Stages

1

New Venture
2

Early Growth
3

Rapid Growth
4

Continuous Growth

Find a Viable Business Model

  • Assuming the customer problem is known and well understood.
  • Most potential customers are not willing to pay you to solve their problem your way.
  • Failing to stop and regroup when customers do not respond to your business model as anticipated.
  • Focusing on a market too small to support the business long term.
  • Lacking flexibility and managing the business as a smaller version of a big company.
  • Lacking metrics to evaluate whether the business model is worth scaling into a company.
  • Hemorrhaging cash because sales and marketing were scaled prematurely.
  • Hiring people that lack the skills needed in a startup.
  • Focusing exclusively on product development before finding a market.
  • Lacking clarity about how the company will become profitable.
  • Lacking a clear, crisp, singular focus.
  • Suffering from poor financial management and major cash-flow problems.
  • Lack of urgency because the startup is overfunded.
  • Underestimating the amount of resources needed to find a viable business model.
  • Hiring too many people too soon.
  • Reduced flexibility by prematurely adding systems, processes, and controls.
  • Focus on org charts, titles, and stylish offices.
  • Believing that one or two large marquee customers is a profitable, sustainable market and business model.

 

Create Customers & Drive Sales

  • The CEO – consumed with operational tasks that somebody else should be handling – can no longer do everything alone.
  • Everyone is constantly fighting fires instead of anticipating and solving problems.
  • Sales are stagnant.
  • Job responsibilities are not rationally structured so quick delegation of tasks is not possible.
  • There are few written procedures, making training new employees a time-consuming and ineffective process.
  • The company lacks direction as priorities constantly shift because an “idea-of-the-day” management style dominates.
  • The company is not able to grow beyond the individual capacity of its leader.
  • The increasing workload is becoming unmanageable as people struggle to keep up with an ever-growing set of priorities.
  • There are no financial or key operating metrics to measure progress and determine if the company is on track.
  • The CEO refuses to let go of absolute control of the organization and delegate some responsibilities and authority.
  • Not enough cash or financial resources available, resources are stretched too thin, and basic operational systems are overwhelmed.
  • Scaling too quickly, hiring too many people too soon, and building an infrastructure beyond what is necessary to meet the needs of this stage.
  • Becoming involved in businesses that are unrelated to the core business. Focus is much too broad.
  • Weak coordination, poor communication, duplication of efforts, and last minute heroics.
  • Continued success turns confidence into overconfidence or even arrogance.
  • Infrastructure is a patchwork of systems and processes created in response to problems as they arise.
  • Personal interests of the founder(s) overshadow organizational needs.
  • A major crisis occurs: major customers are lost, key employees leave, a strategic alliance goes sour, a new product launch fails, debt engulfs the business – the crisis can take many forms, but it brings the business to its knees.

 

Scale the Company

  • Growing need for true experts because big knowledge gaps exist in key functional areas.
  • Some people, particularly top team members, are not capable of handling their growing responsibilities.
  • A sudden increase in employee turnover and retention.
  • The business is increasingly making mistakes and errors.
  • Customer complaints are rising.
  • No planning process or a written strategic plan for growing the company.
  • The company is growing faster than the organization’s capabilities and infrastructure can support.
  • People can’t agree on issues, leading to internal conflict.
  • The business is highly dependent on the founder(s) or a small group of individuals for success.
  • The business is limited by the capabilities of its leaders.
  • The management team still comes to the CEO for every important decision.
  • It is difficult to make and implement effective decisions.
  • The company has become too big for one person to control.
  • Hiring and other people “mistakes” are made.
  • Lack of communication, poor coordination, and confusion permeate the organization.
  • The company is growing in sales while profits remain flat or fall.
  • The organization becomes internally focused and loses touch with developments in the market.
  • Functional departments move in different directions; silos, politics and even infighting prevail.
  • It has become almost impossible to get things done because the company lacks the necessary structure and process.
  • Products are becoming obsolete, new products do not meet customer needs, and competition has intensified.
  • The organization does not have the right people in the right positions, and the senior management team is weak and ineffective.
  • There are not enough effective managers.
  • Investors or the board are becoming impatient with the company’s performance.
  • Some people lack the skills to keep pace with growing responsibilities.
  • Leadership that is not fully engaged in the day-to-day management of the business.
  • There’s an us versus them mentality throughout the organization. Everything old conflicts with everything new.
  • One or more members of senior management do not support the organizational and operational changes.
  • Continually moving back and forth between Stage 2 and Stage 3.

 

Become a Market Leader

  • Sales are slowing in some or all products.
  • A gap exists between the desired rate of future growth and the growth rate that the existing business can deliver.
  • There is major resistance to change within the organization.
  • Industry, market, and technological changes are happening faster than the company can keep up with them.
  • Problems have become more complex and existing solutions no longer work.
  • The CEO is spending too much time on operational issues and not enough on strategic issues.
  • An acquisition or IPO is being considered, but there are serious questions about the organization’s ability to handle it.
  • The company is waiting until existing markets and products stall or decline before finding new markets and new products.
  • The organization is unable to execute the desired strategy.
  • There’s a loss of entrepreneurial activity and the organization is over-managed and over-systematized.
  • People don’t understand where the company is going.
  • The management team isn’t strong enough to lead the business into the future.
  • Key people are leaving or thinking about leaving the company.
  • Accepting the status quo, as managers rely on what worked in the past to take them into the future. Management takes an “if it ain’t broke’ don’t fix it” approach.
  • Overemphasizing ROI at the expense of innovation.
  • The organization has lost its ability to self-diagnose its problems.
  • Candid conversations, initiative, and innovation have been replaced with conformity, uniformity, and a fear of making mistakes.
  • The business lacks the managerial depth to run and grow its businesses.
  • The only source of new growth is through acquisitions.
  • There is a lack of urgency and the company is slow to understand and respond to changing market conditions.
  • An aura of invincibility permeates the business. Entitlement and/or arrogance plagues one or more of the executive team. Senior managers become insulated in a clubby environment where titles and glad-handing matter more than competence.
  • Underinvesting in new growth initiatives, while overinvesting in mature products or businesses.
  • Getting things done is increasingly difficult.