3. Growth means learning to effectively delegate. For a business to grow, the entrepreneur must grow also. When growth begins, entrepreneurs quickly find that they can do only so much and that they need help from others to properly serve customers. They must evolve from being a doer to a manager of employees and then eventually to a manager of managers (a leader).
This may sound easy but it isn’t. Most entrepreneurs don’t like to give up control of any aspect of their business. Facing the fact that they can’t do it all on their own and that they must learn to rely on others to complete certain tasks (and not necessarily exactly how they themselves would do them) can be a very hard reality to swallow.
4. Upgrading never ends. The people, processes, structure and controls needed to manage a business with $1 million of revenue generally do not work for a business with $10 million of revenue. Entrepreneurs often learn the hard way that growth means continual change.
As you grow, the solutions that worked at one level will most likely not work at the next. Inflection points for the companies I’ve studied occurred frequently when they expanded to 10, 25, 50 and 100 employees. When these changes take place, entrepreneurs often realize their hope of having a smooth-running machine is an elusive dream. Successful entrepreneurs and their employees are open to learning and adapting in an incremental, iterative and experimental fashion.
5. Growth creates business risks that must be managed. Growth stresses people, processes, quality controls and financial controls. It can dilute a business’ culture and customer-value proposition and put the business in a different competitive space. Understanding these risks is critical to managing the pace of growth and preventing growth from overwhelming the business.
To get a better handle on growth risks, consider how your strategic space will change as you get bigger. You will probably enter a new competitive space, facing bigger and better competitors than you previously faced. Those new competitors may be better capitalized than you and be able to engage in price competition, driving down your margins.
I want business owners to think differently about growth. I have learned that business is much more than just making money. It is the primary way most people achieve their dream of providing a better life for themselves and their families. But it’s important to remember that growing businesses also have a valuable impact on their customers and communities. These businesses aren’t just job creators. They’re community builders.
Edward D. Hess is a professor of business administration and Batten Executive-in-Residence at the Darden Graduate School of Business, University of Virginia.