How To Monitor Your Business Growth

I’m always on the lookout for articles about How To Monitor Your Business Growth. Here are a few snippets:

The general perception of growth is almost entirely positive, and I can understand why this is the general sentiment. I mean who wouldn’t want to be a billion-dollar business rather than a tiny shop around the corner?

However, we have seen time and again that growth—massive growth—can lead to the death of a company.

Here’s the truth: growth is neutral. It’s not positive, it’s not negative; it is what it is. It’s simply growth.

Hence, business growth can’t be the only indicator that all is well in your business. If you simply look at the numbers and say, "Well, we did $100 million last year and we are on course to do $500 million this year" and think because of that you are knocking it out of the park, then you might need to think again.

In my strategy sessions, I facilitate a discussion of the difference between business growth and health.

If we say a business is an?organisation?(like the word?organism), then we can clearly see that growth doesn’t always mean all is well. In fact, when something grows out of control in any area of an organism (particularly the human organism), we call it cancerous and we try to fix it.

If a business is healthy, it will grow. But a growing business doesn’t always mean it’s healthy.

Here are a few things to check to be sure you aren’t growing to your death.

1. Constantly review your business model to check it isn’t broken.

Every business has a business model. A business model is basically how the business is structured to be profitable—simply put, how we make money and start ahead of the competition.

Sometimes we do so well and grow so large that we might be running a broken model and not know it yet. Take Blockbuster, for example—a great company that didn’t realise until too late that its model was obsolete.

Always check to be sure your model still works.

2. Check for communication agility.

Communication agility within your organisation is the speed at which the best ideas can travel up and down the organisational chain and still retain their purity.

Sometimes the best ideas might come from the floor, but the bureaucracy of the system and the pride of the leaders may not allow access to the information that might be lifesaving for the company.

Every time a growing company fails, it’s almost always because someone wasn’t listening. Because somebody within the entire organisation had to have been smart enough to see what was coming, but nobody listened.

3. X-ray your growth.

Success is the hardest thing to learn from because when we’re winning, almost nothing we do is criticised. However, we must X-ray, or audit, our success to constantly check that we haven’t drifted from the right path. We must check to see that what we call growth isn’t cancer in its early stages. We must review exactly how we are growing and ask, "Is this the best way to grow?"

This is the job of senior management. In fact, I recommend some paranoia when you are growing massively so that you have the chance to catch what’s lacking or what’s overgrowing to the point of being cancerous.

4. Listen to what the numbers are saying.

Cash flow is king in business. Positive cash flow, that is.

Sometimes a business measures growth just by revenue and says things like, "We’ve done $200 million in transactions or revenue," but in basic business, we know revenue and profits are different.

It’s not about how much you make; it’s how much you keep that really matters.

I understand that sometimes it might take a while to be cash-flow positive in certain businesses. But that’s why we must have our projections to know when that will be and constantly check to see if the numbers are telling us we are on course to reach our goal.

Never, ever only look at revenue: that will only tell you that you’re selling; it won’t tell you at what cost you’re selling. And it wouldn’t make sense to sell $1 million at the cost of $1.1 million.

Growth can be a wonderful thing for any business. It brings the ability for a company to have options. It brings massive positive clout to the company, and the growth might convince investors that the business is worth its weight in gold. But ultimately, investors, customers and management would do better with a company growing in a healthy manner and not one growing to its death.

Want to know more? Head on over to the full article here for more ideas and perspective. Afterwards, why not drop me an email to share your thoughts at [email protected]; or call me on 0467 749 378.

Thanks,

Robert