Responsible parents teach children how to manage and mitigate risk. One of the classic childhood lessons is how to cross the street safely. We are taught to Stop, Look (both ways) and Listen before crossing. It’s an important skill for both children and adults to acquire.
A responsible business owner needs to stop, look and listen when he is thinking of expanding his company. Growth is a high risk area, which involves a multitude of new challenges. It is up to him to make sure he understands and is ready to meet them, because many successful businesses fail when they attempt to go to the next level.
There are a variety of reasons for why they fail. The biggest one is the lack of preparedness by the owner, who attempts to grow without giving thoughtful consideration to the changes he needs to make to be successful. He falsely believes that what he did in the past will support future success. Unfortunately, it rarely does.
One of the reasons that past success is not a good indicator of future success is that many do not understand the dynamic of growth. He thinks that because he was able to grow from a start up to a $2 million company that the same skill set will continue to be usable for a $4 million one.
However, as a business grows it demands different requirements from the owner. A few of these requirements include: learning to read more complicated financials, keeping up on increased tax liabilities and government regulations, understanding additional human resource requirements, finding and retaining good employees, developing an operational knowledge of profit and loss, and knowing how and when to delegate.
The duties and functions of management change with growth. If an owner does not keep up with these demands he will start to lose control. When the business is growing, he must grow too. Many a business has become a victim of its own success because he was unable learn new behaviors and skills. He did not stop, look and listen.
