Growing your business is possible for every industry, but if your company has hit a plateau you could benefit from a refresh in your corporate strategy.
In Scaling Up, Verne Harnish gives guidance on the four simple principles that can help you become part of the four percent of top earners in the business world. These are patterned after the habits that the famous John D. Rockefeller, widely considered the richest man in modern history, used to successfully execute his growth strategies.
1. People: Creating the right team to execute your growth strategy
The people you hire to lead your company must be capable of doing so. Scaling up your business begins with putting the best leaders in positions so they can do what is needed to move your growth strategy forward while staying true to the core principles of your company.
When you add people to your leadership team, the complexity of your company can increase dramatically, according to Harnish. That is why picking great leaders to fill key positions and providing them with team members with similar abilities will save time and energy. Your leadership will be set up to work with teams who are up to performing the tasks assigned to them.
Harnish also emphasizes paying people what they are worth instead of adhering to an industry pay scale or some other artificial method of compensation. Putting the best people in leadership roles and delegating responsibilities to them means paying them what they deserve – based on the value they provide to the business.
2. Strategy: Stick with what you know
Understand your company’s core values and stay true to them when creating a strategy to scale up your business.
For example, if you’ve had success with one location or franchise unit, you can grow that business by opening additional locations or territories. Since you’ve already invested in learning what it takes to be successful, you can apply those same principles in new growth. And once you open additional locations, it doesn’t require that you personally take on the management responsibilities. If you’ve set up the business efficiently, your management team from the first location can be given more responsibility for the second location.
By staying true to your company’s core values that made it a success in the first place, and by training your leadership team to implement and adhere to those values, multiple locations can be established with the same opportunities for success. Reward managers with generous bonuses and other incentives for meeting performance goals at the new locations, which will help ensure your growth strategies are implemented according to plan.
3. Execution: Keeping your leadership team on track
Every member of your leadership team who is involved in executing the strategy to scale up your company must have a quantitatively defined goal.
Quantifying your company’s objectives provides you with a means of measuring performance, and it makes your entire team accountable for performance. Harnish stresses that it’s impossible to determine if you’re on the right track unless there is some way to measure your results.
Next, these measurable goals must be clearly communicated to the teams responsible to meeting them. Scale Up emphasizes the importance of giving your team members a standard they must achieve, and a sense of accountability that can be instilled and maintained by your managers.
4. Cash: Success may depend upon how quickly your money returns to you
The final core principle in Scale Up deals with something Harnish refers to as the “cash acceleration strategies.” Making improvements in your operations to shorten the time between when you dispense money until the cash returns to you after delivery of the product and payment by the customer is critical.
The “cash conversion cycle” or CCC is an invaluable metric to calculate as part of this process. Since you don’t make money waiting to get paid, streamlining the process by which goods or services are created and delivered to the customer will help improve your cash flow more quickly.
Learn more about the cash cycle and how you can calculate this powerful business metric – your CCC.