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BY MICHAEL B. SOHMER
SENIOR CONSULTANT, CONSULTANTS TO MANAGEMENT

Whether you are a "team with a dream" or a company with a few million dollars in revenues, managing growth successfully is a concern 24 hours a day, 7 days a week, 365 days a year. If you were a "Monday morning quarterback" what would you have done differently in terms of strategically growing your business? From inception, an entrepreneur should strive for a business model that provides for sustainable growth. Managing growth is a key to future success and the following are certain critical areas the entrepreneur and management team need to focus on:

STRATEGIC PLAN / VISION
Initially, a company should create a strategic plan to help guide it through the obvious and unforeseen ups and downs of the business world. Crafting the right plan will help identify or create a corporate vision, define specific business niches, identify growth opportunities, analyze the company's internal structure and need for financial resources, identify objectives and set key strategic objectives. Each strategic objective should be supported by the appropriate tactics and action plans to ensure its completion. Most importantly, make your employees responsible for achieving the objectives and to set timetables to make it happen.

HUMAN RESOURCES / PERSONNEL
Hiring the right, qualified employees is probably one of the hardest and most important steps in growing your business. Hire people who are talented, committed and believe in your vision. Look for individuals who are creative, self-starters, but very much team players. Appropriate incentives are critical. The optimal mix of salary, options and benefits will increase the likelihood of finding, retaining and keeping happy the right employees.

PROFESSIONAL ADVISORS
Seek out advisors to guide you through the business, corporate finance, tax, accounting and legal issues affecting the company today and in the future. Look for an advisor who has experience working within your space, with companies at your point in the business lifecycle, and who has the contacts you will need. For example, if your future plans require raising capital, seek out an accountant, consultant or attorney with contacts in the banking, venture capital, or angel investing communities. Opening the doors of a venture capital firm via an introduction from your advisor is always better, and typically more productive, than going to the source cold.

A working relationship between your advisor and the capital source can sometimes move your business to the top of the pile. Start your search for professional advisors early. Having an advisor you trust and respect will afford you the opportunity to receive a third party view of your idea or issue. Your advisor will become an important tool to help you grow your business.

CAPITALIZATION
Capital structure is important for any company and especially for early stage companies. All business owners should be asking themselves — Is my company properly capitalized? How do you know? Develop a set of financial projections using assumptions that are reasonable to your business. Projecting major sales increases or greatly improving your accounts receivable turnover when you know these assumptions are unrealistic will only hinder your analysis. Create projections that are achievable and use them to determine your capital needs.

You may realize a cash infusion is necessary to grow at the pace you anticipate. If cash is an issue, do you borrow it from a bank or look for investors? Review your financial statements to determine how much debt your company can handle. If you can't take on more debt, you may need funds through an equity investor. The projections, if completed correctly, will spell out the amount of capital needed to move your company to the next phase. Still don't feel comfortable making those decisions? Don't be shy. This would be a perfect question to ask your professional advisors. Your advisor's perspective on a situation may be a little different than yours, which may save you time, money, and your ownership stake.

As your company progresses through the different phases of the business lifecycle, capital needs change. No matter where your company lies in its evolution, there are always opportunities looking to consume your cash.

To take advantage of opportunities as they arise, the ability to access cash is key. Does the company have the appropriate amount available through a line of credit? Will the investors kick in additional money quickly for an opportunity? These are important questions that need to be answered and by understanding your capital structure these answers should come relatively easy.

MANAGING CASH FLOW
To counter the need to borrow additional money from banks or seek more capital from investors, you should spend time analyzing and improving your cash flow.

Are your accounts receivable and inventory growing faster than sales? If so, you may have a collection problem or softening demand for your products. By spending a little time analyzing your cash flow, patterns could be identified and corrected before they become major problems. We have all seen good business models and good management teams fail due to inadequate levels of capitalization.

TIMELY MANAGEMENT REPORTING
Now that you have made reviewing your company's cash flow statement a habit, it's time to create a monthly management reporting document of one or two pages to review company performance.

The document does not need to be all encompassing, but one that includes important operating statistics such as accounts receivable, inventory and cash on hand. Consider documenting non-financial items such as employee turnover, job related injuries and sales backlog, to name a few. These reports can be tailored to meet your needs and can easily be updated as your business environment changes. Keep the document short and to the point, highlighting the operating statistics important to you and your business.

Within the document, compare current numbers with the same time period last year and also to your budget. Storing the information within a database or spreadsheet will allow you to manipulate and analyze the data for trends.

Coinciding with the reporting document, meeting with your management team will keep you informed on the day-to-day operations of the company. Make this a habit.

If you are constantly changing or canceling your management meetings, set the dates a year in advance and stick to them. If you must, schedule the meeting at night or early in the morning. This signals to all managers you consider this an important part of the job.

Consistently reviewing the trends shown in the monthly management report and conducting monthly management meetings will aid your decision-making capabilities and provide you with a tool to identify and correct problems before they become major issues. Distribute responsibilities among your management team and have them provide updates at every meeting.

Hold your management teams accountable and measure and monitor their progress.

EMPLOYEE GOALS AND OBJECTIVES
A key to sustaining your company's carefully managed growth lies not only with you, but with your employees as well. To help stimulate growth, your employees must know what is expected of them. To do this, establish goals for the employees to strive toward, set performance measures, provide timely feedback and reward accomplishments. This reward does not have to be monetary. To many employees, just being recognized can motivate them to strive for more. Be creative, set up competitions with prizes, but in all, show them you recognize their hard work.

JOINT VENTURES, STRATEGIC ALLIANCES, LIQUIDITY EVENTS
As your company grows, new opportunities may arise, forcing your company to change direction. Joint ventures and strategic alliances are ways to make this happen. When contemplating a joint venture or strategic alliance, think of companies with assets or contacts you could leverage. Examples would be client lists, distribution network, or complementary technology. Liquidity events could be the sale of your company or an initial public offering.

Keep in mind your exit strategy. As the company grows, go back and analyze your exit strategy. Does it fit with the path your company is taking? If it does not, do you need to change your exit strategy? Each time you analyze your company, review your exit strategy and determine if it is still relevant.

In addition to all your other company wide responsibilities, managing your company's growth is another full time job. Using the ideas set forth above should strengthen your ability to successfully manage your company's growth.

Michael B. Sohmer is a Senior Consultant to the Consultants to Management Group at Amper, Politziner & Mattia, Certified Public Accountants and Consultants