The challenges of rapid growth

How vendors riding the latest wave often lose out to local competitors

Congratulations! You’ve made the big time. You are riding this great new tech wave. The Board is happy with your rapid growth. Competitors are trailing in your wake. Is this your perfect scenario? Often, CEOs looking back at this period recognize that this is exactly the point when local competitors got established. How could this have happened?

The answer often lies in a number of areas, each contributing to you being vulnerable to nimble local competitors. First lets examine the finances of rapid growth. Most startups are only financed with enough runway to get them to the point of rapid growth. Periods of rapid growth often occur at unexpected times outside the scope of the original business plan. To fund this growth the Board needs to embark on the next level of Venture Capital funding, or approach high net worth individuals. Preparing for these presentations, negotiating and agreeing terms normally takes a significant amount of time and resources from the Board and senior leadership team. This is huge distraction from the day-to-day business of managing any enterprise.

Has your company culture changed imperceptibly as you ramped up for high growth? The challenges of managing a high volume business are completely different from those experienced by early period startups. In the case of hardware vendors, contract manufacturing, distribution channels, logistics and customer support will be your main headaches. Software vendors will be stretched in the areas of supporting channel partners and customer support.

If you look around your company have most of your new hires necessarily been ‘farmers’ in contrast to your original band of ‘hunters’? Have you lost key employees because of this change in culture?

Are your original channel or retail partners still onboard? Have they been sidelined by your growth? Niche value added channel partners are needed when there is no brand pull or market validation, but they cannot deliver high volumes. The volume players are better for fulfillment of market demand later when you are riding the wave. Managing this migration often leads to tension and acrimonious outcomes.

Under pressure from the Board to deliver ever increasing sales targets, you have no option but to press ahead and incentivize the team to deliver. Human nature dictates that these individuals will choose the easiest route to meet their objectives. Their ‘dash for cash’ will reinforce ‘farmer’ behaviour, alienating many founding partners who contributed to your early success, often more than recognized within the company.

It is at this point that you can create a perfect storm. Local competitors can exploit these local market and channel vulnerabilities to establish a beachhead in your market. They exploit their proximity to market and closer local relationships.

How can I protect my company from this seemingly inevitable outcome? In essence you need a group of professionals that are still grounded in your original ‘hunter’ values to overlay your volume sales efforts. They need to be in country, local to your markets in order to have the experience and personal relationships to protect and build new relationships for you. They need to operate with minimal management involvement to maintain and build complementary channels and sign new customers. This is the most effective way to block your competitors gaining a beachhead as you concentrate on maintaining your rapid growth.

Excelerate360 has a strong track record of helping vendors maintain rapid growth. We offer immediate in country sales and marketing teams, avoiding the distraction, risks, delays and expense of recruitment.

Please contact us to explore how we can help you protect your rapid growth.