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Problems of Growth

Written by: Douglas Long

Article Overview: When an organisation needs more money, the issue is a little more complex than sometimes is realised. In this article, Douglas Long suggests some leadership questions to accompany the management task of keeping the business viable.

Problems of Growth

What do you do when your business reaches the point where more capital is required for further growth? This is a question that worries a lot of entrepreneurs. A related question is: "Is this a leadership or a management issue?"

It's both.

On the surface it's a simple management issue - focus on your vision, develop appropriate objectives/goals/strategies (including capital raising), and implement. But underneath is the emotional/leadership issue of power/control/ownership. There are many examples of entrepreneurs dealing with the money issue successfully only to fail because of the underlying emotional one - "I have (or am about to be) losing control!"

Once the issue is resolved of whether or not your organisation has the assets and credit necessary, the question arises as to the source of the money and the impact that this will have on your role. Will it result in a change of organisational culture so that economic indicators become the total focus rather than "how" things are achieved as well as "what" is achieved? How will I and my team be affected?

There are some simple questions you can ask:

1. How do the sources of finance fit with my vision and goals? - in other words, is there a cultural fit between the organisation/person that is the potential source of funds and my organisation as I want it to be?
2. What role will the sources of finance expect to have in the business? - in other words, will the other party want a say in the day to day running of my organisation or only in its corporate governance?
3. What are the implications of this on me and my staff? - in other words, will there need to be such things as staff cuts or salary restrictions if this other party gets involved.
4. What are the risks and how do they measure up against the returns? - in other words, what happens if the new relationship doesn't work out?
5. What preparation will I need to make with my staff and clients/customers if changes are going to occur? - in other words, when and how will I let all the other stakeholders know that things have changed or are about to change? What will be the impact of this?
6. What is my "gut feeling" about this source of finance and what are the implications of this? - in other words, 'does it feel right?' - your gut instinct can be very important and, in many cases, ignoring it can be fatal.

Leadership and management are not distinct disciplines. In this instance there is a very clear overlap and serious attention needs to be paid to both sides.

Leadership is all about setting up for success the organisation and its people. In other words, leadership is the creation of an environment in which people can succeed. These "people" include yourself as the key person. Unless you confront these questions there is a possibility that success is not as assured as you need it to be.

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Article Tags: capital raising, Effective leadership, growth, leadership questions, money



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