Docuforms Inc. and the companies featured in this article know what it's like to grow quickly. They've all encountered their own "growing pains." And they've all sustained a high level of performance.
Breaking the Speed Limit
How growth affects a company depends somewhat on how fast it's growing. The question often asked is "how fast is too fast?" The difference between steering a company's future and driving a car is that there is no speed limit. "Sustainable [growth] isn't a universal number for any business or any set of companies," Meyer says. "The real question is how to better manage the growth." Laurence Weinzimmer, strategic management professor at the Foster College of Business Administration at Bradley University, Peoria, Ill., and author of Fast Growth: How to Attain It, How to Sustain It, agrees: "There's no exact number. Some companies can experience double-digit growth for years."
There are two signs that a company might be growing too fast. The first is "when top line revenues are growing significantly and bottom line profits are decreasing," Weinzimmer says. The second is an increased frequency of customer complaints.
Ray Goodson, CEO at Vacaville, Calif.-based distributorship The Landmark Image, experienced the latter situation when his company grew quickly as the result of a new product line. The Landmark Image grew 44.4 percent in 2003 with $2,137,000 in sales, mostly from the introduction of a proprietary thermal receipt printer for credit unions. The number of clients increased along with the number of service calls. "People were frustrated," he says. "There's quite a bit of set-up that had to be done, and depending on the level of expertise at the client's site, if they didn't have an experienced IT staff, it usually resulted in frustration." Goodson explains that the company's ability to service customers didn't suffer because it had prepared for the rapid increase in growth. Before introducing the product, The Landmark Image invested in additional staff to meet anticipated needs.
Chasing Time
When it comes to growing quickly, companies have three primary resources: time, people and money. "The best executives manage them in that order of priority," Meyer says, because it's the order that reflects how difficult each is to replace. Money can be obtained from many sources, he says, but "if you make a people mistake...it sometimes takes a while to replace them. The one thing that you can never fix is a time error, because time is infinitely perishable."
Fast-growing distributors agree that time is scarce when business booms. Many have had to adjust their personal lives and postpone business opportunities to successfully manage their growth. Walter Lapham, president and co-owner at Rockaway, N.J.-based distributorship Tri-Plex Business Products Inc., acknowledges that while the company experienced rapid growth, it was difficult to keep its web site updated. With $6,102,000 in sales, Tri-Plex Business Products grew 105.8 percent in 2002, making them the second fastest-growing distributorship in Print Solutions' Top 100 for 2003. Lapham plans to develop the company's e-commerce capabilities but hasn't had enough time yet to determine the best solutions for Tri-Plex Business Products.
Lapham and Jack DeGolier, vice president and co-owner of Tri-Plex Business Products, spend much of their time addressing customers' immediate needs. "I just set out what are the hot button areas of the day or week and how we can move projects to completion," Lapham says. "Jack and I stay on top of those areas." Though it consumes much of their time, the pair commits to quick responses when customers have questions. "We have no problem working late to make sure all communication is completed at the end of the day," Lapham says.
Docuform's Oliger remembers traveling regularly and not spending as much time with his six children. "It was more to run this business and to grow this business than I thought," he says. "Way more than I thought." As the company grew, Docuforms' hired only experienced salespeople. "I basically opened offices based on the right people," Oliger says. The company couldn't have grown as quickly as it did if he had to train staff and salespeople. Now Oliger finds ample time to visit with his family and coach his Little League team.
Vision and Wellness
In practice, managing growth effectively means defining a strategic vision for the company. Meyer compares the process to playing with jigsaw puzzles. Most people start by constructing the edges or working with noticeable shapes and colors, but eventually they have to look at the picture on the box. "If you know what the picture looks like, it's a lot easier to complete the puzzle," he says. "If you want to save time for the entire team, get really good at explaining the box top."
