Whatever your business, whether it’s commercial or a charity or not-for-profit, if you grow significantly there will be major implications on how you fund the growth and manage the cash.
VIstage Speaker, Jo Haigh, puts it like this: “You can trade profitably for ages, but you can only ever run out of cash once.”
James Nicholson-Smith, Director, FD Centre also warns: “Unless you’re really determined you need the funding and have a really good reason for it, this whole funding bit can be a massive distraction to the business. Go into it with your eyes wide open, knowing that it’s going to take a big, big chunk of your time.”
The Scale-Up Institute figures quoted in a recent Vistage whitepaper report show that fewer than 4% of all UK start-ups have 10 or more employees 10 years into their lives, this demonstrates that the majority of start-ups fail to scale - Why is this?
Guy Rigby of Vistage partner Smith & Williamson sees lots of businesses that start with a visionary flourish, only to stall after failing to add more customers because they haven’t innovated or got their marketing right. They lose their way, unable to see how to get to the next stage and become one of the ‘living dead’. These businesses are going nowhere, having lost their vision and reason for existing.
Scale-up is an entirely different business environment, it’s more than just entering an accelerated growth phase. The difference with scale-ups is that the game changes so fast and often simultaneously in all these areas, when growth accelerates. And as we have seen, the price of failure is larger in a scale-up.
As a business professor, students often ask me where they should take their careers in order to have the most impact. They are expecting a straightforward answer: that they should work in finance in a large resource-extraction company, say, or in the advocacy department of a multinational non-profit organization. Instead, I am quick to tell them, “Wrong question: try again.” The key question is one that only they can answer for themselves: “What were you meant to do with your life?”
This deeper exploration leads to the pursuit of a calling or a vocation, which is nothing more or less than your purpose in the world. We all have a goal or purpose to what we do. Where do you devote your energy? How much time do you spend with your family, or in the woods, or pursuing wealth?
People are the only asset that walk out the door every night and consciously decide whether to return or not the next day. They decide each day whether to return in body only, or whether to show up fully engaged and productive. Scary stuff, considering how much you’ve invested in them! Lack of engagement is an increasingly epidemic challenge for business leaders at all levels, and the cost of an employee who’s simply going through the motions is one of the biggest hidden drains on profitability.
If you’ve been looking for strategies to create an engaged workforce beyond the usual teamwork, motivation, and perks/rewards approaches, you’re in the right place.
It never ceases to surprise us when CEOs confide that they don’t have stellar expectations of what marketing can do for their business. “Sure it can make a difference”, they say, “A smart website and some nice newsletters”. All too rarely do we meet a CEO who tells us they expect their marketing to deliver truly transformational, high impact strategic results.
Many have a preconceived, purely tactical view of marketing. “We got last week’s receptionist to make a few changes to the website”. They don’t understand what strategic marketing is and so are unable to set the strategic tone for how they want their business strategy (for those which have one!) to be supported.
And by high impact strategic results - what do we mean? There are a few questions you should be asking of your business.
We are endlessly told that hard work creates more profit. Work harder to create more profit in your new business. Does more work really mean more profit? Do we have to put in ludicrously long hours to be successful?
We have been brought up to believe that working more equates to being more successful. More input equates to more output. Well, I am not sure I agree. I think the logic (and many of the assumptions behind it) is flawed.
Sure, if you are a one-person-business, charging per unit of time, then more units equals more money. But most businesses try to grow by employing people to spread the workload. Or, maybe you should simply charge more per unit of time!
For those of us who are not charging by the hour, then I would argue that it may well be more profitable to work less. I repeat… to work less. Less hours… less stress… less banging your head against a brick wall.
Boards of directors have always had bad press. As far back as the 18th century Adam Smith commented “…Being the managers rather of other people’s money than their own…should watch over it with the same anxious vigilance with which the partners in a private co-partnery frequently watch over their own…”
Where are you in your 5 plan? Almost there? Halfway through? Not even started? It’s both natural and practical to look ahead and plan for what is going to happen in the future. After all, how are you going to know the steps you need to take to achieve your ambitions, if you’ve not even defined what these goals are? But to set a concrete plan in place, which categorically informs what you will do from now until the day you retire is unrealistic. More than that, it’s kind of pointless.
In the not so distant past, career paths were set. You chose a career, you joined a company, you stayed with that company, and you retired from that company with your pension. Skip forward to the present day and it’s clear that this has all changed. If I look at the freedom we now have in our professional lives, the ability and flexibility to change careers and start new businesses is incredible.
Starting out on a new professional venture 20, 30, even 40 years into your working life is no longer exceptional; indeed, you could argue that for a seasoned business leader it’s almost expected. However, these changes are making a fundamental difference in the way we approach our working lives. The job for life is a thing of the past. But, the opportunity for a more fulfilling and rewarding career path is greater than even.
So what does this have to do with 5 year plans?
Essentially, if your 5 year plan stops you from taking advantage of new career or business opportunities then there is something very wrong with the it. Ditching the plan altogether is, perhaps, a bit dramatic. But changing the approach you have to planning means you have the joint benefit of a structure to work towards your goals, as well as the flexibility to take advantage of new opportunities in the market.