We are downsizing: How do I make sure it doesn’t happen again?
Monday, May 14, 2012/
Dear Aunty B,
I am struggling with a problem that I hope you can help me with. We have just had to go through a downsizing.
What happened is this: We grew really fast and won a few awards but then we lost several large clients unexpectedly.
The reason for this was that some staff left for a variety of reasons just as we had successfully won a lot of work. This put huge pressure on our resources at a time when new staff weren’t equipped to cope. And so, I must admit, the service levels were not as high as usual.
I can hope that staff don’t leave next time, of course; but how do I make sure next time we get to that revenue level we keep growing and don’t fall in a heap once more?
You have put your finger on the problem but are blaming the wrong things.
The problem is ensuring you build the platform for growth that can sustain not just an immediate increase in revenue but an ongoing one.
Think of it this way. Every part of your business is going to be affected by growth: your IT, your marketing, your cost of sales, your training needs, your inventory, your building requirements – and that’s just for starters.
The way around this? You must understand it is very difficult to handle all the complexities of a fast-growing business and plan very carefully for growth.
It virtually means stress testing every part of the business under different scenarios with this question: If we grow by X per cent, what resources do we need to ensure our service and product quality levels improve or at least stay at a very high standard?
Of course, this uncomfortable exercise forces you to face the fact that you won’t have the money to put in place the resources you need to do that, and therefore you need to raise money, but you don’t want to raise the money unless you can be assured of the growth – and round and round we go with what I call the entrepreneur’s dilemma!
How do you solve that? You have to take the risk and back yourself. Make a great plan, raise the money and put the resources in place to handle the growth.
What’s the most important part of this exercise? The leadership team, because you can’t be everywhere and they must be your eyes, ears, heart and brain.
Your Aunty B