The Level II Company: "Rapid Growth"

Part 3 in a Series of 4Below are the characteristics and warning signs of a Level II Company, the "Rapid Growth" stage. This is the second of three defined company stages as part of The Business Growth Cycle.CHARACTERISTICS:

• A capable leader is at the company helm (Level I growing pain resolved).
• The business often has multiple locations, such as:
  • Sales offices
  • Branch offices
  • Warehouses
  • Etc
• More detailed attention is given to certain areas (in addition to producing products or services and selling them), such as:
  • Marketing and sales
  • Inventory management
  • Personnel
  • Accounting, budgeting and finance
  • Systems support
• Employee jobs are more specialized.
• The company becomes more impersonal due to having more employees.
• The growth rate is faster than Level I; sometimes accelerating at a very fast rate.
• The company culture - non-negotiable values and ways of treating the customer and each other - start to need to be communicated and reinforced in words and actions that match.

Usually one or more problems block a successful company's transition to a higher level of performance. If company leaders fail to address these problems (actually The Top 12 Warning Signs of Success™!), the company will fight the same battles in precisely the same way, churning on and on, year after year, until - finally - although the business does not explode, the people often do.When these crises emerge, it is what a company does in response that determines if it moves on and becomes a mature, financially stable, professionally managed and led organization, or if it simply moves on aimlessly -- or worse.LEVEL II CRISIS: Top 12 Warning Signs of Success™If these problems are present in a company, they will eventually cause “train wrecks” that slow dow or stop the company’s ability to scale. It is the role of the leader(s) to predict and resolve these problems before they show up in the results.

• Company starts feeling the effects of not being run by a qualified and experienced management team:
  • The company’s top performing individuals are brought together to become the management team. However, this group has little experience working as a team and lacks the expertise necessary to scale a business by predicting and resolving the problems before they show up in the results.
  • Delegation becomes increasingly difficult for the leader (CEO).
  • Access to the leader (CEO) becomes difficult for managers and employees.
  • Managers feel better qualified than the leader to make decisions in their technical areas, but they are not permitted to make them.
• Senior management feels it is losing control as a result of having less direct contact with day-to-day operations. Start to see/hear about US vs. THEM.
• It becomes apparent that some of the senior management team members are not developing as skilled leaders or executives.
• One or a few customers represent a disproportionate amount of the company’s business.
• Increased vulnerability to competition.
• Increased internal problems that threaten the company’s ability to scale, such as:
  • In-fighting among managers and supervisors.
  • Outdated corporate culture.
  • “Look the other way” deals on non-negotiable values for certain “special” employees.
  • Inefficient or outdated systems and processes
  • Bureaucracy sets in
• Results that look like success often breed failure due to poor decisions being made by unqualified managers in areas such as:
  • System design and development.
  • Facilities expansion and purchase
  • Recruiting and hiring “the right” key employees
  • Use of cash
  • (Over) Commitment to new products and/or services
• There is less communication from the top.
• Accountability becomes confused and sporadic.
• Problem-predicting and/or problem-solving meetings and processes can be awkward, time-consuming and, at times, ineffective.
• Some key employees become disenchanted and leave.
• Financial performance reporting and control systems are often inadequate for sales volume.
• Major shortages of management time and cash often occur.
• Entrepreneurial owners and leaders are tempted to sustain rapid growth indefinitely without the systems and management team infrastructure needed to scale the business

CRISIS: Executive Leadership Team, Middle Management Team and SystemsNext: view Level III: Market LeaderKEY QUESTION:Pretend for a moment that you are THE most experienced, admired and respected business guru in the world, (I know for some of you, you do not have to pretend) . Your child or key family member has come to you for guidance on what they can do in order to make their business and personal lives wildly successful. Now assume you can only give them 1 piece of advice on "what to do" in order to be wildly successful and only 1 piece of advice of "what not to do" in order to be wildly successful, WHAT WOULD YOUR ADVICE BE?