- It’s Okay – Walk Away In standard
“You’re getting too big for your britches!” I found those words spilling out of my mouth as I scolded my 10 year old, to which he responded perplexed, “Mom, what are britches?” I couldn’t help but laugh as his sincere curiosity made my admonishment more of a joke than a parenting win.
How often did you hear the “britches” comment when you were growing up? Normally it was followed by some scolding from a grown-up about getting too conceited or thinking you were smarter than you really were.
In business you can get too big for your britches, even without an attitude. The allure of rapidly growing company portrayed on glossy magazines and to which most entrepreneurs aspire, often skim over the reality and challenges of growing too fast too quickly.
Behind the cover story are often daily struggles with cash, an infrastructure that is strained and a culture that has only direction– forward– at hyper speed.
Rapid growth, or getting too big for your britches, can kill companies as fast as slow or stagnant growth. But there are ways to manage the growth if you are going to be successful.
Here’s a few ways to avoid getting too big for your britches:
- Think “bigger britches.” OK, we’re not talking upsizing pants here but you need to start thinking like a bigger company. That means establishing repeatable processes and controls that will allow you to scale. So while you are focusing on top line growth also spend some time making sure your inside operations are able to handle more. We have seen companies book millions of dollars of sales which they never invoiced due to breakdowns in the processes. Or get contracts for projects that turned out to be unprofitable because no one was measuring them, or have employees embezzle thousands and thousands of dollars because the controls weren’t in place.
- Focus on cash. No matter how good sales growth looks on paper, if that cash isn’t coming in at a rate to sustain your operations you are going to have a very big problem, and that problem will come as fast as your growth does. New hires, expensive mistakes, and inefficiencies trying to keep up with the growth often suck cash out of a business faster than new sales replace it. So all focus should be on growth but also cash flow.
- Know how much money you need and when. When you know your current cash reserves aren’t going to fuel the growth you are expecting, it’s time to look at outside funding. Whether you are looking at bank financing, private investors or friends and family, understand how much cash you will need in the first round, and make sure you understand if it will last you to the next round. As a rule of thumb, it is never easy to raise funds so make sure that you account for the time it will take to close on new funding.
- Get advice. Unlike our younger selves when we thought we knew it all, it’s time to get someone who has “been there and done that” and has made the mistakes already, so you don’t have to. Get a good advisor who has worked with growing companies of your size and who can help guide you through all stages of growth and help you avoid expensive missteps.
- Have a plan. Along with getting good advice, you need a good plan. We’ve seen too many companies grow too quickly, with one plan only– grow top line sales. What they build is a fragile company that, once sales growth slows down, the company can no longer sustain itself or be able to scale back effectively.
Sometimes growth comes at such a speed, that all an entrepreneur can do to keep up is just keep running forward. But having a company that hasn’t scaled internally to meet the demands of the rapid growth leads to significant trouble. So take a word of advice from your mom– don’t let your business get too big for it’s britches. Focus not only on the top line but the bottom line, cash and all the operations in between.