Weinzimmer also emphasizes the importance of choosing a strategic direction. "Just because you can make money doing it, doesn't mean you should be doing it," he says. Many companies enter markets or pursue growth opportunities that aren't related to their core business. Often, they start to neglect their core business, and the strategy backfires.
If executives feel that they're starting to lose control of the company's growth, the most obvious action is to intentionally slow down, even if that means turning away business. Both Weinzimmer and Meyer counsel companies to focus on their most profitable clients. "If you're focusing on the customers who don't produce the most opportunities, then you're investing your time in the wrong place," Meyer says.
If turning away business is out of the question, companies can partner. "If you're growing and you don't want to give up the increased revenue, you can joint venture," Weinzimmer says. Partnering with other firms is a good quick fix, but it comes with a loss of control, he cautions.
Meyer says that executives shouldn't consider pursuing rapid growth unless they still love their jobs. If executives are stale, customers and employees won't receive the necessary attention. "The purpose of a business is not to pass it onto your children," he says. "It's to move forward. It's to enjoy it."
Andrew Brown is assistant editor of Print Solutions. Email him your comments at abrown@DMIA.org.
Rapid Growth vs. Risk
When it comes to pursuing risky rapid-growth opportunities, independent distributors and manufacturers have a leg up on their publicly owned competitors. Huge corporations would love to spend more money on research and development, but they can't afford to show losses quarter after quarter or shareholders will sell the stock, says Laurence Weinzimmer, strategic management professor at the Foster College of Business Administration at Bradley University, Peoria, Ill., and author of Fast Growth: How to Attain It, How to Sustain It. Independent companies, however, "can invest heavily in growth, knowing they might dip into the red for a year."
Weinzimmer cautions, "The problem: Their pockets aren't as deep," as large corporations. If a small independent company takes a risk and fails, it could mean the end of the business. If a big company takes a risk and fails, "they'll be at bat again in the fifth inning," he says.
Rapid Growth: A Manufacturer's Perspective
At Abbott Label, every second counts. The day after Thanksgiving, when many businesses shut down, the Dallas-based label manufacturer was up and running to finish a job. The end user needed 750,000 sheets to ship on the following Monday. "Because that order came through, I had no choice but to ask [my employees] to work," says John Abbott, president.
Like their distributor counterparts, some industry manufacturers also have experienced rapid growth--and the challenges it brings. Abbott Label grew 50 percent in 2003 with $4.5 million in sales, earning it the title of fastest-growing manufacturer on Print Solutions' Top 100.
Founded in 2001, the company started with four employees and since has grown to 20. It recently moved from its original 12,000-square-foot building to a 30,000-square-foot building and added additional equipment to ensure it could provide virtually any run length or size. The basis of Abbott Label's success, however, is its superior customer service and fast turnaround. "Responsiveness to customers is what builds your reputation. "That's what gives you more referrals," says Jerry Abbot, John's father and a consultant to the company. Jerry founded a label manufacturing business that grew to include five plants across the United States before he sold the company in 1998.
Abbott Label doesn't have a sales staff and has yet to turn business away. Instead, it operates two shifts a day, sometimes running two 10 to 12 hour shifts. "I never felt the growth was out of control because we have people lined up wanting to work for us, and we've got people here who will work for us," John Abbott says. In fact, Abbott credits his employees' commitment to customers as a major part of the company's success. "Without good people, you're not going to bring in good customers," he says.
Growing rapidly has had noticeable effects. "One of the things that's happened is that we're growing so fast in the custom area that we haven't been able to pursue additional business opportunities as rapidly as we hoped, because we're taking care of customers," Jerry Abbot says. The company's long-term growth depends on tapping these opportunities and expanding its customer base.
The hectic pace also means balancing work and family. "I will get in here at 4 a.m. and leave at 4 p.m. to coach my son in football, soccer, basketball," John Abbott says. "And that's where I relax. When I work on weekends, I'm here at 4 a.m., so I can get home when the kids wake up...You make sacrifices for your customers, your employees and your family."
