Growth5 Blog

Wednesday, April 28, 2010

Managing a Growth-Stage Company

Software company Infusionsoft has delivered seven years of above average growth. Co-Founder and CEO, Clate Mask put together 5 Tips for Managing a Growth-Stage Company for VentureBeat's Entrepreneur Corner. The highlights:

1. Set your prices higher. This will allow you to have enough to share with marketing partners to fuel growth and will give you the extra cash flow to make it through the early/lean years.
-If your product is differentiable and delivers for your customers you can charge what it's actually worth as opposed to just pricing it slightly lower than what your competitive analysis research tells you.
2. Work relentlessly to establish the vision of your company. "Corporate vision guides everything – and it becomes clear through constant, iterative planning, execution and reflection... Once we got serious about it at the end of 2006, the magic in our business began to happen."
-We talked about the importance of your company's vision earlier this week.
3. You need more cash than you think. "Timing when raising venture capital is crucial, but many entrepreneurs resist or deny the need for capital because it frequently implies dilution. As a result, the venture grows slower than it could and sometimes a market opportunity is lost."
-It's the age old question: would you rather have 40% of a little or 10% of a lot. The fear of never making it to "a lot" paralyzes some entrepreneurs into NOT raising the cash needed to get their business to the next level. Do you think they told the original investors that the company's growth would be limited by how much the founders would have to be diluted? Probably not, but it happens all the time. If you're an Angel investor, this is the kind of topic you should be asking about during your due diligence process.
4. Your culture is your most valuable asset. "Your competitors can knock off your products, replicate your process and steal your customers. But they can’t swipe your culture. They can’t compete in the marketplace if your positioning is based on you and how you operate.

Your culture attracts the right people, ejects the wrong people and clearly guides your path. The trick is to stay true to it... the fact that we clearly communicated that (our culture) helped us attract the right VC partner and repel the wrong ones."
-Mask points out that the process of developing your company vision will be helpful in establishing the right culture. You certainly will have a culture whether you have a vision or not – the culture just might not be the right one for your business and might actually impede your growth.
5. A high growth rate will demand the heart and soul of you and your people. "The change is constant. The pace is blinding. The required “figuring it out” is taxing. You must be highly adaptive… and you must devote an incredible amount of energy and intensity to the venture.

... your heart better be in the venture. Because if it isn’t, you won’t find the balance; you’ll burn out.

...a lesson I learned early on: don’t hire mercenaries… and do your best to help your missionaries find some life balance so that they can keep fighting the crusade."

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Growing a business quickly can be just as hard as running a business that's not growing at all. These are excellent tips to help you manage your growing company.

Grace: thanks for passing this article along, good find.

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