Building a Business Empire

 

Have you ever wondered why some businesses span decade’s even centuries from one generation to the next without a glitch yet very promising organizations die out as fast as they had come up?

And you have always had this dream of growing your business to great heights and eventually handing it over to your children? As one popular Kenyan Hollywood actress said your dreams are valid.

Well let’s just take time and learn how to grow your business and the challenges faced by entrepreneur in managing a rapidly growing business.

First let us assume that an entrepreneur has managed to grow their company from having production in their house, selling door to door and now the company is experiencing serious revenue growth.

At this point in time an entrepreneur needs to ask themselves three critical questions:

• Is my business strategy sustainable?
• Do I have a unique advantage over my competitor if any that would make it possible to expand successfully to other markets?
• Is it possible for my business to scale?

Let us look at each shall we.

Is your business strategy sustainable?

Simply put, is how longer will you be in business? A few years back in Kenya, movie rental business was very lucrative. Many young people opened movie rental business and were making good returns. Fast track a few years ahead, technological changes came with it flash drives, torrent etc and most businesses came tumbling down.

Could this happen to your business? To sustain growth as an entrepreneur you need to have foresight by looking several steps ahead.

Can you expand to other markets?

Does your business have a unique advantage making it possible to enter into new markets? Remember new a market doesn’t necessarily mean new geography it could be the same product having new ways of application.

Is it possible for my business to scale?

Rapid growth in revenue can be a big challenge to an entrepreneur and their company to keep up. If there are signs of your business expanding fast, there would be a need for capital injection to enable scaling to meet the increasing demand.

As we are all aware if you decide to expand and your prediction is wrong then your will be in deep trouble. Remember expansion cost money which most of the time is borrowed meaning if you are incurring fixed expenditure with little or erratic sales cover you will be out of business very fast.

One major solution to the scaling problem especially I the short term when you are still analyzing sales and the business is to outsource.

Outsourcing can help you scale up rapidly without creating fixed assets that you cannot afford at that particular point in time or would drag you down due to erratic sales.

A bigger CHALLENGE other than sales growth would be ISSUES within the organization; this is usually the defining moments of any organization.

The founders of start-up companies must occasionally reinvent their organization to cope with changing circumstances, from being the underdog to being the big dog for lack of a better term.

In order to attain this feat, the entrepreneur must change their mode of management from a do it myself attitude to influencing others to do it for them.

This is the point at which many African entrepreneurs find it difficult and end up being liabilities to their own businesses.

Case and point would be the American industrialist Henry Ford who built the successful Model T who later on could not imagine his company building any other car even though the market had changed  leading to an almost collapse of the company.

The growth that many entrepreneurs dream of now is a reality but is a challenge by itself because;

• The founder’s vision must be inculcated in newly hired employees
• The technical skills that made the start-up successful become less important as need for operational skills increases

The founder and the small team’s management skill may not be able to match the new challenge of a much bigger organization.

In order to stay in the game the entrepreneur and the management team must find new ways of operating or be doomed.

According to Havard Professor Michael J. Roberts there are four modes of management available to the entrepreneurs faced with rapid growth;

a)      Real Time Management of content

b)      Management of behavior

c)       Management of results

d)      Management of context

Managing Content

They say that if you want something done, then do it yourself. This is the attitude most entrepreneurs have when it comes to their businesses. The challenge with this attitude is fatal especially when your operations expand rapidly and would require skills and experience at that level.

Managing Behavior

In this mode you specify how you want people to behave. Entrepreneurs with this kind of attitude identify behaviors that lead to success and codify them through policies, rules and regulation that all employees must follow.

As you may notice instead of managing everything the entrepreneur relies on policies and the likes to do the work for him/her.

This approach is most effective when subordinates are inexperienced or need clear direction.

Managing Results

Most often than not, the desired result may not be achieved when people behave in a certain manner. In this approach employees are told what the desired results look like and are given the responsibility of achieving it.

Managing Context

Entrepreneurs with this attitude still focus on results but seek it more broadly: by shaping the culture, values, and structure of the organization.

They strive to create an environment that will naturally attract and retain highly competent employees and allow them to do their best work.

PS: Know when it is time to change guard

Many entrepreneurs have demonstrated a capacity not only to launch successful businesses but also to actively guide it successfully through years of growth such as Nigerian Dagote, Kenyan Vimal Shah, Equity Bank’s Dr. James Mwangi and so forth.

Unfortunately not all entrepreneurs have the adaptive capacity; they cannot change the behaviors that served them well in their small business or they actively resist changes that would dilute their control.

  HELP! HELP! MAY DAY! MAY DAY!

At this juncture when the business is at a cross road, the entrepreneur needs to consider if they have the ability and will to adapt.

If they have the will to adapt, they have two options:

First is surrounding themselves with very smart people who can act as a sound board on their management style. This includes both top management and board members.

This will enable them to adjust to the demands of the market and ensure the overall success of the business.

The second option is to seek the help of an executive coach who provide one on one, customized approach to altering behavior with the goal of improving on the job performance.

If both methods fail then your time is up! You may need to step aside or change your role without being ashamed. Many other founders have trended the same path such as Steve Jobs.

Sometimes the best thing to do for your business is to bring in professional management with the founder staying on as chairperson of the board.

https://viffaconsult.co.ke/building-a-business-empire/