Speed, speed, speed... Everyone wants to go fast! On the track and in business, conversations largely revolve around speed with little emphasis on the best way to sustainably achieve speed. In racing and in business, it's not how FAST you go that determines sustained success and reduced risk; it's HOW you go fast. While speed is an important variable in success, uncontrolled speed can result in serious consequences. On the track, high speed without the proper technique and respect for physics, track conditions, and other drivers, results in potential death. In business, fast growth without proper mastery and respect for leadership, communication, structure, cash flow, etc. can also lead to catastrophe.
Most people can jump in today’s modern 500 horsepower sports car and reach maximum speed in a straight line just as most businesses could grow their top line revenues FAST provided that the economic environment, competition, or cost pressures didn’t play a factor. The challenge is that racers and business owners alike don’t achieve speed in a straight line without many complicated external factors.
We’ve found in racing and in business that sustainable and incremental speed isn’t reached through a simple 1:2 correlation of complexity. As speed increases, the complexity that arises doesn’t occur in a straight-line progression. For example, adding a new product line, sales channel, employee, or location isn’t just twice as hard now that you’ve doubled. Through our experience in managing privately held growth companies, the complexity ratio is typically a 1:10 (or greater) complexity ratio. The faster the growth the more the ratio increases.
Think about it… You go from one sales channel to two. You already have an established rhythm in managing the one channel and perceive your expansion into an addition new sales channel equates to being twice as difficult. The added ratio of complexity comes in when you weigh the many tangible and intangible things you missed in the analysis. Supply chain disruptions, communication systems, logistics flow, expectations, etc. all combine to create additional complexity not forecasted. This additional unaccounted for complexity results in reduced profit and diminished cash flow. Pressing on the accelerator harder only magnifies the issue.
We see businesses day in and day out that grew fast only to achieve less $$ and more risk. The fast growth was supposed to drive the business value and owner’s equity but instead reduced their valuation and raised their risk.
HOW you achieve speed ultimately makes the difference between success or calamity. Most business owners are more concerned with how fast they grow and neglect the details of how they'll manage and accommodate growth. Getting to 150 mph the quickest and subsequently hitting a wall in your first turn results in a totaled car at best. At worst, it can forever alter your life.
Don’t wait until you “hit the wall”! Contact us at email@example.com for more information on navigating fast growth, achieving incremental profit, and enhancing your business value.