Tweet

Managing a Growing Business

Written by: Rodney Burutsa

Article Overview: Once a start-up business is up and running, how does an entrepreneur manage it? Often the entrepreneurial spirit of self-confidence, creativity, focus and control leads to financial and personal grief as the enterprise grows. A hands-on entrepreneur who gives birth to the business loves perfecting every detail. But after the start-up, continued growth requires a shift in management style. Those who fail to adjust to a growing business can be the cause of the problems rather than the solution. In this article, we will look at the stages through which entrepreneurial companies move and consider how managers should out their planning, organizing, leading and controlling.

Managing a Growing Business

Once a start-up business is up and running, how does an entrepreneur manage it? Often the entrepreneurial spirit of self-confidence, creativity, focus and control leads to financial and personal grief as the enterprise grows. A hands-on entrepreneur who gives birth to the business loves perfecting every detail. But after the start-up, continued growth requires a shift in management style. Those who fail to adjust to a growing business can be the cause of the problems rather than the solution. In this article, we will look at the stages through which entrepreneurial companies move and consider how managers should out their planning, organizing, leading and controlling.

Stages of Growth

Entrepreneurial businesses go through distinct stages of growth, with each stage requiring different management skills.

1. Start-up – In this stage, the main problems are producing the product or providing the services and obtaining customers. Key issues facing managers are: Do we have enough money? Will we survive? Can we get enough customers? Many Internet companies are still in the start-up stage.

2. Survival – At this stage, the business has demonstrated that it has a workable business entity. It is providing a service and has sufficient customers. Concerns here have to do with finances—generating sufficient cash flow to runt he business and making sure revenues exceed expenses. The enterprise will grow in size and profitability during this period.

3. Success – At this point, the company has a solid base and is profitable. Systems and procedures are in place to allow the owner to slow down if desired. The owner can stay involved or consider turning the business over to professional managers.

4. Takeoff – The key problem here is how to grow rapidly and finance that growth. The owner must learn to delegate, and the company must find sufficient capital to invest in major growth. Properly managed, the company can become a big business. However, another problem for companies at this stage is how to maintain the advantages of small business as the company grows.

5. Resource maturity – At this stage, the company has made substantial financial gains, but it may start to lose the advantages of small size, including flexibility and the entrepreneurial spirit. A company in this stage has the staff and financial resources to begin acting like a mature company with detailed planning and control systems.

Planning

In the early start-up stage, formal planning tends to be nonexistent except for a business plan. The primary goal is simply to remain alive. As the enterprise grows, formal planning is usually not implemented until around the success stage. Planning means defining goals and deciding on the tasks and use of resources needed to attain them. Entrepreneurs have to define goals and implement strategies and plans to meet them. It is important that entrepreneurs view their original business plan as a living document that evolves as the company grows or the market changes.

Organizing

In the first two stages of growth, the enterprise's structure is typically very informal with all employees reporting to the owner. At stage 3, success, functional managers are often hired to take over the duties performed by the owner. A functional organization structure will begin to evolve with managers in charge of finance, manufacturing , and marketing. During the latter stages of entrepreneurial growth, managers must learn to delegate and decentralize authority. If the business has multiple product lines, the owner may consider creating teams or divisions responsible for each line. The enterprise must hire competent managers and have sufficient management talent to handle fast growth and eliminate problems caused by increasing size. As an enterprise grows, it might also be characterized by greater use of rules, procedures, and written job descriptions.

Leading

The driving force in the early stages of development is the leader's vision. The vision, combined with the leader's personality, shapes corporate culture. The leader can signal cultural values of service, efficiency, quality, or ethics. Often entrepreneurs do not have good people skills but do have excellent task skills in either manufacturing or marketing. By the success stage of growth, the owner must either learn to motivate employees or bring in managers who can. Rapid take off is not likely to happen without employee cooperation.

