Rushabh Vora is the Co-Founder and Director at SILA.
There are clear tell-tale signs when your startup moves towards the growth phase. At this stage, your business should be generating a consistent source of income and regularly taking on new customers. You will notice that your profits and cash flow have improved. With the teething problems gone, now is the time for steady focus and discipline on how to expand your business towards maturity.
To shift gears into the growth phase, a startup needs to change its strategies. It will be a whole new ballgame with a new set of issues demanding your attention. What you need now is more formal processes and systems in place that will help you manage more complicated tasks.
In the growth phase, your business will have to manage more revenue, more customers, more competition and more employees. Delegation is a skill which you not only have to acquire but also teach your peers and juniors.
You and your teammates now need to learn how to delegate duties and responsibilities effectively and to the right people. You need to set up processes that make the upper management dispensable and communicating goals more accessible.
Hiring the right talent with the right skill sets will add to your company’s potential during this phase. The more in-tune you are with the recruitment process, the better it will be.
If you are the founder, you need to move up the chain as well. You will have to allow your team to take over the responsibilities you previously had so that you can focus on other tasks that need your attention.
So, if you delegate more, you will achieve more.
As you move from startup to growth the importance of handling scalable software processes will help you grow systematically. Investing in good technology and processes will help in this phase.
When you are starting out, you don’t need to depend on technology as much because you can maintain the logs on excel sheets and the limited number of employees are managed with basic HR functions. A mid-sized company has a limited number of data sources but as you grow bigger, the challenges with data gathering will increase and manual inputs will get more tedious.
The increasing amount of data from HR, Operations, Sales and larger teams needs to be more formalised.
To collect data, one needs to assign some important metrics to each head of a department and hold them accountable to it every month. It could be sales, contracts or clients acquired or lost, what’s in the pipeline, the number of products, fastest moving products, best moving products, what is getting good client feedback, how many clients were unhappy with the services, and so on. Each manager of the departments in your start-up needs to pick at least five important data points and start tracking them.
As your company grows, the metrics will become more complicated and it would do well to invest in the right software and technology which makes the manual data gathering process obsolete. Invest in automating the systems that give you accurate results in this growth phase.
Formal performance management systems
As you go from startup to growth phase, you will need to acquire more talent. As you hire more people, you will need formal HR systems in place that help with peer rating and tracking performance. HR will become one of your most important divisions. A structured management process might not be needed in the startup phase but you will need one in the growth phase to identify top performers, deciding promotions and assigning the right tasks to the right talent.
You will have to set realistic targets for your employees and rate them objectively and subjectively. You will have to come up with a system of reward to encourage good performance. A feedback system for employees to air their grievances or suggest improvements will help a company in plugging leaks and improving productivity. You will know if your company is in the clear if you have low attrition, happy clients and productive employees.
A lot of things change when you enter the growth phase. You must invest time in your employees who have been with you since the beginning. As more checks, balances, policies and rules come in with the growth, it will be important to help them adapt to new changes.
Older employees will have to adapt to report to newer employees. They may have to interact with middlemen instead of coming directly to you. The corporate culture is ever-evolving and you will have to take them by your side and help them settle in the changing environment. Your aim should be at making any individual employee redundant and have enough systems in place so that anyone can take up from where the previous one left.
In startups, one tends to be dependent on employees. In the growth phase, everyone will have to become more dispensable, even you.
There are several factors such as financial, human, system and business resources which define the ultimate success and failure of any company in the growth phase. Besides these, your operational, managerial and strategic abilities will be under immense scrutiny during this phase.
Tiding over the growth phase will come with consistent practice and customising the tools listed above according to your needs. As an owner, you need to factor in and analyse goals for yourself and your business and utilise all the strategies at your disposal to achieve them.
The author is co-founder and director of SILA.