The Double-Edged Sword of Rapid Business Growth: Strategies for Sustainable Success

09 MAY 2024 - GigX.com

By Robert Fitts, Fractional COO, CFO, CRO, CAO, CEO, COO, CTO & CSO 

The Paradox of Growth

We’re all familiar with quotes attributed to various people essentially saying that businesses are either growing or dying. In other words, if you are content with where your business is, you will get lapped by someone who isn’t. While that mindset fosters a healthy commitment to constant improvement, what’s rarely said is that it’s possible to grow a business to death. 

Recognizing the Danger Signs

High-growth companies usually find themselves in this envied state of expansion for one of several reasons: their disruptive offering has few if any competitors and experiences tremendous demand; a paradigm shift allows for well-capitalized organizations to swiftly establish a new market or seize market share; exiting competitors leave a vacuum to be exploited; or the company makes an outsized investment in sales and marketing. While it’s more difficult to strategically plan for growth in response to a competitor exiting or a paradigm shift like COVID, rapid growth can have ironically disastrous effects if not managed well. While there are too many startup examples to cite, rapidly expanding sales with an insufficient infrastructure often leads to an inability to manage the throughput. The company that was so enthusiastic about growing gets a lot more customers, who end up leaving because of poor product quality, late deliveries, poor customer service, billing issues, etc. What seemed like a good opportunity backfires and the company is left damaged at best or out of business at worst.

Bridging the Gap

Rapidly increasing revenues often produce a narcotic effect on organizations as cash and the potential for even more cash blinds the organization to the more mundane matter of how to operationalize that growth. The focus in rapidly growing companies is typically on customer acquisition and revenues, not expenses and processes. The window of opportunity or the window to at least achieve first or early mover status is often narrow. And the momentum within the organization is hard to get in front of to question the potential adverse impacts of the expected growth. But the question must be asked or else, as insufficient technology, financial or human capital, or an infrastructure not built to scale can certainly kill a company.

Charting the Course

There are ways, however, companies can grow rapidly, even exponentially, and succeed.

The first step to solving a problem is to recognize that one exists. For rapidly growing organizations there must be a recognition that it is possible that it can grow itself into serious or fatal trouble. Someone senior in the organization must make it clear to the leadership team that the narcotic of growth may have long-term, serious, or even fatal side effects if not properly administered.

Cultivating a Growth Mindset

Second, the company must determine the gaps between the existing state of the organization and the state necessary to successfully manage the intended growth. Is the company prepared for such rapid growth operationally? What areas are at risk? Which more so than others? What gaps are there? In other words, what systems, processes, and people need to be implemented to handle the intended growth? 

Monitoring Progress

Third, the company must convert that gap analysis into a comprehensive growth plan. That plan must include timelines and a proforma based on those requirements and it must have buy-in from the key stakeholders. When does any required human capital or infrastructure need to be implemented and at what cost? Does the company have sufficient capital to finance its expansion and, if not, how much does it need and when? These are just two of the myriad of financial and phasing issues that must be addressed. 

Fine-Tuning for Success

Fourth, the growth vision must be communicated to the organization. Communicating the opportunity and larger objectives aligns the organization, enriches the company culture and enhances teamwork via a common purpose. This can be accomplished in a variety of ways including shared dashboards, company Zoom meetings, and other internal communications, but the general rule is the more communication along the way the better.

Conclusion

“Grow or die” may be an overly dramatic and inapplicable aphorism for many companies, but for others, it’s a maxim. While the discovery of new, deep blue oceans has the possibility for rapid or even exponential growth, shipwrecks are also possible. Rapid growth never involves smooth sailing, but if your company recognizes the risks and plans accordingly, it can weather the storms and reach its intended destination.

About the Author

Bob Fitts is a management consultant as well as an interim/fractional COO/CFO for SMBs and lower-middle market companies. A resident of Miami, Bob is the CEO of v3.0 and the Managing Director of Fairfax Insights.