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Thursday, Mar 28, 2024

Large or Small, Fast Growing Firms Try to Achieve Balance

As she watched the kayakers on Lake Tahoe one afternoon, Deborah Shames realized that keeping the boats moving was a lot like operating a small business. When the kayakers weren’t in sync as they steered and powered the boat, it just went around in circles. Shames, a partner at Calabasas-based public speaking training firm Eloqui, thought that what she saw on the lake was a perfect metaphor for what she experienced running her small business getting it right meant finding a balance between managing the day-to-day operations powering and planning for future growth steering. “I’m in the middle of that now,” said Shames. “We were driving and driving but while you’re driving you also have to be planning, and small companies have a very hard time having the resources to do both.” Call it powering, driving or juggling, it is the same with nearly every small business and even some larger firms. Some really do just go around in circles, and the business never grows. Many others find their growth curve looks more like a wiggle up one year, flat or down the next. “It’s the feast to famine to feast cycle,” said Lewis H. Stanton, managing partner of Stanton Associates LLC, a Studio City based consultancy that helps firms manage growth. “But if projects dry up there are no new projects in the pipeline, you’re immediately staring at famine. “Getting that balance right where you’re investing for managed growth but not overspending is difficult to get right.” Although a number of the most stellar performers on the Business Journal’s Fastest Growing Private Companies last year do not appear on this year’s list because they were acquired, went public or moved out of the area, at least a few are missing because, after taking two steps forward one year, the business took a step back in the next year. In nearly all cases, with most of 2006 behind them, they expect to register significant gains once again. The more successful the company, the more extreme the conflicting pull of managing the existing business and planning for future growth. Managing the growth means attention to putting out fires, ensuring quality and customer service. There’s little time for anything else. “If you’re in a real growth situation, everyone gets sucked into the vortex,” said Steve Robbins, CEO of Robbins Bros. World’s Biggest Engagement Ring Store. Right combination Robbins Bros. several years ago hired a vice president of strategic planning, but the exec was soon running the company’s real estate effort as it began its expansion into Texas. The retailer has since hired a director of construction, but, Robbins said, “That’s a perfect example of wearing a lot of hats. It did give us more bandwidth in planning, but depending on how aggressive your growth is, it’s all hands on deck. You’re morphing and responding and adapting and you realize the importance of the combination of those things.” Garcia Research Associates, a Burbank-based market research company specializing in the Hispanic marketplace, saw its business grow 40 percent in 2004, earning it the No. 14 spot on last year’s Fastest Growing Companies list, but did not come near those levels last year. The company’s founder, CEO and president, Carlos Garcia, says it’s a pattern that he has grappled with almost since the company’s inception. “Powering and steering are completely absorbing processes,” said Garcia. “You can do both that’s how you stay in business. But the question is, can you do them both well and at the same time? And the answer is often only intermittently. When I’m on the road all the time conducting focus groups and working with clients, where do I find time to schmooze and develop new business leads?” The problem, experts say, is not limited to small businesses. Even larger organizations fall victim to the conflicting pull of managing and planning. “It’s more obvious in a small business because of the resource issue,” said Sheri Adams, an entrepreneur who has launched five businesses and operates Adams Consultants Inc. in Sherman Oaks. “It’s really clear there’s not work coming in the door if you’re busy doing the work, whereas in a larger organization, there’s still work coming in the door and there’s still work getting done.” Some of the partners at EZ Shipper Racks Inc. come from large companies where they have written strategic plans that, in some cases, were coordinated both globally and across departments, but right now, although EZ managers produce a number of reports and projections, the company has no formal strategic plan. “We don’t have the time,” said Mel Harner, managing partner at the Westlake Village-based company that last year ranked No. 22 but does not appear on the list this year. “This company is only six years old. You’re spending so much time establishing your basic operating procedures that alone takes a lot of planning and you don’t have time to look at the really big picture.” Time and resources Most say the problem is a matter of time and resources. Fast growth strains everything from accounting to computer systems and supply chain management. There are never enough people to handle it all, and, if there were, the company would likely go bankrupt. But some point out that it isn’t just a lack of resources that makes managing growth difficult. Professionals or those who started almost any business because they had some area of expertise, be it manufacturing, sales or technical skills, are most comfortable doing what they know, experts say. And particularly as the business is growing, it’s easier to jump in and fix the problems than it is to look into an unknown future and develop a plan to attack it. Then too, small business owners can get sidetracked by their own lives. “Your kids get sick, or your parents get sick,” said Adams. “I suspect that a lot of this up one year down the next has to do with the things outside business that happens in people’s lives. We do take our focus off our business. I think it’s just how life is.”

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