Growth Without Goals – But Not Without Strategy
The Situation
Who doesn’t want their business to grow? But unlocking profitable growth can feel like a black box. Where do you invest your energy and resources and those of your team? Where do you turn for outside help, and when should you prioritize new partnerships? How do you find what your Thing is, and when do you double down on it?
In other words, how do you get to the next level? And what do you do once you’re there?
The Plays
Nail down how you want to grow: Developing any growth strategy requires a careful assessment of current reality, available resources, and expected return. If you know where you are, what you’re able to do, and how much you’re willing to risk, you can identify and prioritize ways to grow, including one-time projects (often related to gaining resource capacity), the development of complementary products or services, solutions for improved quality, pricing and/or sourcing control, and major reinvestment or overhauls
Make sure you’re not compounding losses: You’re probably not levering up all the pieces of your business at once. While you’re concentrating on making gains (big or small) in one area, don’t neglect the other areas of your business – if they’re not at least holding steady, you’re losing ground in ways that will spread.
Find a core competency and double down: You can grow while executing well on what your business does best, what your customers need, what the market provides, and what you can control. Focus and relentless cultivation of a core competency gives you resilience while allowing you to build.
Whatever you do, do it sustainably: Hustling as a one-man-band doesn’t scale. Build a team you can trust, use delegation, training, and mentorship to release some layers of control, and consider bringing in trusted partners to help.
Run the Plays
Essay: How to Build without Buying
“It feels like we say this a lot: small businesses don’t stay small on purpose. And it’s true. Companies want to grow… Traditional private equity offers one answer on how to grow…” At Permanent Equity, we think there’s more than one answer, and in this new essay we walk through how we think about growth strategies.
Post: Multiply by 1.1
“When we say that businesses are ‘multiplicative systems’ – especially regarding that ‘tastes like chicken’ layer of business – we don’t just mean that small gains in individual parts of the business will compound (although that’s part of it). Each area (from finance to operations to strategic planning and beyond) has the potential to be a multiplier for the other parts of the business. Leveling up one area of the business, even by 1%, can spread.”
Permanent Podcast
Chris Powers (Fort Capital) joins Brent Beshore & David Cover to talk about almost losing everything, what changed his life and business for the better, building exceptional teams, the critical importance of real friendship and support, knowing where you’re going to provide the most value and find satisfaction, and prioritizing an operator’s mindset in the face of challenging conditions.
“For years the business couldn’t get a flywheel that could build momentum and start growing because I was constantly changing it… We were just trying to do deals, but we were great at nothing… We focus on one thing now.”
Listen & subscribe on: Apple Podcasts, Spotify, Overcast
Throwback: Growth Partnerships & the Preservation of Fun
“The most common way we invest is what we call a growth partnership. It’s an acknowledgement that the owner still has super strong conviction about the business, believes in its future, and wants to continue contributing (a.k.a. keep having fun)... While it means owning less, the ambition is that the pie also gets bigger. So it’s fun, compounding.”
Throwback: Ceilings, Scaling, and the Death of a Hustler
“But as your company grows (in units, people, scope, or any number of other ways), even if it’s growing linearly, the decisions that need to be made and the work that needs to be done grows exponentially. Continuing to rely on your individual ability will become a ceiling (for your business and for you personally) rather than a springboard.”
Go Deep
Scaling Up is a Problem of Both More and Less (HBR)
+ We tend to think of growth only in terms of accumulation, but the most effective growth also requires an eye toward subtracting. “A hallmark of skilled leaders and teams is that, as their organizations grow larger and older, as the footprint of a change program expands, they keep looking for signs of once useful but now unnecessary roles, rules, traditions, processes, products, strategies, and services. To borrow a phrase from author Marshall Goldsmith, they remain vigilant about ‘what got us here, but won’t get us there.’”
Multiplicative Systems: Understanding the Power of Multiplying by Zero (Farnam Street)
+ More math, but also basketball, meal prep, General Motors, and the difference between additive systems and multiplicative systems – and what all of them have to do with being human. “Most businesses, for example, operate in a multiplicative system. But they too often think they’re operating in additive ones.”
Business Scaling Wizard and Organizational Physics (The Fort)
+ An episode from Chris Powers’ podcast on growth, scaling, and systems. Plus another equation: “Success = Integration/Entropy.”
Scale: The Universal Laws of Growth, Innovation, Sustainability, and Pace of Life in Organisms, Cities, Economies, and Companies (Geoffrey West)
+ A deep dive on scaling, tipping points, and phase transitions – in short, how a system (organic, inorganic, or theoretical) responds when its size changes. “It’s not often appreciated that without a continuous supply of energy and resources, not only can there be no manufacturing of any of these things but, perhaps more important, there can be no ideas, no innovation, no growth, and no evolution. Energy is primary.”