Starting and building your own business is exciting and scary at the same time. Turning an idea into a business is full of unknowns, chances to learn, and pitfalls to avoid. Growing a business challenges you to change and grow as a leader as your business changes and grows. Fear not, you are not alone! Iconic businesses, like Apple and Ben & Jerry's, were literally just two creative people in a garage trying out an idea. As their start-ups took off, they faced the same challenge that all startup leaders face: how to evolve their leadership style to match their company's evolving needs. As a great example, read HubSpot CEO Brian Halligan's story about how he had to learn to say no as HubSpot grew from start-up to scale.
Not all businesses grow to the size of Apple, Ben and Jerry's or HubSpot, but significant growth is possible even at smaller scales. Regardless of the size you aim to be, building your growth engine involves the same progression. There are three major phases involved in starting and growing a business—start-up, scale-up, and build out. In the paragraphs below, I'll walk you through them. For each phase, I point out key tools and techniques that will help you excel at your current stage and set you up for further success as you grow. You'll see a common theme of constant learning and iterations throughout, even as the focus changes through each stage of growth. Check them out and reach out to us if you have any questions!
In the Start Up phase, designing your business model and proving out your product-market fit are your top priorities. This requires lots of experimentation and exploration. Developing a business plan is a good step, though a traditional multi-page business plan is likely overkill. Instead, try a Business Model Canvas. These single page business plans allow you to quickly outline the major components of your business, from your core value proposition to your cost and revenue structures. Our founder, Carl Lorentson recalls, "When I was starting up, these proved to be more useful than the formal business plan I put together in a class I took." We continue to use them when we are considering new services for our clients because they allow us to efficiently outline the idea and ensure we have a complete offering.
Once your expected business model is defined, you must verify it in the market place. Iteration and continuous learning are the name of the game. An excellent approach is the Lean Startup methodology's feedback loops. This process allows you to learn how your product or service is actually received in the market, adjust your approach, and observe the impact of your changes. Using iterations to develop a minimum viable product (MVP), refine your business model, or improve internal operations is one of the most powerful habits you can adopt as a business owner. It's rare that your original idea is the idea that finally sticks. In fact, many well known companies started as something else entirely. From Twitter and Paypal to Starbucks and Nintendo, big changes in business focus are common, especially when starting up a new company.
Initial Scale Up
As your product-market fit solidifies and your business model takes shape, you can start to scale up. At this stage, stepping up your marketing to bring in more customers is crucial. Using social media to amplify your message, especially by using your earliest adopters as evangelists should allow you to quickly bring in more customers, more sales, and more revenue. Tesla's Elon Musk does this well, consistently using social media to communicate with Tesla customers.
As much fun as more sales and more customers are, you can easily become a victim of your own success as you are overwhelmed by a rapid increase in customers and orders. Now is the time to add feedback loops that are more focused on your internal operations. The retrospective approach, adopted from agile software development practices, is a powerful tool to organize your team. At RIS, we use these sessions internally to constantly evaluate and change how we are working, aiming for ever increasing efficiency throughout our company. Continually reviewing how the many functions of your company (e.g. marketing, sales, production, shipping, etc.) are working together is a key step to ensuring your success. Using the same iterative foundation as the lean startup model, this approach is a natural evolution of your business management toolbox to support greater scale.
Growth, Full Scale Up, and Build Out
During scale up, you will bring in an increasing number of customers and continuously refine how you and your team work together to serve them. As you move beyond scale up, and your company continues to grow in size and you as an owner will become more distant from the on-the-ground decisions that will be made every day. As you gain employees to coordinate and departments continue to grow and mature on their own, you will once again need to shift the focus of your organizational development to prepare for success as an established company.
Efficiency becomes the name of the game. Driving out cost and delivering to your customers quickly, effectively, and efficiently allows you to create the most value for both your customers and your bottom line. Software should be carefully selected and implemented to support all the functions of your business and integrate them. The principles of Lean Manufacturing come into play as you look to avoid waste and continually work more efficiently. Again, there are ample examples of the power of lean manufacturing, with Toyota probably being the most famous for adopting its principles to produce high quality products at scale. The principles apply no matter how big or small your company is. Finding and eliminating bottlenecks in processes will increase your productivity, profitability, and sanity. The retrospectives that were used during initial scale up should be continued and replicated at the department and team levels to encourage the same continuous improvement that was needed when the company was first starting to grow.
Additionally, the feedback loops, established when the company first started, remain vital. Collecting the data becomes more complex as your company grows. Investing in software systems to provide a complete picture of your business by collecting and aggregating data from all corners is vital. As your business continues to mature, business intelligence software, data warehouse, and even artificial intelligence could become components of your information systems.
All Grown Up
Once you have gone through these phases, you can hardly be considered a start-up company anymore. With an established product, strong customer demand, and top-notch people and processes to connect them, you have become a mature company. Now you get to figure out what's next? New products? Acquire other companies? Sell your business and retire to a beautiful place of your choosing?
You can build a successful business! We can help! Find out more about how we can help you grow at the links below, or contact us for a free consultation!