There's much argument as to who grows more jobs in this economy-large businesses or small ones.
So who is going to do that?
Business growth expert Professor Ed Hess asks, " Are they the nation's richest individuals? Are they big public companies? Hot start-ups?"
No, he asserts.
"If we are really going to get serious about job creation, policymakers and communities should focus more on nurturing existing private, high-growth businesses," agrees Hess, the lead instructor of the University of Virginia's Darden Graduate School of Business's upcoming free online course, "Grow to Greatness: Smart Growth for Private Businesses" and the author of Grow to Greatness: Smart Growth for Entrepreneurial Businesses.
"That means doing what's necessary to create a healthy small business environment, such as encouraging investment in private business through tax incentives, encouraging hiring inside the U.S., making credit readily available, and so forth," he adds. "But it also means zeroing in on a very important issue that often gets overlooked: growth."
To this end, Hess thinks, state governments, the Small Business Administration, chambers of commerce, economic development agencies, and entrepreneurship centers at colleges and universities should increase their focus on educating existing private business owners on how to manage both the risks and the challenges presented by growth.
So, what are the big challenges facing the nation's real job creators? Take a look at a few facts Hess thinks every company should know about business growth:
Too often, businesses grow themselves into trouble. We know that many successful small businesses implode when they attempt to grow too much too quickly. Growth can outstrip people, processes, and controls. "Cash flow management during growth periods is critical, because in many cases growth requires investments in people, technology, supplies, etc., ahead of the receipt of cash from customers," says Hess. "Entrepreneurs have to understand that they may not be able to afford all the available growth. Instead of following the 'grow or die' myth, a much better axiom to follow is 'improve or die.' As a business grows, in most cases entrepreneurs have to scale people, processes, and controls. That means not only more but better people, processes, and controls. A focus on improvement is critical because one must maintain high quality standards and financial controls in the haste of growth."
Successful entrepreneurs know when to release the growth "gas pedal." In his research, Hess found that every private business faces the same challenges as it attempts to grow. He found that successful entrepreneurs learned to pace their growth.
Growth means learning to effectively delegate. For a business to grow, the entrepreneur must grow also. When growth begins, entrepreneurs quickly find that they can do only so much and that they need help from others to properly serve customers. They must evolve from being a doer to a manager of employees and then eventually to a manager of managers (a leader).
Upgrading never ends. The people, processes, structure, and controls needed to manage a business with $1 million of revenue generally do not work for a business with $10 million of revenue. Entrepreneurs often learn the hard way that growth means continual change.
Growth creates business risks that must be managed. Growth stresses people, processes, quality controls, and financial controls. It can dilute a business's culture and customer value proposition and put the business in a different competitive space. Understanding these risks is critical to managing the pace of growth and preventing growth from overwhelming the business.
"The good news is that you can minimize this and other big risks by planning for growth, pacing growth, and prioritizing what controls and processes you need to put in place prior to taking on much growth," Hess adds. "I call it 'what can go wrong' thinking, and entrepreneurs can't indulge in too much of it."