Three Barriers to Business Growth

When we work to fig­ure out what’s real­ly going on in com­pa­nies expe­ri­enc­ing a rough patch, we usu­al­ly find three bar­ri­ers to busi­ness growth.

These are often unseen until there’s an impact of mil­lions of dol­lars in addi­tion­al costs, loss­es or oppor­tu­ni­ties that real­ly hurt:

1. Scal­able Infrastructure

The lack of sys­tems and struc­tures to han­dle the com­plex­i­ties in com­mu­ni­ca­tion and deci­sion-mak­ing that come with growth.

If your peo­ple, strat­e­gy, exe­cu­tion, and cash sys­tems aren’t right, you won’t have scal­able infra­struc­ture and, with­in that con­text, you need the right set of tools, sys­tems, and process­es to be as effi­cient and effec­tive as you can — Kevin Lawrence

Take your ERP. Is it well designed and are your peo­ple trained to man­age the com­plex­i­ty of, say, 200 dif­fer­ent SKUs sold in dif­fer­ent areas to dif­fer­ent types of cus­tomers with dif­fer­ent pric­ing and dis­count­ing mech­a­nisms? Does it give you the data you need to under­stand prof­itabil­i­ty by a SKU, or by a cus­tomer or by sales rep.?

It’s seri­ous work to get ERPs right, to get val­ue from them – and well worth the effort. You have to:

• Mas­ter the toolset and con­sis­tent­ly agree how to use it.

If you auto­mate weak sys­tems into a toolset that every­one uses in a way they’re used to, you’re just sys­tem­atiz­ing garbage.

• Stream­line and refine.

Lead­ers must ded­i­cate time to get it right, con­tin­ue to dial in to make sure it works, and spend time trou­bleshoot­ing, train­ing and work­ing with the team.

• Mas­ter simplicity.

Peo­ple get excit­ed and want all these cool soft­ware sys­tems, but they make a mess when they’re too com­plex. In fact, as com­pa­nies get more com­plex, you actu­al­ly need sys­tems to make things sim­pler. Do the most basic pos­si­ble to do a great job for the cus­tomer and to get the data you need to make decisions.

2. Mar­ket Dynamics

The fail­ure to address increased com­pet­i­tive pres­sures that erode mar­gins as you scale.

When there’s a desire to grow, you have to make sure you can sus­tain growth, main­tain your com­pet­i­tive advan­tage and pro­tect your brand.

For exam­ple: To hit growth sales tar­gets, many com­pa­nies sell their prod­uct to any­one who will take it, and then kill their brand when their pre­mi­um prod­uct shows up in dis­count stores. Or they go down the price-war rab­bit hole when they show up on the com­peti­tors’ radar, and mar­gins erode as they try to keep up.

That’s a sign that you’ve lost your strat­e­gy or your dis­ci­pline, or there’s not enough mar­ket to demand your growth. You need a stronger strat­e­gy and a dif­fer­ent way to fight the battle.

A strategy’s pri­ma­ry stress test is if it will sus­tain or grow your gross prof­it mar­gin. If not, is it real­ly a good strategy?

3. Peo­ple Power

You don’t have enough of the right peo­ple in lead­er­ship posi­tions to lead the com­pa­ny ahead, to del­e­gate and pre­dict – and, ide­al­ly, con­tin­ue to grow up-and-com­ing leaders.

Build­ing a world class team is chal­leng­ing and takes time and seri­ous invest­ment in recruit­ment and devel­op­ment. With­out it, you can’t sus­tain growth.

That’s why, in our orga­ni­za­tions, we put so much ener­gy into build­ing a stronger, more capa­ble team with two things:

• Tal­ent reviews every 90 days, and strate­gies to enhance and devel­op the exist­ing team.
• Top­grad­ing™ to iden­ti­fy what great looks like, and then thor­ough­ly screen peo­ple against it. Then, onboard them real­ly well. We have a 70% to 95% hit rate on putting the right per­son, in the job, who’s going to be awesome.

The right lead­ers pow­er growth.

Bar­ri­ers to Busi­ness Growth Come at a Cost

Besides missed oppor­tu­ni­ties and inef­fi­cien­cies, the two big costs are:

• Less prof­it. Any of these bar­ri­ers can pre­vent you from effec­tive growth and prof­itably. That means grow­ing at 20% or 25% ver­sus 5% or 10%. Added up, over years, that’s a mas­sive difference.
• More stress. More prob­lems and frus­tra­tions, less align­ment. A team that’s struc­tured to lever­age the strengths of each mem­ber helps share the load. This helps your life becomes much easier.

The Chal­lenge

• Which of the bar­ri­ers to busi­ness growth are you expe­ri­enc­ing now — or could you expe­ri­ence, in the near future?
• What can you do to illu­mi­nate or min­i­mize those bar­ri­ers to con­tin­ue growing?

For more, lis­ten to Episode 96 of The Growth Whisperers.

Lawrence & Co’s work focus­es on sus­tain­able and enhanced growth for you and your busi­ness. Our diverse and expe­ri­enced group of advi­sors can help your lead­ers and exec­u­tive teams stay com­pet­i­tive through the use of var­i­ous learn­ing tools includ­ing work­shops, webi­na­rs, exec­u­tive retreats, or one-to-one coaching.

We help high-achiev­ing lead­ers to have it all – a great busi­ness and a reward­ing life. Con­tact us for sim­ple and impact­ful advice. No BS. No fluff.