Business growth – are you a tortoise or a hare?

Back in 1979, Prof David Birch at MIT found that, in any developed economy, most jobs are created by a small number of fast growth smaller businesses – what Birch called the “gazelles”.  Just recently, I’ve come to the view that he might have been a bit too simplistic with his zoology!  From my work with thousands of entrepreneurs and owner managers, I believe there are at least two different types of fast growth businesses – the “hares” and the “tortoises”.

Recently, I’ve been reading entries for the Growing Business Awards.  I’ve been awe struck by the entrepreneurs who’ve come up with ideas to revolutionise whole industries and who’ve then had the guts and determination to make those ideas happen.  These remarkable individuals are mostly in their 20s and their ambition, right from the start, is to create a business which will grow into something big.

They are the “hares” of business growth – the ones who seek to achieve market leadership in no time at all, the ones that excite the media, the ones who gather in tech clusters and networks, the ones that governments fall over themselves to encourage and been seen alongside, and the ones who win business awards!

And, I’m equally in awe of those owner managers whose growth is less meteoric, the “tortoises”, if you like.  They probably started their business years or even decades ago because there was something they could do that others would pay them for, or because they had no choice.  At the time, they may well have had no intention or ambition to grow the business – it was just a way of supporting themselves and their family.  And then something unexpected happened.  It turned out that they were so good at what they do that they won too much work for themselves to deliver alone and so they took on other people – creating jobs and building a business almost by accident.  Over the years, they’ve worked through the inevitable ups and downs of owning and running a business.  And, sometimes, as in the fable, they keep on going and survive long enough to grasp a big growth opportunity when it comes along.  While they may not achieve the same profile as the “hares”, the “tortoises” are just as remarkable.  And, sometimes, the “tortoise” wins the race!

Of course, both of these approaches to growing a business are valid and both are hugely important.  One is not better and worthy of all of our attention and support while the other is ignored.

At the same time, they’re also very different.  In particular, “hares” and “tortoises” are very different individuals, they face different challenges as their businesses grow and they need different types of support to help them achieve it.

For the “tortoises”, the journey is long and, at each step of the way, there are a series of different challenges for the founder to overcome.  Many of these challenges require the founder themselves to change and develop.  As a result, growth is often difficult and tends to happen in “lumps” at specific times in the overall life of the business rather than consistently.  For instance, there’s often a surge of growth quite early in the business, taking it up to about 10 people, then a plateau for a while, followed by another surge, another plateau and so on.

These surges of growth are typically driven by one or both of two things. Often, the main driver is the founding owner manager themselves – their circumstances have changed, they’ve re-assessed what they want from the business, they’re frustrated that the business isn’t quite what they want it to be, they recognise that they need to build a business which can run without them so that they can exit and/or retire. Sometimes, the driver is an external event such as a big market opportunity or a change in the competitive landscape.

The main challenges these founders face in growing their businesses are:

  • Maintaining their passion for the business over an extended period of time
  • Being absolutely clear about what they want personally from the business, both financially and otherwise, and thinking through the implications of these choices
  • Changing their own role as the business develops so that they continue to be the leader that their business needs them to be. This will almost always involve, at some point, letting go of the day-to-day operational activities which used to keep them busy and spending some of their time looking forwards and outwards being more strategic
  • Articulating a clear vision for the business which inspires other people to help them bring it about
  • Making the most of their current markets and avoiding the temptation to diversify too early
  • Measuring the right things and mastering the numbers
  • Recruiting and retaining great people.

The “hares” are actually the more rare species.  Despite all the media coverage and the heroising of big-name entrepreneurs, there are still only a very small number of people with the vision, determination and leadership skills to build a big business from scratch.  Compared to the “tortoises”, the “hares” tend to have a more detached feeling for their business and a very different approach to growing it. They’re less likely to be personally involved in the delivery of the core product/service so are more inclined towards the strategic leadership role from an earlier stage.  Where “tortoises” ambitions are often inextricably linked with their personal life, “hares” ambitions are more likely to be centred around the business, which they may see as a “means to an end”.  They’re more likely to need external funding and to consider external ownership. They’re more likely to bring in other senior managers earlier. So, their challenges are more usually around things like:

  • Managing and dealing with a rapid pace of growth
  • Recruiting sufficient people
  • Product/service development
  • Entering new markets
  • Raising external finance
  • Recruiting high quality senior managers who can work in a rapidly changing environment
  • Management and staff retention including things like share option schemes.

In addition to these differences, “hares” and “tortoises” also share a number of challenges.  In particular, whether you’re a “hare” or a “tortoise”, you need to:

  • Be absolutely clear about what you want from the business by answering questions such as: how much money you want to take from the business, whether you want/need that money as you go along or can wait until an exit event, what other rewards you want from the business, how much of your own time and energy you’re prepared to put into the business, what role you want to be doing in the business, how long you want to be doing this for.
  • Develop as clear a picture as you can of what the business needs to look like in order to deliver what you want at the end-point of your planning horizon. This might include things like: sales turnover, profit, number of people, number of locations, geographical markets served, number of customers, reputation, etc
  • Articulate that picture in a succinct way and create a vision for the future of the business which will inspire other people to help you bring it about. And then tell everyone your vision! This will have a remarkable affect on people who already work with you, people who you’re looking to recruit, customers, potential customers and even competitors (eg. Tristram Mayhew of Go Ape developed a vision that they would have 40 high ropes courses in the UK by 2012. A potential French competitor later told Tristram that they’d never tried to enter the UK market because there wouldn’t be any demand for more than 40 courses!)
  • Working back from where the business needs to be at the end of your planning horizon, work out where it needs to be 12 months before that, then 12 months before that and so on until you get right back to where the business needs to be in a year’s time. In other words, plan from the end point.
  • Keep reviewing your own role and your own performance in it. What leadership capabilities do you need develop in order to be the leader your business needs you to be and how do you ensure that you continue to perform at the absolute peak of your performance?”

If you see yourself as a “hare” or a “tortoise”, or some hybrid in between, then our Better Business Programme can help you address all the above challenges in a way which is unique to you and your business.  The next programme starts in January 2013.  Call us on 08456 838 818 for an initial exploratory conversation.

 

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