Growth Management: Read the signs,before it is too late

Greg Anderson, a partner in the Growth Solutions Group of Deloitte Wellington, makes some of his living providing advice to start-up and growing businesses. So he has a vested interest when he claims that one of the mistakes a growing business makes is not seeking advice at the right time. "You have to get input when everything is going swimmingly well. When the bank is about to recall a loan and you've had to fire half the staff, it's too late. "

In his experience, there are some common causes of business failure.

In the startup company, it is a lack of cash, and a lack of general business experience. They may also have a wonderful idea, but find nobody wants to buy it, or a technically good product, but they don't know how to market it. And he warns: "One of the main reasons small businesses fail is that the owners wear themselves out."

The critical resource needed to reach the established stage is capital. Taking on outside investment may mean relinquishing some control, but that brings the benefit of reducing risk of burnout, Anderson points out.

Once a business has a proven product, and is generating revenues, the causes of failure change, he says. "Typically a product becomes outdated. The owner fails to look ahead, and make decisions at critical points, such as to open another plant or outlet, or reinvest in technology.

"I think some owners get to the point where they are comfortable and don't want to take any more risks. But ideally you should always be looking to grow."

To be successful any business must not just find a market, but be able to offer something different - a reason why a customer should buy from you as opposed to anyone else. That is a problem with crowded business sectors like retail, real estate and homestay accommodation, which are all popular start-up options. "

A lot of people who go into self employment go into these areas, because they are not so complex. But not all of them are successful at it. They don't understand how much stress there is, compared with being an employee."

Evidence suggests that some of the best wealth-creating business opportunities today are in the Info Tech area. Anderson concedes that "it's pretty hard to leave employment and develop an IT solution. It's not something everyone has the ability to do".

Consultancies such as Deloitte's growth practice draw on knowledge from a global network. In Deloitte's case, a worldwide business benchmarking survey, the Fast 50, gathers a wealth of information.

Greg says the surveys worldwide throw up common issues for business owners, the main ones being: 
* Managing risk associated with growth

*Aligning the internal organisation for growth

*Attracting capital

*Hiring and retaining talent