Managing unexpected growth

It's important to define your vision right away—it will guide your business and lead you on the path to growth. There is an objective for each stage of growth. Here are the first 2 stages and their primary objectives.

First growth stage: Selling

The first objective you'll have to set is the sales target you need to hit to break even (sales – total costs [including your salary]).

Your only concern at the outset is to sell, sell, sell. But keep an eye out so you don't cripple your production and self-financing capacity. Once you've reached your break-even point, take a time out. That's right, take a time out! Through it may seem unthinkable—if not downright impossible—to many entrepreneurs, you need to take time to transition to your second growth stage.

Second growth stage: Structuring

Now is the time to structure your business and get a complete picture of your sales and production cycle. You'll need to focus more on the profit margin on every sale rather than the number of sales you make. Your business owes its existence to sales, but its survival will depend on gross margins.

Imagine a cleaning contractor who had as much work as he could handle. To improve his operations, he had to take a break from selling for a time. He spent this time improving his cleaning teams, training forepersons to act as site supervisors and hiring an administrative assistant to follow up with clients. The process revealed that some of his contracts did not generate enough profit to pay for his new structure, so he raised his prices a bit, driving away demanding clients who were more interested in low prices than quality work. Though the new fixed costs drove up his break-even point, his production capacity was stable, his prices had been revised and his margin was more appropriate. Once reorganization was complete, he was able to go back to what he knew best: selling.

This simple illustration shows how once you have a growth strategy in place, you just need to plan and execute it. This involves devising a growth plan the way you would a solid strategic plan.

Planning your growth in 8 steps

1. Determine your mission

Determine the main driver of your growth.

2. Analyze your internal environment

Make a list of the strengths and weaknesses of each department of your business (marketing, sales, finance, production and human resources).

3. Analyze the external environment

Determine what in your business environment could help or hurt your business's efforts to achieve its mission.

4. Set objectives

Your objectives are an offshoot of your mission. They are yardsticks by which to measure your progress toward achieving your mission. Your objectives should be quantifiable and time-specific.

5. Formulate a strategy

Based on your internal and external environments, formulate a strategy outlining how you will achieve your objectives.

6. Devise an action plan

Identify variables that are within your control that can help you achieve your objectives. Make a list of the concrete actions that must be taken to change these variables the way you want. Put someone in charge and establish a timeline for each activity.

7. Execute

Execute your growth plan. You will need to secure the buy-in of all employees by assigning them responsibilities from your action plan.

8. Follow up and monitor

Regularly check to see how you are doing on your objectives and what effect your efforts are having. There are a number of uncontrollable variables in your business environment that can have an impact on your growth scenario, so you'll need to make adjustments periodically.

In conclusion, the most important skill you must have as an entrepreneur is selling. But in order to grow and face your challenges head on, you'll need to quickly become competent in other areas such as financial management, production, human resources and marketing. Sound overwhelming? Get help by surrounding yourself with knowledgeable experts.