In my first entrepreneurial venture, I quickly realized my leadership capabilities were not keeping up pace with the company's growth. I showed up daily to a new set of problems. In my research, I began to notice the commonalities between fast-growing companies and slow-growing businesses. In fact, they can look eerily similar. What holds one back from reaching its potential is often stunting the growth of many others.
Here's what some of the slow-growing businesses are doing to "help" themselves but are really harming their growth in the process.
1. They hire employees, not people who take ownership.
As my revenues grew, I hired more employees. Before I knew better, I would hire people simply because they could do the work. I thought I needed doers. But in reality, I needed people that really wanted to grow and take ownership of projects and the client experience.
Let's dive deep here. As companies get bigger, they tend to think they'll need fewer entrepreneurial-minded team members who will take charge and build processes and policies. So leaders hire those who can manage the processes.
That fits in with the idea that businesses can't be packed with superstar employees; some of their workers have to be average. Companies' talent tends to be distributed along the bell curve, with a heavy emphasis on average performers and a few outliers on the high- and low-performance ends. This seems like a logical structure, right?
Not exactly. Companies that give up hiring and developing those with an entrepreneurial spirit also sacrifice elements of innovation, risk-taking, and strategy. Employees who merely "work the line" are doing what's expected to earn their paycheck. Employees who are empowered to take ownership go beyond what's expected, noting process delays, customer complaints, and supply chain problems in a quest to develop solutions. Those are the people who will push their companies forward and propel growth.
2. They do favors that downplay their value.
Over the years, I have interacted with thousands of people who wanted to be better leaders and help their business grow rapidly. I can honestly say that I wanted to help each individual overcome their challenge and develop a strategy for growth. As I got to know them, I'd gain the clarity that many of these people could not afford the investment to work with me. Over the years, I watched myself I would give access to some of my time for free. They needed the help. I wanted to help.
Here is the problem. I would give of myself with the hope that they'd do the work and be able to rise up to help themselves to eventually work with me at regular pricing. The problem here is that in every case of "giving" away my value, they took it and did little to nothing with it. You could say they didn't value what was free. Consequently, doing favors like this never resulted in adding value to their world nor mine.
Part of the logic is that if you give it away, (or heavily discount) it will increase sales. This works in some industries like the food industry for instance. Samples have always been popular, particularly in the food and beverage world. One Cornell University study of wineries found that tasting room visitors who were "highly satisfied," had a 93 percent chance of spending more, as well as a 92 percent chance of purchasing wine from the winery in the future.
Many businesses follow the same line of thinking, and they do this by discounting their value. In theory, slashing prices to get people through the door so a business can knock their socks off and upgrade their services is great. In practice, customers believe they'll always be able to -- or should be able to -- get the company's services for less because that's what they're worth.
What's more effective is placing incentives a sale. Bonuses for things like referrals or long-term contracts are tied to actual performance or loyalty -- they can be rescinded or not awarded as needed. They accentuate the value of a service or product rather than dilute it.
3. They spread their resources too thin by trying to do too much.
You can't be all things to all people. We all know this proverb. However, we forget that it applies to us. I know my own experience with company growth caused me to take on too many strategies and too many types of customers.
I would rationalize that it was the best way to create a buffer against the economy, trends, or the winds of change by getting involved in everything. The result was not doing any of it very well.
When you look outside the world of business strategy, you see principles of being a good investor. Investors know that putting all their eggs in one basket could cause an entire company to come crashing down if one sector takes a hit.
But the opposite is true, too -- companies that spread their resources across too many areas don't do any of them very well. And businesses that aren't the best at what they do rarely grow. In fact, 64 percent of hyper-growth brands acknowledged that having a very defined niche was crucial to their growth.
Striking a balance between the two extremes provides a cushion against unexpected changes while allowing a brand to develop a specialty and a strong reputation. Looking at what serves as an ancillary service or product to an existing offering is a better way to solidify the existing service and fuel growth. For example, a company that sells soccer equipment may venture into producing soccer apparel. This not only further ingrains the brand in soccer fans' minds, but it also enables consumers to do their shopping in one place and allows the brand to capitalize on what it knows to sell to larger leagues and groups.
Slow-growing companies often have the best intentions but hamper their own growth by making short-sighted decisions. Those hoping to be some of the "lucky" few that succeed, can fuel their growth by adopting the mindset of the hyper-growth businesses.