I love the analogy of climbing a mountain when I think about getting businesses to scale: They both involve hard work that looks especially daunting from the bottom.
And just like every mountain is different, every business is unique. But if you dig a little deeper, it turns out those differences don’t matter that much.
There are a lot of common challenges when it comes to growth. In other words, there are a handful of things that every business will have to address to succeed in the long run.
As an example, here are three discussions I’ve had in just the last couple of weeks with local business owners. (Note: Names have been changed.)
Joe’s business is having a great year. Things have fallen into place for marketing and sales, and the pipeline looks good. But he’s running out of capacity, needs a couple of the right people and he may not be focused on the right offerings. He has to make some big changes if he wants to continue to grow.
Challenges: Products, People, Profits, Planning
Overwhelmed with choices
Anne’s business has been stagnant for the last couple of years, but she’s doing well. There hasn’t been much growth, but her margins are high, and she has a lot of potential products and business models that she could be pursuing. She wants to sell in a few years, but to get to where she wants to go, she will need to focus and change.
Challenges: Planning and Products, which may lead to People and Profits.
Ready to explode
Roy’s business has taken off like a rocket over the last three years, and he and his partners have identified the target market they really want to focus on. But the partners aren’t really on the same page when it comes to execution, and it’s becoming clear that they don’t have the right people in place to handle the level of work that they’ve now grown into. Will this year’s outcome be their high-water mark? Or can they adjust and manage the situation so their growth is sustainable?
Challenges: Planning and People for sure, maybe more.
These are 3 very different businesses, with different kinds of owners and different long-term goals, but they are absolutely all struggling with at least one of the following four challenges.
4 Growth Challenges
Challenge No. 1: Product Focus
There are an infinite number of ways to make money, but some of them are clearly better than others. Unfortunately, because of their personality traits, most entrepreneurs love to pursue any and all ways to make money. That optimism and ambition are crucial when it comes to starting a business, but if you want to scale your business, you need to narrow your focus down to those products or services that are right for you and can scale.
There are two major components to figuring out what your product focus should be:
- Focus on your interests and strengths. Are you offering something that you can get really excited about and that you’re really good at?
- Secondly, is it a scalable product? Is it teachable, valuable and repeatable? Is it worth a premium, is it recurring, and can you get others to deliver on it?
Challenge No. 2: Profits
A truly successful, scalable business has a clear focus on profitability. It’s not WHY they’re in business, but it is still a major factor in how they operate (or they’ll soon go out of business). Reasonable profit margins will vary dramatically by industry, but what doesn’t vary is the need for a healthy margin and a constant need for doing whatever it takes to maintain that healthy margin.
The good news is that this doesn’t have to be that complicated. The reality is that you really only have two levers to play with here: You have money coming in and money going out. What can you do to make sure that there’s more than enough coming in to cover what’s going out and leave you with room for growth?
Challenge No. 3: People
Patrick Lencioni makes a great point:
“It is teamwork that remains the ultimate competitive advantage, both because it is so powerful and so rare.”
If you don’t have the right people in the right seats, then you’re not going to get very far. And the right people are the ones who want to be on YOUR team and who are capable of working well with others. It’s a simple idea, but this one challenge impacts every business at some point in time and impacts most businesses on a regular basis. It’s not easy, and it’s an ongoing thing you have to worry about.
Challenge No. 4: Planning
It’s easy to get sucked into all of the day-to-day challenges and miss the big picture. Take time to routinely do strategic planning, even though it can be really hard to pull off. How can you keep it simple and develop the discipline to stay on top of it on a regular basis?
Embrace that less is more. The most successful organizations identify only the top two to three most important things they’re going to do for the next year and make sure they have a clear plan and accountability for getting those things done (and leaving everything else for some other time).
Four challenges to growth: products, profits, people and planning.
If you get these four right, then your business becomes a lot easier to run and to grow. If you get any of them wrong, then things are going to be difficult – with a decent risk that you’re not going to be around for the long term.
What do you think? Is this the right list of challenges? Did we miss a big one, or is one of these not that big of a deal? We’d love to hear your thoughts.
Shawn Kinkade, Kansas City Business Coach