What to do with too much Growth

By almost all accounts, Tom is having a great year with his business. Revenue is up, former customers are calling for more help and there’s been a record pace of quality referrals.

But Tom has a serious problem. Too much growth might be considered to be a ‘nice problem to have’ and more money makes a lot of things better, but too much growth when you’re not ready for it can be as bad, if not worse, than not enough growth.

Tom’s business challenge has shifted from getting new work in the door (sales and marketing) to delivering on the work – and since things have been tight for the last couple of years, the tendency is still there to say ‘Yes’ to anything and everything a client might want.

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Pull back the Curtain

Behind the scenes, Tom and his team are working really long hours – to the point that Tom is worried that he might burn out or lose one or two of his top employees. And frankly Tom’s life isn’t anywhere close to where he wants it to be either – he’s putting in extra long hours, he hasn’t had a vacation in years and he’s starting to feel burned out as well.

On top of that, even with the extra revenue coming in, his margins have gone down since the team isn’t being as careful or productive as they might be at a slower pace. More mistakes, more redoing of work means less money to the bottom line.

And the answer isn’t as simple as just hiring a couple of new people for the team. The type of person that’s needed is fairly specialized and it can take a while to not only find someone who has the right skills, but even then they need to be trained in the particular work that Tom and his team are doing.

What are Tom’s options?

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How do you address too much growth too fast?

Tom wants to grow his business, but what he really wants is a business that’s easier to run and more profitable. And his current growth mode – even if he could handle it, isn’t taking him in the right direction.

Short term fixes – Get Help, Raise Prices

There are a couple of things Tom can do right away that will help almost immediately. The first one is that he can hire more help in some non-critical areas (back office operations, admin, assistants). This won’t directly impact the work the clients need done, but it will free up Tom and the team for at least a few hours a week – and it won’t cost all that much (could be outsourced or part-time hires).

Secondly, Tom needs to immediately raise his prices – this will help improve his margins, but more importantly it will also slow down the amount of work that’s coming in (and if not, then he should raise his prices even more). This is a tough thing for most business owners to do – especially with long term clients, but it’s better than just turning away work – and most clients will understand. They may not be happy to pay more, but they will understand. Let supply and demand work in your favor…

Longer term fixes – Hiring and Focus

In addition to the short term fixes above, Tom needs to also do a few more things. These won’t pay off right away, but they will help him to minimize this problem in the future – and hopefully position him for the kind of growth and business that he really wants to have longer term.

Change (or at least add to) his hiring approach. Tom has traditionally hired very experienced people who could, with a few months training, step right into the work that needs to be done. However those resources are hard to find and often they don’t match the culture that he’s trying to build, so it can be very difficult to make that work. An alternative would be to hire inexperienced or at least less experienced people who will need to grow into the positions.

He could go with more of an apprenticeship type program (pairing up new people with experienced counterparts) or maybe changing how the work is done with the senior team doing more oversight and breaking the work into smaller pieces that less experienced people could do.

The other long term change he needs to make is find a way to focus the work that he and his team do. Currently they say ‘Yes’ to almost anything that comes in the door. That causes a couple of problems – for starters, a lot of the projects tend to be unique challenges that require a lot of up front work to figure out how to get them done. It also means his team doesn’t get a lot of benefits from synergies between projects – they can’t reuse a lot of their efforts because most of them are very different.

A better approach – especially if you want to be able scale more easily – is to identify the top 2 or 3 kinds of work that you do for clients and turn those into repeatable products (as much as possible). And then start focusing as much as you can on only doing that kind of work.

This should be the kind of work that your team is especially good at… and where you have a lot of existing and potential client interest. In other words, you need to specialize – focus your efforts and consciously stop being the solution for everything in your industry.

Get more help, raise prices, change your hiring approach and become more focused and specialized. These aren’t easy things to do – but they will help Tom (and anyone who’s trying to grow) transform his business into one that can scale without most of the pain and drama.

What do you think? Are we missing anything? Have you had this challenge? What did you do? We’d love to hear from you.

Shawn Kinkade Kansas City Business Coach