If You’re Constantly Fighting Fires, Your Growth Is Likely To Flame Out
Written by The One Page Business Plan Company, on January 28, 2021
One might think that growing exponentially fast from a small to a midsized company would be a good thing. But many of these firms are totally unprepared for it. A payroll of dozens expands into hundreds. A burgeoning customer base exacts ever-bigger demands for support and preferential pricing. A much-larger revenue stream leads to billowing expenses to earn that revenue. And all this, in turn, means capital and other investments on a scale that would have been unfathomable when the company consisted of a handful of people who fit in a small office.
Invariably, an explosion in activities, expenses, and complexities ushers in an explosion in fire-fighting by managers trying to solve small (and not-so-small) unanticipated problems every day. At the same time, the firefighters in chief… the top management team… too can become engulfed in the firm’s daily brushfires.
That lack of preparedness is the perfect recipe for making rapid growth go negative… and rapidly so. By putting out fires, company leaders no longer have time to create the business plans that will position the business for the next stage of growth.
When its daily fires keep growing, a midsized business stops growing. That’s unfortunate, to be sure. Yet it’s also avoidable, as I’ll explain.
Haven’t seen this yet in your company? Congratulations – you are among the lucky ones. You are also among the minority, from my experience. We have plenty of stories to tell about how leaders of midsized firms watched their companies shrink while putting out the daily flames.
Let’s start with one of these cautionary tales, the story of a fast-growing consulting firm.
How a Consulting Firm’s Growth Burned Out
The consulting firm surged from $15 million in revenue to $24 million in one year. Fantastic! But, with that growth they became so swamped delivering the work that they stopped planning for how to hit the $30 million mark the following year. Profits were incredible, but the firm’s leaders stopped prospecting and selling. They knew they needed to hire, to upgrade their HR processes, add some leadership—but they were too busy putting out fires. The following year, sales dropped back to $20 million.
Growth requires planning for the future… not just a week, a month, or a quarter, but a full year or more. This longer time horizon helps us anticipate what the business (or the market) will need and begin preparations early. When that time arrives and these preparations are made, the business has the right people and the right systems already in place and can compete to win… without as many blazing fires.
But who has time to plan the future when each day has so many hot priorities? We work with a lot of senior leaders in midsized businesses and find that many of them would gladly have a longer term time horizon but are overwhelmed with short term issues and projects. They look to their subordinates to see who can step up but find no one. This is the heart of the problem.
Senior leaders in every growing company need a protégé or two. This is someone on their team who is up and coming, who is eager for expanded responsibilities and ultimately, promotion. Intentional development of these people will not only help retain them but will also provide a ready path for delegation. Senior leaders can keep their focus on the long term if, as the business grows, they can hand off their lower level tasks to subordinates. If all their subordinates are “just barely competent” to do their own job, then they must upgrade one or more of them immediately. Firms can’t grow if its leaders can’t grow. And leaders like you can’t grow if your subordinates can’t grow with you.
Once you have the time to think, you must plan and execute for the long term. We find that many leaders have trouble being proactive and allow urgent matters to compound and fill all their time. Instead, here’s how you can better plan for the long term:
- Schedule time each week (actually block time on your calendar) for long term work. If possible, do it with another senior leader.
- Lay out what the company should look like, quarter by quarter, starting six months from now through two years. That’s six snapshots. Note key products, changed customer mix, competitor moves and the overall size of the company. Of course, you don’t know exactly what the future holds, but take your best guess.
- List the three biggest drivers… things that must happen in order for you to be successful.
- Also list the three biggest obstacles… the things likely to hold you back.
- For each of the three drivers and three obstacles, in each quarter, note what tasks must happen to optimally manage them. This becomes the core of the long term plan. This is where senior leaders need to spend more of their time.
- Consider using One Page Business Plans to capture and organize your best thinking in a without resorting to complex planning processes.
When this is done correctly, something amazing happens. Over the course of a year, you’ll see this long term planning begin to work. There will be fewer surprises and the team will be more prepared. There will be fewer fires and focus will stay where it should be… On growth!
The consulting firm that became absorbed in firefighting was set back for a year. But they were determined to grow. They hired a project manager and upgraded several intern positions to more seasoned talent. They split one leader’s function into two, adding an experienced marketing manager to the team. They more clearly articulated the career path for the team. The additional hires knocked the bottom line down a bit, but as the new hires and processes became normal, so did a monthly $2 million run rate. Where this growth rate had made the firm crazy hectic just two years prior, with the right planning in place, the firm was able to handle the growth smoothly. Quality is back up, profits are back up, and the firm has a strong pipeline of new work.
You can’t grow your business if you’re spending all your time firefighting short term challenges. Midsized company leaders keep their companies growing by increasing their focus on the long term as the business scales. Build up your support team, delegate more of the short term work, and make the long term vision of your firm into reality!