The fear of these risks is justified. A recent study by the Kauffman Foundation and Inc. found that 66 percent of the companies that make the Inc. 5000 fail to become self-sustaining businesses within five to eight years.
That doesn't mean it can't be done, however. There are plenty of companies that do successfully make it through the rapid growth stage and reap the rewards. Sapper Consulting, a company that specializes in helping other B2B companies grow sales, has tripled in size over the past six months and is poised to do so again.
"Sometimes, CEOs need to agree to less-than-optimal deals with customers to get the ball rolling," said Sapper Consulting founder and CEO Jeff Winters in a recent interview. "For example, my company had a salesman in a major slump. He even brought in a break-even deal. We signed it. Why? I needed him to gain momentum. Since then, he's become our most productive salesperson, signing as many as 10 customers a month."
What You Should Focus On
Like Sapper Consulting, investing in who you hire is one smart strategy that can help make fast growth easier. Pursuing growth means you should also be prepared to:
1. Spend Lots of Money
There are always unforeseen costs. All fast-growing businesses need contingency plans for times when they may run tight on cash. It's not a matter of if this will happen, but when. Even businesses that are growing quickly and making a profit can get stuck; cash can easily get tied up in payroll, inventory, or unrealized client payments. Having a business line of credit, negotiating with vendors for longer payment terms, and knowing where to get short-term loans are all essential steps.
2. Hire Quickly, But Wisely
Hiring the right people will accelerate growth, but finding them will demand more time and money than most businesses plan for. This is not an area you can cut corners in. Good job descriptions, smart ad placements, and time spent cultivating an excellent candidate pool will directly affect the quality of help you attract.
Getting to know candidates well and making sure they're a cultural fit is equally important. Fast growth means having to quickly hand off many things to employees. Phone interviews, skills tests, in-person interviews, and reference checks are all vital parts of the hiring process.
3. Plan for Rapidly Evolving Space Requirements
A growing business needs room to spread, but you may not know exactly when or how space requirements will evolve. Flexible leases (month-to-month or six-month intervals) can reduce financial risk, but moving is also a disruption. You can alternately look for expandable spaces that allow you to add second floors or switch to more open layouts.
Another option is to lease a space larger than your current needs warrant. For certain jobs, you can also consider adding work-from-home policies. While none of these options is perfect, expansion planning reduces stress and financial risk as needs evolve.
4. Spend Your Time Wisely
Growing your business will require giving many responsibilities away. However, there are certain things you should never delegate to others -- as well as many things you should push yourself to give away.
Business owners are ultimately responsible for what happens within their companies. Any strategic decision that will affect the direction of the business or everyone within the organization should still reside with you. Likewise, the development of company culture is your responsibility, along with providing a vision of company direction and values.
The key area where you should spend the majority of your time is customer development. Make sure your company is getting qualified leads, converting them into customers, and retaining those customers. Without sales, you have no business.
You should also always be involved in hiring and employee training. This is especially important regarding those directly reporting to you, but it's really essential for any new employee. Until you're able to hire a competent HR or recruitment director to take the reins, you should meet and approve final candidates, sussing out cultural fit as the keeper of the company's cultural direction.
Can you achieve success with a rapidly growing business model? Absolutely. Will it be difficult? Yes. The more prepared you are in the four areas above, the higher the chance you will become one of the success stories told about taking the risk of rapid growth -- and excelling.