A few thoughts on growth in a start up

"Growth can be fun, if you are carefull"







Somethings that have been happening here at FDD and in life in general made my see some things really clear W.R.T. growth in an organization. There are two ways that a company can grow organically or by acquisition, with past experience of the latter I would have to say that acquisition is a hard road to go down, and should be weighed in light of the hidden costs and disruption vs the benefits you will gain.

The Organic growth path is not an easy road to run either, there is a statistic that 92% of the companies in Scotland have only 10 employees, there is a barrier at 10 employees which is hard to cross for most of these companies, as I have grown 5 companies from early doors to head counts of more than a 100 employees. I have had to manage some of the traditional issues of founders not being able to delegate or let loose the reigns of the company, this is a well known challenge for the start-up, and understood by the Venture capital community, I have touched on this in previous bloggings on growth. The key thought I want to bring out, was that as a company grows it needs structure but the structure in it self can kill the the very same dynamics that have made the company grow, I am not advocating a WL Gore or John Lewis's approach but I am say be very careful in how you build and apply the structure to the organization, best to have the initial structure in place near the very beginning as it will be hard to introduce the structure later in the companies evolution. The recruitment process can damage this as well I have seen hires that have introduced a whole level of bureaucracy into an organization that it can impair the companies ability to achieve its objectives and goals.


Slainte

Gordon

Problems During Start-up Can Mean Success Later

"Some wizdom from my rear view mirror"

People always want their start-up company to be immediately profitable, but sometimes a little struggle at the beginning can be the best-case scenario.

Why? Because when things go too smoothly right from the start, two dangers can emerge:

1. Owners and employees may become complacent, thinking that it will always be as easy to make sales and maintain profitability. Then, if the economy or specific industry changes and sales drop or profit margins grow thinner, it can be tough psychologically to put in the extra effort suddenly required to achieve what once came so easily.
2. A company may not have the incentive to streamline operations and strengthen the fundamentals of the company to maximize chances for long-term profitability. A new company becomes strong by squeezing costs to a minimum, making the most of employees, securing the best terms from suppliers, negotiating tough terms for leases and loans, learning how to analyze expansion, adding new products/services, making the most out of every marketing spend and all the other factors that can allow a company to weather future changes.

Slainte

Gordon