I’m Rick Williams. I serve on the Board of Directors of technology companies and advise company leaders as they make key decisions on the path to growth and success.
This is the third of three videos during which I’ll give you an overview of the issues to consider before attempting to grow your company to scale and how to improve your chances for successfully growing to scale.
In the first video, we looked at essential requirements for a company to grow to scale, and a growth and ownership plan for the company. In the second video, we developed the concept of a growth-to-scale profile for your company—what the company will look like when it reaches the significantly larger size you envision. In this third video, we develop the execution plan and the overall growth-to-scale plan.
The execution plan describes the transition of your team and your company from where it is today to the at-scale company you envision in the future. With the growth and ownership plan, the at-scale profile and the execution plan, you will have the core building blocks for the growth-to-scale plan for your company.
Why Are You Spending All That Time and Money?
Before getting into the details, I want to check in on why we’re doing all this work when you just want to get started. We began this process by developing a good draft of the growth-to-scale profile for the new company. The next step is to develop the execution plan—again in good draft form. Consider for a moment why we’re investing all this time and effort into planning and what you want to achieve by the end of the process. Remember that you already have a successful smaller company or perhaps a late-stage startup with real customers and revenue.
Growing larger is creating a significantly different company with risks for you, your team, your financial partners and your business partners. You need to answer a threshold question before making large commitments to the growth-to-scale program. Can this really work? Can this company and this team really bring this off? You first need to convince yourself and your core team that the larger company you imagine can be successful, and your company as it exists today can transform itself into the larger company.
To do this right, get outside help and feedback. Think about what you’re hearing and be very honest with yourself about the risks and chances for success.
Let’s Work on the Execution Plan
Your plan will be unique to your company and your industry. Use the five core business components to characterize the growth process. Developing the execution plan will force you to consider where your company is today, what changes will be necessary to grow and how you make the transition to the larger company profile. You will create a schedule covering the growth period, including major milestones. Fine details of the growth plan are not needed at this point. More often, the barriers to growth are implicit or unstated assumptions, and the notion that all these details will work themselves out—or that you are handling the cash flow, product returns, sales management now, and they work just fine.
In the earlier videos, I said that leadership and cultural change from a successful startup or an established smaller company to a rapid-growth company is often the most difficult transition for a company—your team—to make. Consider both the organizational structure and culture. What will the new organization need? How does current leadership fit into the new organization? The values, expectations and working relationships in a larger organization are different than they are in smaller organizations. Your execution plan will outline leadership, structural and cultural changes to be made as the business grows.
The business model is the second category. You defined the business model of the new company in the growth profile. If the way you make money is different than what you’re doing today, how will you make the transition and when? If you plan to change from selling testing equipment to selling a testing service, how will that revenue model work and how will you make that change? If you’ve been a specialty reseller of home furnishings and you plan to bring out a line of branded products, what does that P&L model look like and how will that transition happen? If you will grow your current business model to a bigger scale, how will you maintain product quality and customer loyalty? How does that appear on your cost structure?
Product strategy is next. The product strategy—what products you’re selling—was developed in the growth profile. The execution plan will identify the addressable market for the products and how you’ll get to those customers. Sales and revenue projections over time will be developed. If you’re moving from direct sales to distributors, what distributors are you considering, and how does the cost structure change? How does your customer connection change? The plan will describe how the company will move from today’s sales and marketing approach to the structure of the new company.
Upgrading the accounting and control systems is essential for the transition from a smaller company to an at-scale business. The costs and delays inherent in making these transitions are often overlooked when schedules and cost projections are made. For broad categories of businesses, there are rules of thumb that can be used for the cost tradeoffs between outsourcing and bringing in-house HR, IT, accounting, CFO and other functions for different sizes of organizations. As the company grows, expectations will be higher for the accounting and financial control systems. Management reporting, sales management, operational controls and a host of other systems unique to the business will have to be upgraded or replaced. A reasonable growth and transition plan for these systems must be included in the execution plan, including cost and schedule.
