Ready to Ramp Up?
When a company has grown to 11 – 19 employees, survival mode is quickly replaced with growth as the top priority. This is called Stage 2, or Ramp Up. This is a critical stage for the business owner who is starting to worry about the management of their growing staff and many other issues that can arise as a company begins to ramp up.
The CEO of a Stage 2 company is still the center of the business. All decisions run past the leader and this aspect doesn’t change until Stage 3. But what does change is that growth now becomes critical. The company needs to support higher sales levels and must start to generate consistent positive cash flow. The key objectives at the Ramp Up stage include:
Setting Key Performance Indicators to keep informed about how the company is performing
Organize and refine three revenue groups and customer segments
Preparing to transition to an enterprise-centric as the company approaches Stage 3
Focus first on Profit, then Process, and lastly People
Organize, Diversify, and Ramp
In the chaos of rapid growth, it’s easy for a leader to ignore key indicators of how the company is doing. Cash flow, for example, can get very thin quickly and without much warning.
As a Stage 2 company, the leader is going to find his or her range of capability and influence being pushed to the edge. This is a time where leaders can really get burned out. It’s at this time when the proper delegation of responsibility and authority can advance the company into the next stage of growth. However, failing to delegate appropriately will surely prevent advancement into the next stage.
As a Stage 2 company, we also start seeing the beginning of diversification within the organization and infrastructure. In contrast with Stage 1 where everyone was wearing all the hats and could do everything, in Stage 2 people begin to differentiate their tasks and start to specialize.
The Rules
Some of the Non-Negotiable Rules of Stage 2 are:
Organize Business Development (Marketing, Sales, and Customer Service) around the company's 3 Customer Segments.
Expand to a basic daily, weekly, and monthly KPI Flash Sheet.
Ensure employees know how the company makes and keeps money.
Clarify positions and roles in all departments.
Develop 3 employee supervisors to be responsible, accountable, and proactive.
Set in place an effective Team Mindset throughout the company supported by clear Core Values.
How do you lead a rapidly growing company?
If Stage 1 was about surviving the chaos, Stage 2 is all about corralling the chaos. The ability to take the initiative, develop your employees, and have a positive influence on them are critical competencies of a Stage 2 Leader. A “head coach” leadership style is required as you begin to hire quality people and continue to improve sales.
In Stage 2, your business needs you to be a leader that coaches the team, exemplifies a standard of high performance, and exerts influence to achieve success.
A Stage 2 leader is still spending significant energy as a Specialist (40%) and Visionary (40%) , but their Manager time is increasing from 10% in Stage 1, to 20% in Stage 2. Because the leader must start delegating authority and responsibility, this is a perilous stage for most entrepreneurs. Many leaders will try to hold onto all the control, continuing to make all the decisions, but this is a mistake. This is the stage where entrepreneurs begin to feel stretched too thin, frustrated that people aren’t doing their jobs and worried that things are getting out of control.
A leader who is open-minded, willing to look at themselves first when things go wrong, and who is constantly in ‘learning mode’, can take their company through Stage 2 and have the all the pieces in place to begin Stage 3.
Once you’ve made it through Stage 2, Ramp Up, you’ll head into Stage 3, Delegation. In Stage 3 the CEO starts to delegate decision making and if they aren’t a self-aware leader, danger lurks just around the corner.