moneyFYI
Financial Freedom Is Merely Organized Common Sense
Manage Growth
Big dogs don’t live as long.
Businesses that grow quickly often fail, too.
There may be reasons.
For businesses, the problem is undifferentiated growth. Many small businesses have trouble scaling. What works at one size may not work when larger.
Businesses must learn to match their context.
Three numbers matter
There are only three to think about. None, few, and many. Within any of those contexts, management is straightforward.
The problems are on the edges between. As you can easily see a change from one employee from none is challenging. A change from 5 to 6 is trivial.
A change from a few products to many is often deadly. Similarly a second location, especially in another jurisdiction.
Managing growth is essential
Most businesses have a right size. It has to do with lumpy fixed overhead. A construction company cannot hire half an estimator or two thirds of a contract supervisor. Many handle overhead growth poorly
A factory at 60% of capacity is a drag.
Growing from right sized
The usually best way is to add another right sized instance. Sometimes by acquisition, often by internal emphasis on a sales territory or product. Knowing right size matters.
Be careful with culture
When culture matters, more than 150 employees seems to be a problem. When employees must interact be cautious. Think engineering, research, customer service, and sales.
Differentiation matters.
There will be natural limits to market share. Few large companies have a single product or service, because scaling such has limits that they may reach fairly quickly.
What then? Growth for growth’s sake may counterproductive. Price cuts don’t help much. More marketing costs? Not so much either.
Usually using skills already owned to develop other businesses. Maybe shared customer support. A sales rep might as well present more than one product. They are there anyway.
Grow in ways you understand. Grow toward a right size. Grow to better use overhead. Grow to afford training and redundancy.
Above all, grow to enhance the fun.
I help business owners, and professionals understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.
Please be in touch if I can help you. don@moneyfyi.com 705-927-4770
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