The Road to Profitable Growth

Cranfield School of Management

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The Road to Profitable Growth
By David Molian

Over twenty years and over 1,100 owner managers have worked with us to grow their sales and profits and to develop themselves as leaders. During that time we have observed ten key characteristics that distinguish fast growth businesses from the rest, and the high achievers make these the building blocks their success. In this article, we feature each of these in turn and how they impact on businesses.

1. Passion is power

Running a small business and achieving growth is about running a marathon not a sprint and periodically owner managers need to recharge and re-energise themselves - it is a long race and a gruelling one. Keeping personal energy up is important and it is infectious. Managers need to find ways in which they can re-enthuse their passion and develop the ability to pick themselves up, overcome obstacles and take the business forward.

2. Become a strategist

If you are running a business, particularly your own business, you are always going to be sucked into the day to day operational stuff – solving other people’s problems and fighting fires. What we do is find ways to help people bring the longer term thinking onto the front burner to make it top of their agenda and that is the way in which they will build their businesses for tomorrow.

3. Know where you're going

If you don’t know where you are going you will probably end up somewhere else. This is the brutal reality. So the discipline of producing a formal plan from which you can articulate a vision of where you are going to go is incredibly important and being able to share that with the members of your team is essential if they are going to travel with you in the same direction.

4. Stick to the knitting

Nine out of ten of successful high growth businesses succeed by servicing their existing customer base and finding others who are like them. The task of finding a niche in which a business can excel is absolutely key to the success of most higher growth businesses, and our research supports this.

5. Know your enemy

It is very important to understand what the competition are doing. It is equally important to benchmark yourself not just against direct competitors, but against the businesses that you aspire to be. One of the things we have noticed is that the really high achievers look at the next division up and they identify the kind of business which they would like to become. They recruit the right staff so that they can take them to the next level and they recruit the right advisers as well who will also help them get to that next level.

6. Watch the pennies

Most business owners, most of the time, will talk in terms of sales and turnover – very few will talk in terms of profit or gross margin as their primary target. Yet this is where the focus must be.

7. Grow up!

The systems, the processes, the structures and the way in which the business is led and managed all have to change as the business changes. The business will go through phases of maturing and successful business owner managers understand that not only does the business have to change, but they have to change in their style of leadership and managing as well. Formalisation of systems and processes has to happen; entrepreneurs can no longer hold the business in the palm of their hand; they need to be able to step back and allow the business to function independently of them.

8. It's all about people

We know from everything that we have researched and studied that successful owner managers spend significant amounts of time mentoring and coaching the top teams in their business because those are the people who will deliver the results for them. This means huge amounts of time spent on recruiting, retaining and motivating the right sort of talent. Achieving a successful business with independent value is largely down to the people in your team who will do that for you.

9. It's down to you!

The owner manager is both its biggest asset and potentially its biggest liability. If the owner manager is not capable of change and growth and development, if they are not open to new ideas and ways of looking at things, then they may become an obstacle to taking the business further. Personal and professional change rests squarely on the manager’s shoulders.

10. Work smarter, not harder

If you able to stand back from the business, to empower the people who are working for you, you don’t have to spend 70 hours a week doing everybody else’s job for them. You can spend more time thinking about taking the business forward and developing a new business for a new tomorrow. Owner managers need to look after their health, their welfare and achieve a balance between their work and their family life. Ultimately the manager should get to the point where the business is working for them rather than the treadmill of constantly working for the business.

Putting these building blocks in place won’t necessarily guarantee your success, but it will certainly shorten the odds dramatically in your favour.

David Molian is Director of the Business Growth & Development Programme at Cranfield School of Management.



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