Hi, I'm Isaac.

I'm a consultant and advisor  for social enterprises - using business to change the world.

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Are We Growing Too Quickly?

Are We Growing Too Quickly?

weeds in the grass

One of my friends begrudgingly admitted something:
About a year ago, they’d excitedly told me about how their church was rapidly expanding – opening new campuses, buying buildings, taking on new ministries, all at the same time.

Now I don’t remember this, but apparently my response was less than encouraging.
“Do you know how weed killers like Roundup work?” I said, somewhat strangely.
“They don’t poison the weed, but make it grow at an incredible rate. The growth is unsustainable, and ends up killing the whole thing”

Probably not the wisest thing to say to someone who’s celebrating.
Anyway, this friend recently reminded me of my bizarre remark.
“I hate to say this, but you were right.
One of the properties fell through, people are upset and leaving the church, and now they’re cutting staff.
It’s horrible.  And all I could think of was your weed killer comment”

This principle is something I deeply believe – I got that Roundup analogy from Paul Steele and it’s been self-evident over many years.
A good thing that expands too quickly can become a disaster.

You’ve seen it yourself:
·      Musicians who produce too many songs after their first album becomes popular
·      Restaurants that open several new locations and lose their magic
·      Startups on Kickstarter that take on too much money and can’t deliver on their deadlines
·      Actors who have a small cult hit, then take on three big movies that aren’t very good
·      Video games that promise huge new features, then deliver an undercooked product

So why does it happen?

planning session

Planning is incredibly gratifying
Most people and organisations start out with big ideas and small opportunities.
When they’re offered new projects that would match their vision, saying “No” becomes very difficult.

Wil Anderson once asked Dave Hughes “Why do we say yes to every job?”
Hughesy replied “Because we remember when nobody asked us”
It’s an incredibly natural instinct – to seize the opportunity, chase crazy ideas, to go all out.
These planning sessions are so satisfying – raw optimism and possibilities are like a drug.

We forget how long things took to build
It’s easy to forget how much extra work went into a project.
It might be the favours that were called in, the extra hours from friends and family, the donated time and labour, the mental drain of the founder.

This is dangerous because it means we readily commit to do it all again, but this time without the spare capacity we had the first time.
This is doubly so when the people commissioning the project didn’t build the first one.

Dreaming and scheming got us here in the first place
The act of creating something out of nothing takes ingenuity and irrational optimism.
To stop that now seems crazy, so we’d rather double-down on what made the first project a success.

cranes in construction

By understanding what kills a project, we can better defend against them and spot problems earlier.
Here are three common patterns I’ve seen:

Cashflow & Cash Reserves
There’s a difference between Profit & Loss and Cashflow.
Most planners think in terms of P&L – e.g. the idea will end up making money over three years – and they’re probably right.
What that doesn’t tell you is that the project bleeds money like crazy in the second year, then makes it all back in the third.

Here’s where it’s dangerous: If you have two simultaneous projects that follow this pattern, they’ll sink your whole operation in the second year.
No matter how exciting they are, no matter how great they can become: if you’re out of cash, you’re over a barrel.
It might mean ending one project to save another, a painful decision that will upset a lot of people.

By forecasting monthly cashflows and building in buffers, you can make sure the accounts never hit zero.

Losing passionate people
Not all managers are created equal.
You might think that any half-decent project manager can get the job done, and in good times that’s probably true.

It’s when things go wrong that you see who’s genuinely talented.
Talented people will go the extra mile to reassure customers, identify which tasks can be delayed, manage the dollars, keep staff happy, negotiate with partners and generally keep spirits high.

If your passionate people are stretched too thin, they’ll be ineffective or become disenfranchised.
They’ll probably leave, and the issues will snowball.

Decent vs Excellent
You can’t be excellent at everything.
Excellent companies tend to die when they switch to being decent at a lot of things.
On paper the decision looks great – expansion into new industries, a bigger presence, economies of scale, etc.

What this doesn’t tell you is that you’ll be competing against other people who are excellent in that particular field.
Instead of dominating one area, you’re now average in a lot of areas.
This tends to lead to lost market share, lower profits, and then cashflow issues.

exhausted entrepreneur

Growth can be great, but it needs to support your sales instead of requiring more sales.
If you go big too quickly, you’ll burn out your best people, your supporters and your cash reserves.

It takes fortitude to say no to something exciting.
If it ensures you build something remarkable, is that a sacrifice you’re willing to make?


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