High Growth Companies – The Transition Points

I am speaking at an event this morning about high growth and the leadership characteristics that go with driving a company forward. It’s really very interesting that being at the helm of a high growth business is similar yet also very different to that of leading in the corporate world. Having a vision, game plan and great team are common must haves for leaders.

Having said all of that in a growth company the Founder has many more grass-roots issues to consider, ones that in the corporate world are generally looked after by someone else. Starting up and growing a business is a bit like spinning plates. What comes with growth is the Founders need to continuously develop him or herself – quite often they “don’t know what they don’t know”. If the ambition is to grow then the commitment to self development is vital.

What is interesting to observe is the transition points that come with growth, these transition points usually relate to the head count of the business:

Point 1 – Setting up the business is the first transition point, being alone and its all down to you – you make the decisions – so sort yourself out. Self discipline is vital

Point 2 – You start to employ people. You are now responsible for someone else’s life in part. PAYE, HMRC,  employment stuff, rules and regulations start to occupy your time and energy. In many instances this red tape is viewed as non value adding – but you must get it right.

Point 3 – You are heading for 7 employees and the hassle really starts to kick in. The Founder now becomes a social worker. The need for structure organisation and processes becomes a must have.

Point 4 – Leading up to 25 employees. Be careful because the team can rapidly become a mob. Values and a rule book must be established. Devolving responsibilities and letting go to those trusted individuals becomes a necessity. A healthy mix of thinkers, doers, sellers and controllers is vital. A culture is emerging….

Point 5 – Heading for 50 people. This almost becomes a corporate entity, usually what comes with this is size of company is devolved P & L responsibility, tight financial control, lean operations and well embedded systems and process. KPI’s dashboard is paramount (it is at all points) because leakage can happen very easily. The leader now has a very different beast on his/her hands.

So what’s the point – the leadership style at point 1 is very different to that at point 5. Very few individuals commit to the self development necessary to get to point 5. Added to this many don’t want the hassle either. It explains why some 95% of UK business stock has a turnover of less than £5M.

 

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One Response to High Growth Companies – The Transition Points

  1. Mike Dean says:

    Hi John – great summary. I met with two entrepreneurs at an event last week – both of whom have hit that £3-5m “ceiling” – they “think” they want to grow further but they don’t understand the challenge and don’t feel ready to commit….very precisely the point at which they need external help and support…..watch this space!

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