GROWING BUSINESS: Column

Creating quality jobs key necessity for Bay
It seems the chorus of pundits urging New Zealand to lift its economic game to keep up with other OECD countries is growing.
In the United States on the other hand they are more focussed on creating jobs, and there is a specific interest in high-growth firms - the so-called "gazelles" - that account for a disproportionate share of job creation.
How can we encourage more gazelles to create quality jobs and grow foreign earnings here in the Bay of Plenty?
A key starting point is identifying aspirant and ambitious business owners and giving them all the support we can. Often the ambition is there but the business knowledge or experience is not.
The advice of serial entrepreneur and chairman of the Australian Graduate School of Entrepreneurship, Tom McKaskill, may be just what local entrepreneurs need to develop clarity around growing their businesses.
His book, Winning Ventures , sets out an easily understood model of the key business principles that drive high growth.
Most entrepreneurs have no proactive model of the driving forces of high growth to guide them. Typically they don't have a full understanding of the inter-dependence of the factors inside their business and their external environment that underpin growth.
It is not sufficient to be good in one area of business, such as a great product or an excellent management team.
If the business is weak in any one area, it will undermine the overall performance of the entire strategy - and this is why sustainable high growth is so difficult to achieve.
Winning Ventures identifies the 14 critical principles of growth and explains how the entrepreneur can construct a business environment which can implement and exploit those principles.
These principles are:
Being in the right place at the right time often occurs through a dramatic change in technology, regulations, the economy or the way society operates.
Finding the compelling need to buy helps the high growth business because it solves a problem that is urgent or resolves a strong physical or psychological need.
The successful high growth business typically has a very tight definition of the ideal customer, and knows how and where to find them.
Accessing and securing the necessary distribution channels to market is critical. A weak or vulnerable channel could be a severe constraint on growth.
Innovation is the fuel and driver of the high growth enterprise.
While it would be ideal to have no competition, few businesses can attain that happy position. However, at a minimum the business needs a superior competitive position that matches the needs of its market.
Building in sustainability means finding ways to secure its existing customers and protect its entire value chain, because over time competition will erode a single advantage.
Engineering in the capacity to grow means building scalability into processes, systems and other vital ingredients so that growth is not constrained.
High growth firms usually create a future scenario they want to achieve, and then develop the tactical plans to get them there.
Too many businesses fail to have a focus that clearly sets out where their position is in the marketplace. This lack of a clear vision means many wrong turns away from the conditions that will drive their growth.
Almost without exception high growth businesses have above average margins, because around compelling needs prices are less sensitive.
Managing risk is an important skill set of the growing business. Risk scenario planning and managing the downside are important activities.
Assembling a capable management team seems obvious, but often trips up the entrepreneur who fails to build a group that collectively represents the required skill sets and experience.
Ultimately the business must generate a healthy return on investment for the shareholders. The fundamental economics must be able to support a long term positive cash flow.
This book is an excellent read, and when the fish aren't biting during the coming Christmas holidays every ambitious business owner who picks it up is likely to get hooked.
Max Mason is chief executive of Tauranga Chamber of Commerce. He can be contacted on email: max@tauranga.org.nz or (07) 577 9823