Getting a Grip on Rapid Expansion: “Pick Partners Carefully”
“Build a strong foundation. Don’t be too opportunistic. Go into growth with the long term in mind,” said Marc Shuman, founder and CEO of garage makeover company GarageTek.
He summed up a lesson of the summit’s panel on growth that is so rapid it almost undoes the business. Shuman is a poster boy for CEOs who almost lost the company because it grew too quickly. Four years ago he realized the company had taken on too many franchisees who just weren’t cutting it. They were passive investors who wanted to see profits, but were not eager for the workload. How to change the crew? Shuman admitted his company’s health was fragile as he weeded out 15 of 57 franchisees in a negotiated process that bruised egos and cost money, but today Shuman projects 2007 revenues of 30 million, up from $1.1 million in 2001, the company’s first full year.
“Pick partners carefully and pick ones who can grow with you,” said Shuman.
More tips on managing rapid growth were offered by author and small business expert Cliff Ennico, who said:
“Create systems to manage growth.” Ennico said that the best businesses — think McDonald’s, UPS Stores, Ritz Carlton hotels — run on systems that take a lot of the guesswork out of employee decision making. Small businesses can follow that lead.
Finally, finance expert John D’Aquila offered this encouraging news to small businesses on the hunt for capital: “There are many sources of money. Today there are new complications in the financial markets, but there remain many, many opportunities for investment capital.” D’Aquila warned, however, “eighty percent of entrepreneurs just don’t understand what investors expect in a small business.”