The final business category is financing. Cash and credit fuel growth. The Catch-22 is that without demonstrating that the successful small company can transform its leadership, model, products and systems, the funding will not be available from investors, lenders and suppliers. The execution plan will outline revenue and cost projections, cash flows, financing requirements and schedule. Sources of cash and credit, an analysis of the cash requirements of the business and the sources for that funding are essential for realistic execution plan.
Taking the Time to Get to Scale
Getting to scale is not a linear extension of your company’s path to success as a smaller company. Most companies considering growth have already demonstrated they can be successful as a smaller company. The issue is whether they can transform themselves and grow into a materially larger company. My recommendation is you take the time to develop the execution plan in each of these five business categories. This will be a great way to engage your leadership team.
When you have a good draft execution plan, encourage your leaders and consultants to challenge the assumptions and the individual transition plans. Be sure the five segment plans are consistent with each other. Are all the expense projections included in the financial plans? Revise the plan if necessary to address the team’s input. Put the growth-to-scale profile, the execution plan and the growth and ownership plan together, and you have the vision for the new company. You, your leadership team and your outside advisors and consultants can now consider the totality of the plan. Does the total story hold together? Are there key assumptions that have not been tested? What can go wrong? How you take the risk out of the plan? What is the schedule and cost for quickly reducing the risks? Take the time to work these issues through. Check assumptions. Get more data. Go back to the plans. Revise as necessary.
Move Forward With Confidence
Considering everything, are you convinced that the vision you and your team have created can be successful? Momentum, strong advocates and unspoken reservations are real factors in this process, but you should make a real yes or no decision. Your team needs to know that by whatever decision process you use, a decision has been made. Assuming you want to move toward growth, you now have the core components of your company’s plan for going forward.
To the ownership plan, the profile, and execution plan, add an introduction and a few appendices and you have your growth-to-scale plan. The growth-to-scale plan is the underlying concept of the new business. Once you have convinced yourself and your core team, you will have to convince investors, lenders, new employees and probably sponsors and key customers.
Without a convincing story—professionally presented—you’ll not get the support you need to succeed. Your growth-to-scale plan may be more of a working document at this point, but it is the foundation for the business plan. You may need more developed financial projections and financial scenarios. An expanded board of directors and board of advisors may be needed. You will need a business plan that outside investors can review, an investment proposal, a financing plan and slide decks that can be shared with investors and lenders.
The work you’ve done to create the growth-to-scale plan will be the foundation for all of these presentations to outsiders, investors and partners. You will speak with confidence about your vision for the company and why your company and your team can successfully grow to scale.
We’ve covered a lot of ground. Allow me to share an overview summary. The companies that succeed are those that innovate, build a strong foundation, create a culture of performance, establish a business and financial model that can grow and be profitable, gain access to capital and align all the shareholders. These are the rare companies that make the transition from initial success to relaunch themselves to significant growth.
About Rick Williams
Corporate leader and advisor at the CEO & board level with broad experience as an executive, board member and management consultant. Industry experience includes med tech, financial services, real estate and high tech. From executive and board positions, has successfully lead strategic repositioning work in response to the evolving technology, financial and political/regulatory environment. Effective team builder and communicator with a record of bringing boards and senior leaders together.
Founding Partner of Newport Board Group – New England. National CEO & Board advisory firm. CEO/Founder of The Equity Company – award winning real estate development company. Spent ten years with Arthur D. Little, Inc., global management consulting firm, helping companies deal with the strategic impact of government regulation in the areas of chemicals, oil and gas, innovation, and process industries. Began career as a Senior Physicist with an expertise in photo/electro optical systems for space & defense applications.
Former Chairman of the Board of the Community Development Finance Corporation. CDFC (now Growth Capital Corp) is a quasi-public corporation that gives businesses access to capital in markets under served by traditional lenders. Chairman of the Board of Point Care Technology, Inc., leading provider of medical instruments for HIV-AIDS measurements in the developing world. President and Member of the Board of Governors of the Harvard Business School Association of Boston until 2013. Board Member of Amorphex Therapeutics – innovative drug delivery company. Board Member of Fairway Financial US – on line auction platform for 1st issue bonds & other commodities. Chair of Executive Committee for Directors Roundtable.
Harvard Business School and University of Pennsylvania (BA, Physics).