Leaders of Fast-Growing Companies: Are You Losing Your Mojo? (Part 1 of 3)
Congratulations! Your company made Inc. magazine’s 500/5000 list of fastest growing companies!
The invitation to go to the grand induction ceremony is on your desk. Your baby, Rocket, Inc., is now on the map!
Local papers have printed the announcement on the front page!
The phone has been ringing off the hook from potential investors. They are so impressed with what you have been able to do that they want to woo you. Financial consultants are chasing you to represent your company!
Plaque manufacturers want to memorialize this moment with a dozen plaques that you can display prominently in the reception area of each of your offices!
Wooohoooo!!! You, the CEO/Founder/Executive/Leader, made it into this fast-growing exclusive club! The eagle is soaring! What could be better?
So…….Why do you feel so anxious as you cut the celebratory cake? Where is your elation of the accomplishment? Why are you engulfed with fear that the whole facade will come crashing down and hit the dirt?
Just because you have survived the birthing pangs you are not immunized from any further pain. Organizations of any size experience these growing pains. You know and the statistics show that fast growth generates a myriad of new problems. The fast road to success is not littered with rose petals alone — there are many, many thorns embedded in between.
Founders/Executives/Leaders of most fast-growing companies are inadequately prepared for the many financial, operational, and personal risks that pop up and become killjoys. I can safely bet that you relate to at least a few, if not many, of the following:
1. Cash Flow crunch. The ebb and flow of cash in and cash out gets extremely complicated. Fast-growing companies burn money for years before generating a positive cash flow. Your monthly expenses may exceed the inflow. This can be true for companies even with good operating margins. A common scenario is exceeding your credit line and suddenly one bad sales month spells disaster.
2. Turnover. You funded the last few cash flow shortages by postponing payment of your salary and that of some of the other senior team members. Some of the employees, including your right hand people, are polishing their resumes. Contractors and suppliers are threatening to stop providing products/services and may actually follow through. You beg and plead and remind them of all the things you have done for them. They say, “That was the past. We have to deal with the now.”
3. Need to spend to become a big Company. Your team is pushing for more robust processes and equipment to deal with the present load and the growth trajectory. All this requires cash. Cash is scarce and the inflow from these initiatives is way down the road. Resources of all kinds are stretched thin.
4.Finding “good” investors. Those who can partner with you and be supportive to help you grow and prosper? They exist but, where are they? How do you screen them?
Sometimes, smelling blood in the water, what you are getting are offerings laced with crazy conditions. These predators-masquerading-as-investors want their pound of flesh even if the venture fails. You want to say “no.” Are you in a position to say no?
Caution: There are many “loan to own” shops who seem to come to your “rescue” only to trap you in a default.
5. Investor relations is cutting into ‘productive’ effort. You had collected enough investment dollars to tide you over the erratic cash flows. Alas! You are now indebted to many people who demand your time whenever a thought occurs to them. Every week, new cash flow projections have to be prepared in “their” format, not the one you winged last week. When do you do real business?
6. Trying to race a VW Beetle at the speed of a Ferrari. VCs have invested big money in you to grow fast and become a “unicorn.” You have to keep going faster and faster. The more you speed up, the more is required from you. If you don’t keep up the pace, the VCs will cut you from their favorable view of potential unicorns and you will be a lame duck. To keep the pace, you need to overhaul the whole contraption with a new engine, new wheels and an aerodynamic body. Where is that money coming from?
7. Operations and Customer Service problems. When you started everyone and anyone could handle all aspects of the business. The processes were simple and one-person-smooth. Now you have silos, and the left hand does not know what the right does. You, the board, and investors are pushing for even faster growth.
You had prayed that with customer and revenue growth, it would cover all sorts of sins. Now that it is happening you are overwhelmed. You know that the internal team is praying for a slow down so that they can catch their breath.
You find yourself seriously understaffed and have had to start cutting corners. You know that this eventually leads to inferior service and customer dissatisfaction with your company. You can already hear the stress level and petty fights in the voices of customers and employees.
8. Over-reliance on early customers. The fast growth that put you on the map was from the few early customers. They know it and are continuing to tighten the screws. In order to be successful you are now trying to diversify your product line, expand geography, and increase margins. The early customers are not agreeing to change to the new programs. They don’t want to understand your situation. What do you do? Do you let them go or continue to service them as a loss leader?
9. Star salesmen bomb out. To keep up with ever expanding sales requirements you hire many new salespeople. They were stars in their previous positions. In your venture, a good percent cannot deliver for many months. They incur costs of on-boarding, training, travel costs, and any “guaranteed” bonuses. The costs pile up. However, the sales are a promise in the future. You have to decide how many salespeople you add under these metrics.
