You Say You Want to Grow Your Company?
Most companies I know have been running pretty hard lately. And, like the White Rabbit in Alice in Wonderland, many feel that the faster they go, the behinder they get.
Especially after the last few years, when chasing business has sometimes been frantic, this is a good moment to stand back and ask yourself some hard questions. One of them might be: What's most important now: growth or consolidation?
Growth is a perennial priority because it means we can hire more people, develop them, create new products, expand into new markets. But recently I've seen a lot of companies chase revenue mindlessly. They are–justifiably–so daunted by the economic climate that they have taken on business and customers anywhere they can find them. In a recession, cash is critical and it often feels you can't get enough of it.
But there can be problems with growth; I count at least four of them:
1. Poor strategic focus.
When you take any business you can find, it's easy to discover that your positioning is now way off course–or non-existent. This is a particular danger for service businesses. I once worked with a software company that had specialized in surveillance and security technology. But when tough times hit, they said "Yes" to all kinds of work, in: knowledge management, search technologies, encryption. Being smart people, they could persuade themselves that all this fit into their core positioning–sort of. The truth was that they'd wandered so far from their path that no one, inside the company or out, knew what they stood for any more. The CEO then took the courageous decision to back out of some business and refuse anything not central to their expertise.
2. Bad customers.
Not all customers are equal. Some are demanding and that helps you become better at your job. But others are demanding just for the sake of it. They Drain your time, attention, and patience, and, in essence, they take far more than they will ever pay for. Pure pursuit of revenue says that you have to keep pleasing them. A more analytic approach would highlight the degree to which some customers are unprofitable and therefore need to be fired.
3. Expensive footprint.
It's tempting to take business wherever you can find it. But a very broad geographical spread can cost you a fortune in time and travel. While it may look as though that customer on the other coast takes just a day's work, in reality getting there takes one day and getting back takes another. Does the income justify that expense? It's tempting to think that taking the red eye saves time but everyone knows it just makes you brain dead the next day. Moreover, being spread too thinly may mean your business is developing no word-of-mouth which means it's hard to call the travel an investment.
4. Valuable time.
Many businesses fall into what I call the revenue/time trap. They are so busy chasing cash that they don't have the time to sit down and invest the time and resources required to develop new products or new markets. Impulsive and energetic, they work hard but never attain momentum.
It takes more than courage to fire customers and say "No" to new business. It takes strategic discipline. If you find you're running like crazy just to stay in the same spot, it could be time to stop, think, and focus.
MARGARET HEFFERNAN is an entrepreneur and author. She has been chief executive of InfoMation Corporation, ZineZone Corporation, and iCAST Corporation. In 2014, she published her fourth book, A Bigger Prize: How We Can Do Better Than the Competition.
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