Stepping from the self-absorption of the early days of a company to the more active communication necessary for growth can be tricky for entrepreneurs. You can never get anywhere if you're pulling your staff around behind you all the time. Focus more on employee needs and less on financial growth. Entrepreneurs have to make an effort to communicate with employees, conduct surveys to learn how they are feeling about the company, and find ways to involve them in decision making.

Your leadership style has to allow the company to enter the takeoff stage with the right corporate culture and employee attitudes to sustain rapid growth. Leadership also is important because many small firms have a hard time hiring qualified employees. Labor shortages often hurt small firms that grow rapidly. A healthy corporate culture can help attract and retain good people.

Controlling

Financial control is important in each stage of the entrepreneurial firm's growth. In the initial stages, control is exercised by simple accounting records and by personal supervision. By stage 3, success, operational budgets are in place, and the owner should start implementing more structured control systems. During the takeoff stage, the company will need to make greater use of budgets and standard cost systems to provide statistical reports. These control techniques will become more sophisticated during the resource maturity stage.

Related Articles
  Create an Account Management Team
  Article # 35 Managing Your Time When You Have None
  Managing techies
  Talent Development and The Wheel of Becoming
  The curse of the BDM

Article Tags: business entity, cash flow, different management skills, distinct stages, entrepreneur, entrepreneurial businesses, entrepreneurial companies, entrepreneurial spirit, internet companies, management style, period 3, personal grief, professional managers, profitability, profitable systems, self confidence, stage 2, start up business, takeoff, workable business



Related Forum Posts
Re: What's 1 word to describe what your business will be in 2012 - Growing. MichelleJ
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Why should I hire a virtual assistant for SEO purposes? - Do you find it hard to find time for rest because of promoting your business or your website all by yourself? Well, perhaps it is the right time for you to hire the services of an SEO virtual assistant. Virtual assistants for SEO services will help you on the process of improving your rankings within search engine results to achieve an increase in natural traffic. The higher your site in the search engine results page, the more traffic and sales conversions you will obtain. Using the services of virtual assistants (VAs) certainly is the best method to move in order immediate results and in reduced operational charges. This provides a great answer especially for a small business owner whoever company is actually considerably expanding, and the jobs have normally doubled. Here are some of the services that a virtual assistant can do for you: • Traffic Geyser • Main Street Marketing • Data Entry • Web Research • Market Samurai • Managing Facebook • Managing Twitter • SEO • Local Business Listing Robot • Traffic Revolution • Infusionsoft • Senuke • Angela’s Banklink • Linkjuicer • Blogging • SMM • Virtual Assistant • Personal Assistant • Article Writing • Spinning Article • Press release • Email Response Handling • Online Order Processing • Word Processing • Forum/Comment Posting • Social Bookmarking • Video Editor • Internet Marketing • Email Marketing • Link Building • Powerpoint Presentations • Web Development • Other Administrative Support
Re: HRPreneur - Evan, I am looking for new clients and to see if my business model resonates with Entrepreneurs. Thanks Joey Walters, CHRP, H.R.C.C.C. Managing Director HRPreneur Inc. C. 647-534-4774
Personal duties - Great topic Kevin! My business is obviously my website, a part of which are these forums. In terms of tasks I usually do the following: - Business vision and direction: 10 - Strategic partnerships: 8 (I do it for most of my site while Kevin has begun for the forums) - Managing staff and assigning tasks: 8 (Again, I do it for most of my site while Kevin has begun for the forums) - Content development: 2 (Most of this is done by my authors and staff but I get involved in the management from time to time) - Advertising / sponsorship: 10 (I'm very hands on here as it's the way that I make my money) - SEO: 10 (With so much of my traffic coming from the search engines, if I'm not on top of new developments then I'm not driving traffic and I'm not in business) Generally I've picked the tasks that I most enjoy and feel that I can contribute my skills to. The other tasks are given to people who have expertise in those areas and produce great work.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Life, Conflict and Work

10 Reasons Your SBA Loan May Be Declined

Igniting Your Unstoppable Business Destiny

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.