10. Responsibility for the entire Value Chain. You meet the family of your team members in the company picnic. You smile dutifully but cringe inside at the thought of how many people are dependent on you.
Your concerns are not limited to you, your team, and your own company. You worry about everyone in the complex value chain of suppliers, customers, business partners and stakeholders. You must keep them engaged and successful. The burden of the entire chain is on you.
11. Constant crisis management. You are the ‘expert’ on everything and your opinion counts for all the decisions. You have added staff in keeping with the growth, but they are merely conduits of information to form a line outside your office door.
All of these superstars you’ve hired cannot come to an agreement on various issues and you have to be the sole arbitrator. Afterwards, you console the one whose idea you rejected because you feel threatened that (s)he may leave. You wonder if you might as well be doing all the grunt work yourself because you are still a one person band. Won’t hiring more people just add to the confusion?
Anytime you hear yourself saying “I will do it” you are worried about the ability to stretch the day any further.
12. Lack of controls. Your oversight staff is non-existent and controls are lax. You wonder who among your employees have been taking advantage and cheating.
13. Disconnected with the ground reality. As you deal with the executive issues, you are getting disconnected with what is really happening with the product, customers, your employees and your business. This can distract you away from long-term goals and strategies and your ability to focus on the big picture.
There is little time to think, let alone plan. The plans you made have been obsolete a long time ago. You are merely reacting to the rush of activity.
14. Cultural dissolution. It was so much easier to develop chemistry, cohesiveness, and values with your initial team. As you add personnel at a rapid rate it gets difficult to keep everyone connected. New departments and employees get caught up in their own, often competing, goals and daily activities. Maintaining any cohesive corporate culture appears to be a losing battle.
15. Obsolescence. Since beginning your venture, you had to pivot several times to get the ship finally moving. Unfortunately, your company name, logo, and image are still trapped where you started. Your present and past have become muddled. You urgently need new branding but you have neither time nor money.
16. The world has moved on. While you made a big dent with the early adopters, new competitors have come in with newer versions of your product. Customers are evolving. You haven’t even recovered the investment in the previous processes and here you are, having to change again.
17. No time to grow into the leader role. Not enough time for everything that needs to be done. The board wants you to take classes and coaching to grow into an effective leader. Unfortunately, what they cannot provide you with is more than 24 hours in a day. What gives is your children’s soccer games and spousal priorities. You do feel guilty but are trapped.
18. Your family life is in the pits. You are doing all this for them and instead of being grateful; they think you are checked out. You are exhausted and don’t have time for more drama.
19. Passion, what passion? This was your dream, your energizer. What happened? Your enthusiasm is waning. You are killing yourself physically, mentally, and emotionally. You question whether all this insane effort was worth the physical and emotional pain. How are the problems of rapid growth better than those when you had little growth?
20. List your own issue. This list is just a small set of all the issues that are around you. There are a zillion more. You can add to this list your other personal issues.
Growth risk is an important issue. It is equally as relevant as economic downturns or technology obsolescence. Those issues are also on your mind! These and other painful symptoms are letting you know that the company’s growth has outpaced its basic foundation.
While others celebrate the growth of your company, many organizational, professional and personal issues have formed a twisted rope that is slowly strangling you. You no longer have the joy of driving performance. You are bogged down to averting disaster……The game has changed and you are not on top of it.
You are losing your Mojo!
How do you know you are derailing?
According to Eric Flamholtz and Yvonne Randle (in Growing Pains):
• People feel that there are not enough hours in the day.
• People spend too much time ‘‘putting out fires.’’
• Many people are not aware of what others are doing.
• People lack understanding of where the firm is headed.
• There are not enough good managers.
• People feel that ‘‘I have to do it myself if I want to get it done correctly.’’
• Most people feel that the firm’s meetings are a waste of time.
• When plans are made there is very little follow-up, so things just don’t get done.
- Some people feel insecure about their place in the firm.
- The firm has continued to grow in sales, but not in profits.
Is there hope?
Yes. You are definitely not alone. I have been there. I have felt that. My last company was in the Inc. 500/5000 fastest-growing companies for five years in a row. At one time or another, I have felt the pain and agony of many of these issues and more.
All successful organizations move through these stages. You have adequately covered the risk of failure. Now, is the time to tackle the risk of choking on your rapid growth.
Next issue I will outline several entities and groups who can help you and share some of this burden with you.
I will also outline one particular resource that is not used often enough by fast-growing CEOs. In hindsight I wish I had made use of that resource when I was struggling with these very issues while building a fast-growing company.
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A version of this article originally published in Upsize Magazine, Minneapolis, December 2015.
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Dr. Rajiv Tandon is an Entrepreneur, Educator and Mentor. He facilitates peer groups for CEOs of fast-growing companies in Minnesota. To learn more, sign up to get the email newsletter.
