Planning for Future Growth and Its Consequences

Dr. Joseph E. McCann III Dean, John H. Sykes College of Business Dean of Graduate Studies Co-Chief Academic Officer The University of Tampa Tampa, FL

Early stage investors have an abundance of issues to consider in funding a venture. One of the most important is to think ahead to consider the challenges later that their successful businesses typically encounter. Foresight and early application of resources often make the difference between success and failure of a new company.

The Florida Entrepreneur & Family Business Program at The University of Tampa maintains relations with several hundred successful ventures, ranging from early stage technology companies to mature family controlled companies that dominate their markets. In a recent survey of more than 100 of these companies, we asked their leaders what were the major sources of their success, biggest challenges, and biggest mistakes. Many responses were predictable for any rapidly growing enterprise, but it is still worth reflecting on some of these, particularly given the need to anticipate and plan for growth and its consequences.

Major Sources of Success

• An ability to develop and fully utilize the strengths of employees
• An intensely felt and shared ethical and moral environment where honesty and integrity rule
• A widely shared sense of values and culture that emphasizes empowerment, love, trust, loyalty, and harmony
• A commitment to hard work, perseverance, and sacrifice
• A singular focus on customer satisfaction and close relationships
• A willingness to innovate in terms of product/service quality and modern business practices and systems

Biggest Challenges

• Managing rapid growth - demands on:
  • Financial resources
  • Adding capacity fast
  • Family and personal time
  • Communicating and sharing family philosophy and culture with greater size
• Assuming ever greater business risks to enter new markets and free up capital
• Facing bigger competitors as the business grows
• Finding, hiring, and retaining good employees
• The need to create new structures and professional practices and control processes

Biggest Mistakes

• Poor business choices - growing too quickly for the resources of the business and capacities of its members
• Losing focus on the market and assets that first gave the business initial success
• Being overly conservative in taking advantage of opportunities
• Inadequate long-range planning - loss of vision and focus
• Not identifying and using professional services well - "going it alone" mentality
• Mistakes regarding people:
  • Inability to educate and train employees and family members early enough
  • Dealing with people problems in a timely way
  • Preparing the next generation early enough for leadership

These responses show that entrepreneurs often fail to plan and work far enough ahead of themselves to build the capacity and skills to allow them to manage growth. Investors can assist in this process by educating the entrepreneurs about these issues and by insisting that attention is given to them ahead of time.