ time? And as the business grows, new operational systems may need to be developed to maintain efficiency.
Funding
Clearly no business can grow fast without the right funding, and so capital is another key business growth driver. Finding the right form of financial backing, and at the right time, is critical. That’s not to say that high growth can only be achieved with large amounts of funding, or that high funding levels will automatically result in fast growth. Transactions are also important for driving growth. These could include alliances in the form of strong supplier relationships. In addition, as the business grows, mergers and acquisitions may offer the potential to achieve a step change in growth, or facilitate entry into a new geographical market or a complementary service area.
Risk and reporting
Last but not least among the five growth drivers comes risk and reporting. As the business grows, so it is essential to establish controls to manage the inevitable risks that accompany rapid business development. The reporting element is also important for growing companies, both internally and externally.
Management teams need to communicate clearly between themselves, to understand business performance and delivery against future targets. Similarly, the company needs to report effectively to external investors and other stakeholders to maintain their ongoing confidence and support.
Managing all five growth drivers can be a complex challenge. As the business grows, so new approaches may be required in each area – a different form of capital injection, a new type of staff reward structure, an improved financial reporting system. The entrepreneurs who understand and leverage the growth drivers are likely to be leading the fastest-growing, most successful businesses.
This article was written by the late Ronnie Bowker, an audit partner in Ernst & Young’s Birmingham office.
This article was originally published in Masterclass magazine.
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