What conditions cause the growth of the enterprise? What is favorable to him and what is not necessarily? If you find out, you will be able to plan effective business activities more effectively. Also check what is holding back the company's development. Perhaps you are unknowingly making any of these mistakes?
What is enterprise growth?
The answer seems obvious - the company's growth means its expansion. It turns out, however, that in scientific studies on this topic, researchers sometimes present a completely different approach. M. Goold claims that growth is greater than before in terms of market value, sales value, company profit and share value.
Meanwhile, many other authors understand the growth of the enterprise literally - as employment growth. It is worth remembering, however, that this does not always mean greater value of the company or growing profits. Concepts such as excessive bureaucracy and bloated administration are often used when referring to unprofitable state-owned enterprises with an outdated structure. They are huge, but that doesn't translate to the results. It is a consolation for those who dream of the company's growth, and their company cannot boast of a radically larger team than it used to be.
Business growth phases
Arkadiusz Wierzbic in the pages of the magazine Nauki o Zarządzania ("Growth and development of the enterprise - review of theoretical concepts") notes that since the 1960s the growth of a company has been described analogously to human growth and development. Various researchers distinguish phases such as:
- pre-founding,
- infancy,
- increase,
- growing up,
- bloom,
- maturity,
- aristocratic,
- early bureaucracy,
- bureaucracy,
- death.
Perhaps this brutal approach allows us to see without any illusions what awaits the company in the coming years. Defining the stage, on which the company is located, facilitates the assessment of the company's growth potential. However, this is only one of the shots. Others distinguish only four phases of the company's growth:
- preliminary expansion and accumulation of resources,
- rationalizing the use of resources,
- expansion and diversification,
- development of a new structure and rationalization of resources.
In turn, Smith, Mitchell, and Summer simplify even further by pointing to three phases: establishment, growth, and maturity.
Enterprise growth according to Greiner
The growth model of L. Greiner's company is very interesting. It is well known that it is darkest before dawn. Another analogy is that you have to fall to get up, or that the healing process begins after the patient's strength declines sharply. It turns out that L. Greiner adopted the same principle in his model. In his view, the company develops on a straight line from its inception to maturity, but on its way it experiences sharp drops just at the moment of switching to the next stage of operation. These drops are successively crises in the following areas:
- leadership,
- autonomy,
- control,
- bureaucracy.
Is something inhibiting your company's growth?
We will diagnose the cause and implement effective corrective actions!
They can be considered as inevitable on the way to success thresholds. Some companies are unable to jump over them, which inhibits the company's growth. However, where there is awareness that this is only a temporary slowdown before entering the next stage of the company's operation, it is easier to stay calm all the time. LL Steinmetz writes about it in a similar way, distinguishing three critical phaseswhen problems inevitably must arise. It even sets the hiring thresholds at which to expect these sudden twists and turns (25-30 employees; 250-300 employees, 750-1000 employees). Study the history of large corporations or local companies you know, and you will notice this regularity yourself.
Rapid Growth Companies
Not everything is predictable in the business world. However, there are business models that are particularly conducive to the rapid growth of the enterprise and those in which it is unlikely to expect a significant growth in a short time. The former include, for example, technology start-ups, which are assumed to be quickly scalable (a typical story about the road from the garage to the Silicon Valley), and they often use business accelerators, support from business angels or subsidies. On the other hand, in the case of small-scale operations (restaurant, shop), the business plan often states that the expected time horizon in which profitability can be expected is as much as 2-4 years. It's important to be aware of these growth forecasts for your business before you go live. Then you can adjust the model of operation to your own abilities and expectations.
From the Rapid Growth Company report, you can find out which factors are conducive to the company's rapid development, and which inhibit it. The authors talked to owners of fast-growing companies. Quantitative and qualitative research led them to the conclusion that the most common barriers to the rapid growth of an enterprise are:
- problems related to employees - inadequate HR policy models, lack of team motivation, inadequate motivation tools.
- gaps in the competences of the management staff - education inconsistent with the requirements of the position and the market, lack of business experience, inability to manage a team.
- problems with managing the company - inability to manage projects, lack of orientation in the market and reality, inadequate marketing strategy
- problems with financial management - lack of financial liquidity, no access to capital.
On the other hand, among the activities supporting the company's growth, the respondents mentioned:
- Financial support - subsidies, reliefs, attracting investors.
- Improving the regulatory environment - legal clarity, favor of officials, knowledge of the law.
- Quality of administration - management, processes and systems in the company and its environment,
- access to foreign markets - administrative support, but also own methods expansion into new markets.
- Quality of education and training - improving the qualifications of employees and management.
If you are looking for other ideas to join rapid growth companies, please contact Commplace. We will prepare a strategy for your company that will accelerate its development.