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Successfully navigating initial growth

Module 2: Stages of growth

When you first start a company, your goal is to launch a product or service, secure some customers, make your first hires, and generate enough revenue to stay afloat. Your biggest priority is figuring out what products or services customers will buy, i.e. getting the product-market fit right.

Once you figure this out, the next stage beyond “start-up” is “initial growth”.  As you enter this stage, the company needs to focus on market penetration and developing and launching products or services to customers in similar industries. Put another way, your job is to capture market share and grow revenue. As CEO, you can’t grow your business while still doing everything and making all the decisions regarding R&D, product development, sales and operations. You need to hire people who you can delegate tasks and decisions to, then hold them accountable.

Finally, you need to switch from being reactive to proactive. Doing whatever paying customers want is not a sustainable business model for growth. Instead, you need to figure out your company’s optimal place in the market, and then put in place the structure and processes that will enable the company to capitalise on those opportunities.

As CEO, you can’t grow your business while still doing everything and making all the decisions

Moving from start-up to initial growth

One sign that your company is ready to move from start-up to initial growth is when you find questions and requests to solve problems from your employees, customers and suppliers begin to bottleneck. You find your days are filled with endless phone calls, emails and conversations with people who should know what to do, but won’t act – until they talk with you. You need to get better at delegating. Begin hiring more people at higher levels and stop making all the decisions.

If you don’t hire people you can delegate to, or if you don’t decide where the greatest opportunities are for growth and begin to focus, you will find it physically and emotionally impossible to continue to grow. The burden of managing the risks and making all the decisions yourself will wear you down – when you should be positioning the company to capitalise on its biggest opportunities for growth.

One sign that your company is ready to move from start-up to initial growth is when you find questions and requests begin to bottleneck

What happens in initial growth?

In the initial growth phase of a business, your company needs to focus on sales and generating revenue. You will need lots of revenue when you enter the next phase – rapid growth. During initial growth, company operations tend to be flexible as people develop “just in time” processes, try to sell to many different types of customers, and do whatever it takes to deliver.

But when the company begins to experience breakdowns and a feeling of chaos, you’ll need standard operating procedures to better serve customers and employees. During initial growth, you need to step back, take a hard look at your systems (e.g., Customer Relationship Management, Enterprise Resource Planning, Finance, Learning Management Systems), map how they interact with each other, redesign them, or implement new ones. In short, you need to figure out how to position the company for competitive advantage, then build your company’s capacity to deliver.

Grow as a leader to grow your business

During initial growth, you must be a strong leader to your team, supporting them to work independently. This means deciding on the most promising direction for the company, delegating tasks to others, then monitoring progress on projects you’ve delegated to them. Tell them you are going to stop making all the decisions, solving all the problems and answering all their questions.

When they ask you what they should do, say, “I don’t know, what do you think?” or “Go think about the question, and come back to me with your answer.” Work through the five levels of delegation. Not everyone will get to level five, but if you can get them to level two, three or even four, you will be helping them develop decision-making skills and learn to be accountable for achieving goals, while spreading decision-making across the organisation.

Flip the switch in your own mind about your role as leader: your job is no longer making all the decisions

In the initial growth phase, you need to set the direction, implement processes to help the company ramp revenue, and figure out how to be more efficient and profitable. Hire talented people who match the company’s values and have the capacity to grow at least two levels, then delegate to them. Flip the switch in your own mind about your role as leader: your job is no longer making all the decisions. It’s figuring out the best way to achieve the company’s growth potential, hiring people who will make as good – or better – decisions as you, and delegating effectively.

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