Recognizing Growth Pains

Growing pains (defined as increasing the net employee count) seem to have common themes in the small marketing firms we work with. The average firm grows at 30% a year. Real, internal growth (vs. growth through merger or acquisition) is more manageable at something less than that average, since as humans we cannot seem to adapt that quickly. (This average growth statistic may explain the unusually high failures in the same industry.)

We live in an environment that seems to worship growth. But growth is foolhardy without first fixing what you have. Unless growth is controlled, you’ll lose money faster, experience increased turnover, and suffer through quality control issues.

In essence, you’ll become what we call “self-sizing.” The weakest kids will get thrown off as the merry-go-round spins faster. The formula for that seems to be five or six employees per principal or senior manager. That is, without serious ongoing attention to structural issues, a firm with one principal and two senior managers will “self-size” above fifteen to eighteen total employees.

How do you know if you are growing too quickly? Here are some signs to watch for. If several apply, you might be outpacing your systems:

• You are deadline driven instead of profit driven.
• Responsibility for keeping projects on budget is not centralized.
• You guess at your fixed monthly overhead, and it’s really quite a bit higher than your guess. 
• Equipment leases are regrettably agreed to because cash is unavailable.
• Employees leave, complaining of the lack of structure and job descriptions.
• Everybody does everything, but nobody is really responsible.
• There is no time to put things in writing.

Let’s just look at this last one in greater depth. The last time you left on vacation, we can assume that you tied up all those loose ends and then addressed in writing what might come up while you were gone. You were motivated to do this because you didn’t want to be bothered.

How is it, then, that you rely on verbal directions instead of written ones after the vacation is over? Despite protestations to the contrary, it has little to do with insufficient time to write everything down. (We all know that this small investment up front saves considerable time later.) It is rather because subconsciously you want to be needed. If you dole out information peace meal, you are left indispensably in the loop. And still get mileage from complaining about all the interruptions. This is a sure sign of someone who is struggling with their role. And that happens most often in a firm growing quickly.

Practice saying “no” to opportunities that wag the dog. It’s the most painful word any entrepreneur ever uttered. Growth is about your personal role and little else.