The Growing Pains of Rapidly Expanding Businesses (Part 3)

In Parts 1 & 2 of this multi-chaptered blog I looked at four of the Growing Pains associated with rapidly expanding businesses - Changing the Starting Line Up, Building the Business Infrastructure, The Premises Conundrum and The Clique Communications Challenge.  I compared these business Growing Pains to the growing pains experienced by rapidly growing teenagers.  

So to maintain the metaphor in this blog I’m going to now look at Plugging the Process Gap and the Joy of Regulation, the business equivalents of revising for and sitting your exams.  Now, given that we are currently entering summer exam season, many of you will already have started twitching at the thought of studying for and then taking exams, so I won’t draw out this metaphor too far.  

Unfortunately for the heroic entrepreneur Plugging the Process Gaps and the Joy of Regulation are business “must do’s”; rights of passage that will determine whether or not you and your business earn the right to play with the other big businesses or whether you will end up being a happy serial entrepreneur and developer of multiple small businesses.   Suffice to say, like most exams, they are important, they do require serious work and cheating is not an option.

Major entrepreneur’s health warning: Unfortunately most entrepreneurs find very little joy in the engineering/reengineering of business processes and almost no joy at all in complying with the demands of the regulators.   Quite frankly, like a revision timetable on a warm summer’s day, they bore entrepreneurs rigid.  This is the primary reason why these two issues can cause real heartaches and headaches for rapidly expanding businesses.   Hopefully in the course of this blog I can shed a little light and hope on the subjects and suggest reasonable paths of action, that whilst perhaps onerous and challenging, shouldn’t be overwhelming. 

Plugging The Process Gaps

When a business is small but rapidly growing it’s relatively easy for an entrepreneur to maintain control – they can see most things, direct most things and influence their employees. However, as an organisation grows and starts to edge up beyond the 60 employee mark it becomes increasingly difficult for the charismatic entrepreneurial leader to exert and maintain effective control over the specific actions of the people in the business. This is where process comes in. 

Processes act as control mechanisms (risk management), they act as enablers of performance and they act as activity guides for new employees. As the business grows effective processes become more and more important. Without them a business can start to fall apart. The entrepreneur who hasn’t had the humility to introduce processes to their business will become increasingly consumed with fire fighting. Like a teenager who’s failed to revise properly they will run from one last minute piece of revision to the next, hoping the late nights and pro-plus will sustain them through what they believe is a challenge that can be overcome by just the use of their obvious genius, considerable charisma and last minute drive and focus. This is not a recipe for success. 

There is a long list of aspiring businesses that have gone to the wall because they simply couldn’t do the basics of their business well enough. Many had great products but couldn’t control cashflow, or manage the sales pipeline or recruit people effectively etc, etc.

To implement process at the right time requires humility on the part of the entrepreneurial leader. It requires them to give up control and reinvest cash. It is not a natural act for the entrepreneur. However, the wise and the well advised can build process. The really smart entrepreneurs hire a COO to help them do it – and to be honest I have no better advice. Task them with the job of helping the organisation design and build repeatable, effective processes. The good one’s are worth their weight in gold and whilst not necessarily having the same personality traits as the entrepreneur they will help set the business up for a sustainable future.

The Joy of Regulation

As an entrepreneur, if you found the challenge of process insurmountable I’d advise you to stop reading now because you’ll absolutely hate doing what is required to deal with your industries regulators.   As an entrepreneur you have a natural optimism, enthusiasm and belief in your ability to change the world around you.   All good things, until you interact with your regulators.   

Now they may be dressed in suits and pleasant enough people to go for a drink with outside of work, but, in their professional guise they are unbending, unsympathetic, disinterested and powerful.   They are the dementors to your Harry Potter, ring wraiths to your Frodo.  However, unlike dementors and ring wraiths they do actually exist and they will suck the life out of you and your business unless you learn to interact with them effectively.   This requires you to understand a number of things.

1. Their response to you isn’t personal – they’re like that with everyone
2. Their job is to protect your customers (NB – they kind of think that this is something you should be doing without them having to ask)
3. They are really not interested in changing their process or viewpoint merely to accommodate your business – they regulate the whole industry not just you
4. Working effectively with the regulators can improve the long term health and well being of your business
5. If you see them as the enemy then that is what they will become.

Now there is plenty more that can be said on the subject but this is a relatively short blog.   The question is how best to deal with them.   There is no one right way but I am pretty sure there is a wrong way.  If you leave the relationship with your regulators entirely in the hands of your lawyers it is likely to go very wrong.  Of course you will need legal advice and support but you wouldn’t go to a lawyer for marriage guidance.   Lawyers tend to think in a confrontational right vs wrong kind of way and are great for disputing the finer points of contractual law.  However, regulators are more interested in understanding the impact of the culture and actions of your business on your customers.  

Again you will need to hire, and hire well.  Seek out and employ one of those rare breeds of people who understand the world of regulation and the world of business.  Find someone who can both build a constructive relationship with your regulator and ensure that your organisation is capable of gearing up to respond to the requests and requirements of the regulator.  Once again – if you are an entrepreneur they are unlikely to think and act like you.  This is a good thing.

So there you have it – the challenges of process and regulation – two major pains – exams to be revised for and taken.   The good news is that if you get it right you can enjoy the delights of a fabulous summer.