Growth Is Not A Mistake ... It Takes Focus & Understanding
The founder and CEO of Gazelles, Verne Harnish, says companies hit a
wall when they reach a certain size and unless they take the right
steps they�re doomed to remain small. The biggest challenge for
companies with revenues of $1 million to $10 million is often the
role of the founder ... for three reasons.
1)
As the business becomes more complex the entrepreneur simply doesn�t
have the time to devote to the task he or she has always done best.
Subsequently, that task is likely to become a weak link in the
organization. A critical decision must then be made to bring in a
person to replace you in what has always been your fort�. (Often
it�s sales and marketing.)
2)
As products and customers are added, the original accounting system
likely won�t be robust enough to track all the costs. In short,
growth geometrically increases the complexity; without enough detail
you may not know where you�re really making the money.
3)
Once you�re above $10 million the gross margins fall apart, because
now your company is on the radar screen ... competitors have taken
notice. Meanwhile the size of your orders increases, and customers
start demanding a discount.
In
order to combat this, you have to become laser-focused on your value
proposition and know why you�re different than your competitors...so
you can hold onto your price. One way to differentiate from your
competition is to use barter as a part of your selling effort.
Barter is a value proposition your buyers will understand and
embrace.
