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Stage 2 – Ramping Up, Are You Ready?

Ramp Up is Stage 2 in The Stages of Growth methodology and follows on from the Start Up stage. Companies are in this stage as they grow from 11 – 19 employees.

Growth now becomes a top priority replacing the survival mode that was key in the Start Up stage. This is a critical stage for the business owner who begins to worry about how to effectively manage the growing number of staff and all the other challenges that arise as the company ramps up.

The business owner of a Stage 2 company is still the central figure of the business. All business decisions are run past the owner and this doesn’t change until Stage 3. Growth now becomes critical for the business to succeed. The company needs to increase sales and be able to support these higher sales levels. This effort should start generating a consistent positive cash flow. The key objectives at the Ramp Up stage include:

  • Setting Key Performance Indicators (KPIs) to keep informed about how the company is performing.
  • Organize and refine three revenue groups and customer segments.
  • Focus first on Profit, then Process, and finally People.
  • Prepare to transition from an owner-centric to an enterprise-centric company as it approaches Stage 3.

Organize, Diversify, and Ramp Up

Rapid growth leads to chaos and it’s easy for a leader to ignore key metrics, or indicators, on how the company is performing. Cash flow is a great example, that can get very thin quickly and without much warning.

As a Stage 2 company, the owner will find that his or her range of capability and influence will be pushed to the limit. Business owners can easily get burned out as they start to feel the added pressure of a growing business. This is where proper delegation of responsibility and authority is required to advance the company into the next stage of growth, failing to do so will surely prevent advancement into the next stage.

As a Stage 2 company, we also start to see the early stages of diversification within the organization and infrastructure. In Stage 2, people begin to differentiate their tasks and start to specialize, which is in contrast to Stage 1, where everyone could wear all hats and could do everything.

The Rules

Some of the Non-Negotiable Rules of Stage 2 are:

  • Ensure employees know how the company makes and keeps money.
  • Clarify positions and roles in all departments.
  • 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.
  • 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 managing the chaos. Critical competencies of a Stage 2 Leader would require them to have the ability to take the initiative, develop their employees and have a positive influence on them. As the leader begins to hire quality people and continues to improve sales, a “head coach” leadership style is required.

Essentially the business needs a leader that coaches the team, exemplifies a standard of high performance, and exerts influence to achieve success.

At Stage 2, the leader is still spending significant energy as a Specialist (40%) and as a Visionary (40%), but their Manager time increases from 10% in Stage 1, to 20% in Stage 2. At this stage leaders also start to feel stretched thin. The greatest challenge for them, is to start delegating authority and responsibility. Many entrepreneurs struggle with this because they still feel they need to control everything and make all the decisions, which is a mistake. Having delegated to others, the leader often feels frustrated that people aren’t doing their jobs and they end up worrying that things are out of control.

A leader who is open-minded, willing to learn and who can look at themselves first when things go wrong, can take their company through Stage 2. These traits will also help them put all the pieces in place to begin Stage 3.

Once they’ve made it through Stage 2, Ramp Up, they’ll head into Stage 3, Delegation, where the leader starts to delegate decision making, but if they are not a self-aware, danger lurks around the corner.