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Do you know what's stopping your growth?

Tuesday, 24 August 2010 | By Tom McKaskill

Short-term growth can easily be the result of good timing and luck, but it is hard to achieve sustained growth without some dedicated effort and planning – especially these days.

 

If you look back over your firm’s history, you will see times when you grew and times when you went into decline. Almost certainly external events will have played a significant role in both.

 

However, there will also have been times when you could have grown faster or for a longer period but you were unable to because of factors inside your business that imposed constraints to that growth. Identifying and removing growth constraints is a critical part of any growth strategy.

 

It is what we don’t know that is most likely to hurt us most in going for growth. What most people fail to realise is that there are a large number of capacity and capabilities attributes of the business that must be planned and co-ordinated at some distance in the future in order to facilitate growth.

 

Some of these will have long lead times, such as acquiring new specialised equipment or recruiting and training skilled workers. We simply can’t leave many of these decisions to chance.

 

Just think of the level of effort it takes to find and equip out a new office facility or to select and implement a new enterprise application system. Unless you plan for sustained growth, it will be what you don’t do that will prevent you from meeting your growth objectives.

 

You need to start with projecting out the levels of your core activity over the next three to five years.

 

What activity best represents your growth? It could be revenue, employees, tonnage produced, clients served, systems installed and so on. That core activity level is then translated into all the supporting resources; staff numbers, warehouse space, inventory levels, fleet size and so on.

 

Now start to work backwards and identify what you need to do to develop the levels of capacity and capability to support your core activity volumes. Don’t forget to put in reasonable lead times to source equipment, find and train new employees, source funding, develop new warehouse space or office accommodation.

 

What you will find is that key resources take a long time to acquire and integrate into your business. You need to periodically take the time to review your long term resource needs so that you can put in place the activities needed to get them in place before their lack becomes a growth constraint.

 

Also remember that you can’t predict the future with any accuracy so you need to be sensitive to pulling back or reversing a commitment. Try thinking about different ways in which you can meet a resource constraint that could give you more flexibility in the future.

 

What can you do to bring more capacity online, or what can you do to layoff capacity. In the end it is your ability to manage these resource boundaries that will determine your capacity to take advantage of growth opportunities when they occur.