Oh my god, don’t get me onto ‘managing growth’, this has to be my all time favourite subject and I could witter away for hours if allowed! It’s massive, and if it could really be answered in one article wouldn’t that be great? But it can’t. You haven’t got time to read it – you’re too busy! So I’m only going to touch on some parts and come back to the others later.
Who would possibly think growth could be a problem? Surely, each and every one of us in business strive for some degree of growth, and yet when it turns up it is the bane of our lives. So why is that, and what can we do to minimise the pain and maximise the opportunity?
Am I saying that unless we are happy with the ‘steady-state’, a point at which we have reached the plateau and no longer wish to grow (or shrink) we are doomed? Well, obviously not, it’s just that to change, something different is going to happen. Here we go; ‘if you always do what you’ve always done, you’ll always get what you always have’. So perhaps the first reason we struggle with growth is because we apply the same old, same old to the new challenges and amazingly, something doesn’t work. Who would have thought that?
Here’s another truth: Business is a challenge. I mean, at times it’s a real challenge and when you are the guy in charge God do you feel it. There’s always something that’s pulling you out. You fix this, and that falls over. You take a couple of steps forward and one step backwards. I recently ran (a quarter) of the Classic Quarter in a relay with some guys from work. I’ve done it before, but this time a new leg. It’s an ultra marathon so it’s not just about distance it’s terrain (cliff paths) and elevation – my 10 miles was 1,400ft. I trained (although admittedly, I probably started too late) and was doing 3 nights a week on the footpath running 6 or 7 miles. I even gave up booze for a month – no bad thing, quite enjoyed it! But hell, was every session hard work. I’m probably older than most of you (and about 4 years older than God) but it was never easy. Weirdly, I kept relating what I was doing to business. Emm kept saying ‘it’s a challenge, if it was easy everyone would be able to do it’. That’s the same in business. No business is like falling off a log. If you want to fall off a log, don’t start a business. When it came to the climbs I would be at sea level looking up at 200ft of steps. After 7 miles. What! But there was no magic bullet that would propel me to the top. No one thing I could do that would ‘hey presto’ that was easy. It was good old fashioned one step at a time. One more, one more. But not losing sight of what the end goal was. To finish. So, if you want to recalibrate your head for challenges go and do a measurable physical one. One that really stretches you. One that gets you well out of your comfort zone. Because the other thing, that is where the magic is. Get to the edge of your wheel and you can see the sparks fly.
A few of you who know me just can’t wait for this next bit, it’s the mantra I roll out every time I see someone in this situation, and it’s about resources, namely time, money, people and space. The point is, and there are very few exceptions to this rule, you cannot change unless you have resources to allow you to change. And of course, I’m talking about change being growth. But you’ll need some element of each of them if you wish to change. You’ll need time to do what it is you can’t do now. You’ll need money to implement some of the changes, buy the people, buy the equipment, buy the premises. You’ll need a new team, but you’ll definitely need the right team. No dick heads. And lastly you’ll need the space.
First of all, you need to ask yourself what do I need more of? What one thing will change my business (and stop this pain)? If you have that, what will it give you? And then, what is the next thing? Sometimes those questions are difficult to answer, so here’s some great questions to ask yourself (from the opposite perspective).
1. If you won a million pounds on the lottery to spend on your business what would you do? What would you spend it on?
2. If you could stop the business for 30 days, switch off the phones, switch off the emails (yes please!), stop all enquiries and interruptions, get enough pizza in the building to last the month and not let any of the team out, what would you do? What would you fix? What would each of you fix to make things slicker?
3. If you could press Control-Alt-Delete on your business and re-boot it, what would you not do this time around, what decisions would you make differently, who would you not employ, what would you do more of?
Guess what? If you try the above, three amazing things happen. Firstly, when I have set this test, no one ever spends anything like a million pounds or even gets anywhere close. Most people fix their problems for less than £50k. Try it.
Secondly, given 30 days to fix all the problems, most people do it in a fraction of that time. some in a couple of days and a few in less than a week. You’d be surprised.
Lastly, the option of Control-Alt-Delete tells you what you need to stop doing and what you need to start. It lays out some clear decisions that, if you have the balls to make, will transform your business.
Maybe this is the second rule for growth. Stop for a moment and take stock. Try the test above and see what simple quick fixes are staring you in the face that if only you took time out to do them the business would take a step-change for the better.
Let’s talk about cash. Cash is the King and you had better get your head around that. Profit is on paper, cash is in your pocket and you need to focus on that, because without it you are likely to be ham strung. So, how do you get it?
The first way is what I call ‘organic cash’, that is the cash we grow ourselves. The cash we can grow from trading. So, we sell something, we cover our costs, that’s the bit that’s left. But depending on your business, growing organic cash is tough. The minute you produce some, you’ve spent it on more stuff to sell. Or the engine has fallen out of the van, or some marketing campaign sucks it up. But one way or another, be under no illusion that producing your own cash is really tough and it is probably the first place you need to look to fix.
The remaining options are; borrow it, get given it, steal it. But before doing any of those things you need to have answered the question ‘ok, if I did have it, this is what I would do with it’. It’s a bit like the million pound lottery win question above. But what you must do is model it. Build a model of (no limits) what your business could be like. How much could you really sell over time. I mean if you really put your mind to it. No seriously, really put your mind to it, like 80% of your effort. Well, I don’t doubt it could be a big number, but it will also leave some gaps behind you and you must work it through so that you know all the costs to get you there. Your model will be a budget, a profit forecast and a cash flow. And it’s this last one we are interested in. That will show your maximum cash requirement (which will be net of the organic cash you grow) and it is this we must borrow, get given or steal.
But before looking at how to get the cash it’s worth noting that just setting a budget is not the end. It sets the waypoints, the markers, the KPI’s that we will need to track ourselves on this journey. And whilst you are there, why not tweak a few things by, say, 5%, and see what difference they make to your outcomes (in this case cash). Where the outcome changes a lot, they are significant, manage them more closely than anything else. Where they make little difference, just keep a weather eye on them.
Raising cash……that will be the subject of the next blog, along with time, people and space.
If the above is of any interest, I would love to talk it through with you, it is my favourite subject after all.