This is a question that has long intrigued business leaders, market researchers, and investors. The key to the answer does not lie in a single factor but in the synergy of many elements that together build a competitive advantage. When I asked ChatGPT about this, it pointed out more than 15 factors such as innovation, market knowledge, flexibility, competitive pricing strategy, and easy access to capital. Many of these factors apply to startups, especially those that achieve “unicorn” status. Companies valued at at least one billion dollars.
However, in this article, I will focus on companies with an established market position. These organizations already have recognition and a defined market niche, yet their growth rates vary significantly. What makes some of them grow faster than others? In my opinion, there are four key areas: effective management, willingness to take risks, fiscal policy, and knowledge of the company’s condition.
Why these four?
1.Effective Management Effective management is the foundation of any organization’s success. It includes planning, clear communication with the team, monitoring goal achievement, and the ability to provide constructive criticism. Leaders must define the vision and direction for the company, engage employees, and create an environment where everyone feels valued and understands their role. It’s no accident that people join companies but leave bosses.Effective management also involves flexibility and the ability to adapt. Companies that grow quickly have leaders who are capable of making bold decisions based on solid data and analysis.
2.Willingness to Take Risks Risk is an inherent part of business. Companies that grow quickly are able to spot market opportunities and take risks before their competitors do. However, the key is to base these decisions on solid analysis, not intuition. Risk analysis should consider not only potential threats but also opportunities. For example, one international IT corporation made a risky decision to hire a large number of specialists in anticipation of new projects. When the market collapsed, the company was left with a “bench” – 60% of employees with no tasks to do. This situation could have been avoided if the decisions had been better thought out. Willingness to take risks is only effective when supported by economic reasoning. Analyzing the return on investment, financing costs, and the potential outcomes of decisions are crucial. Companies that grow quickly are able to manage risk systematically and predictably.
3.Fiscal Policy Fiscal policy is another critical component of success. Effective management of cash flow and understanding the cost of capital allows companies to make informed investment decisions. Companies that grow quickly often boldly invest in areas such as automation or marketing. An example is Uber, which initially subsidized its services by investing in the app and marketing. This strategy allowed it to quickly gain market share, eliminating uncertainty associated with traditional transport services. The added value of such an investment was in building a long-term competitive advantage.Leverage can be a powerful tool if used wisely. Companies should analyze in advance how financing costs will impact their cost structure and profitability in the long run. With healthy financial ratios, leveraging can significantly improve the return on equity.
4. Knowledge of the Company’s Condition How to gather knowledge about the financial condition of a company? The answer is to implement the right ERP system. The choice of solution depends primarily on the complexity of processes occurring within the company. Let’s consider the example of the professional services industry. In law firms, clients often require precise documentation of a lawyer’s working hours – down to the minute. Some expect aggregate invoices, others want detailed ones. At the same time, the largest cost in such firms is the salary of lawyers. Which can depend on various factors: work done for a particular client, client acquisition, team management, or participation in the firm’s profits.
Compensation mechanisms, calculating service costs, labor costs, and the resulting margins often pose challenges. By contrast, a company creating software typically bills based on workdays. And the number of engineers required to complete each stage of a project within a specified time. From a business perspective, the complexity of both processes is entirely different.
A good ERP system tailored for professional services allows for quick and precise monitoring of a company’s condition. It enables a rapid transition from general indicators and plans to detailed analyses, such as the performance of a particular employee, project profitability, client profitability, or the overall industry’s performance. Thanks to this, key questions can be answered:
- Is a particular department able to take on an additional project if the sales department acquires a new order? Does the department have sufficient staffing resources? Based on historical data, should new employees be hired?
The ERP system provides comprehensive data – from financial indicators to detailed analyses of project performance or team efficiency. For example, law firms need systems that allow them to document working hours down to the minute. While IT companies need tools to optimally manage resources in projects. Integrated ERP systems are not a luxury. But a necessity in times when quick access to information is essential for making informed decisions.
How to Accelerate Company Growth?
Companies with an established market position can accelerate their growth by applying the following strategies:
- Taking well-considered risks – decisions should be based on solid analysis and reliable data.
- Investing in automation and marketing – these two areas are key to building market advantage.
- Engaging the team – employees should understand the company’s vision and feel part of it.
- Implementing modern management tools – ERP systems enable fast and precise decision-making based on data.
In conclusion, the key to rapid growth lies in a comprehensive approach that combines strategic management, thoughtful investments, and effective use of technology. If your company is looking for solutions to support its growth, feel free to contact me. Together, we will find the best strategies for the future.
