Is Your Growth Controlled or Out Of Control?

Each month in this column I ask a different question to you, the ExitEvent Entrepreneur. Thought provoking questions that are meant to get you to sit back and think. Each month I offer insight into the question, along with common mistakes made by (us) entrepreneurs, and a key take-away for you to think more about. My goal – to increase your self-awareness as an entrepreneur and a leader.

Insight: Entrepreneurs are driven to grow companies. The faster and the bigger we grow, the better we get, right? If we are going to play the game, we might as well play to win, and we darn well want to win big. Growth is good. More growth is great. Exponential growth, priceless.

Or is it?

Common Mistake made: In my book titled The Second Decision; the qualified entrepreneur, I outlined the top reasons companies either fail or underperform in the long-run. Out-of-control growth makes the list, so let’s take a closer look:

Out-of-control growth—This would include over-expansion, moving into markets that are less profitable, experiencing growing pains that damage the business, or borrowing too much money in an attempt to keep growth at a particular rate.

In a past column I wrote about cash as the No. 1 reason why companies fail. Out-of-control growth companies are just as guilty of failing in this manner, burning up their cash until the well has indeed run dry.

Key take-away: I fully understand that bootstrapped and private-equity or venture capital-backed companies differ in terms of their growth models. But if the company goes out of business due to out-of-control growth, it doesn’t matter where the money is coming from.

For this article, let’s assume that we are talking about the organic growth businesses, where you are required to operate at a profit to sustain and grow your business for the long-term.

So what can you do? Three steps.

  1. Acknowledge that not all growth is good. Imagine briefing your Board of Directors on your aggressive growth plans, would they give you their approval or send you back to make adjustments to your plan?
  2. Have a business plan in place that forecasts your cash along with your growth. Profitable growth is great, as long as you also maintain control of your cash along the way.
  3. Remember that vision without execution is hallucination. Even the most optimistic entrepreneur can’t save their company when it runs out of cash or operates so inefficiently that quality is negatively affected (to the point where their customers flee for their competitors). Having a plan and executing the plan are the basics of any successful business.

Be smart about your growth and you can successfully compete for years to come, while staying in control.

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