18 Things That Prevent Companies from Growing Past $25 Million in Revenue

Earlier this year I talked about the issues that companies face when approaching the $10 million in revenue mark.

If you’ve made it past $10 million, congratulations! Roughly 96% of all U.S. companies never achieve your level of success. You’ve not only survived, you’ve thrived, and have carved out a space in the market.

Now that you’re bigger, you’re going to encounter a new set of challenges. Think about the old food chain diagrams we saw in grade school. At each level, there’s a new danger (except at the top). That analogy is relevant for you:

Even though you’re beating your previous competition, there’s new competition that is taking notice, and you’re in their crosshairs.

We often call these challenges “growing pains.” The chaos from our previous days, from startup through the early-stage growth years, must now subside; it’s time to start instilling processes and procedures and properly training executives to manage growth.

There’s a saying that I find myself repeating often to the stakeholders of private companies:

The ones who helped you get here are not necessarily the ones who will help you get to the next level.

It may sound harsh, but it’s reality. And it applies to customers, employees, managers and even key members of your executive team.

New Territory Requires New Thinking

Battling new competition can require new thinking, new approaches and new systems.  Some of the things that helped get you where you are today will continue to help you. But some will prevent you from going further. The key is to identify and evolve them to align with the direction of your changing company.

Below are the common characteristics and struggles of companies nearing the $25 million revenue mark (the mark may be higher or lower for you depending on your industry, but from 30+ years of experience working with mid-market CEOs, the $25 million mark is the most common milepost):

  • “Cowboy” management is still in place (i.e. the original founders or first employees; professional managers have not yet been hired)
  • Staff is growing and energetic, but untrained
  • Founder is still the strategy- and thought-leader
  • Strategy is still largely focused on growth at any cost
  • Company is dependent almost entirely on the genius of the CEO
  • Competition has taken notice and has begun to be more aggressive
  • Cash flow is a monthly problem
  • Competition has created pricing pressures
  • Staffing and turnover have become more serious issues
  • Remaining competitive with employee benefits is becoming a challenge
  • Training for staff and managers is challenging or non-existent
  • Hiring is still shoot-from-the-hip
  • Sales growth is slowing
  • Sales management problems are becoming an issue
  • Competitive strategy for market acceptance is becoming essential
  • Customer mix is becoming an issue
  • Involvement of founder’s family conflicts with company needs
  • Technology changes and upgrades have become more pressing
  • Are you experiencing any of these?

If you’re experiencing some of them, it’s the norm, not the exception. If you’re experiencing many or most of them, then you’re headed for trouble. Focus on resolving as many as possible, as quickly as possible. The faster you’ve grown, the faster you can crash. It happens.

Here are 6 recommendations if you feel you’re heading for trouble:

  • Hire smarter people. Find people with a proven track record and use validated assessments to mitigate hiring risk.
  • Conduct a competitive analysis. The competitive landscape has changed.
  • Align marketing and sales programs. Refine your positioning and brand strategy for your new competition and tie together your marketing and sales programs.
  • Engage professionals to handle cash management. You’re big enough to justify this.
  • Obtain quality legal help for taxes, personnel, and contracts. Outsource these to professionals.
  • Diversify customer reliance. High growth can create high customer risk. Focus on creating diversification.

Diligent focus on these six areas should help get you through your growing pains and past that $25 million dollar revenue mark.

Interested in learning more?

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