The principles of business growth are pretty straightforward. Find and fine-tune a formula that works, test that it can scale, and scale it. It all looks so simple when you put it on paper but the actual reality is something different.
I know plenty of CEOs and MDs who run businesses that have got stuck somewhere between £1m and £10m. I would argue that there are five things that really great businesses are obsessed with and taking your eye off any one will leave your business potentially vulnerable:
1. Strategy (planning while being aware of the outside environment) - without one you are like a rudderless boat drifting wherever the current takes you. This can work for a while but your luck will run out at some point.
2. Marketing – acquiring more of the right clients.
3. Teams – and people are a nightmare!
Three separate magazine publishers became obsessed with the triad of strategy, marketing and teams to turn around their fortunes. All the publishers had made their money from subscriptions and sales revenues. Both of these revenue streams fell by about 70% in 2009. The entire landscape of their very different markets and industries had changed. The solution was to reinvent the businesses. One used its incredible database to run conferences, one contracted by 70% and only kept its premium high-value work while slashing all irrelevant costs, one reinvented itself by focusing on editorial and content relevant for a very specific age range. All three businesses became more profitable than they were when they hit their respective brick walls.
One should also mention two other issues that were key in the case studies:
4. External advice loosely describes the willingness to take on support and assistance from beyond the current gene pool. Too many MDs and CEOs fail to acknowledge their own limitations.
5. External finance is often ignored by growing businesses. Fuelled by organic growth, the growing business is faced with the demands of ever-faster and larger cash-flow movements.
So yes, businesses get stuck and yes, the textbook case studies and articles make it all look so easy. The reality, for the majority of MDs and CEOs, is that maintaining growth is not quite so easy. All the research points to successful businesses being obsessed with strategy, marketing and teams, as well as external advice and external finance. Are you?
More from Vistage: