Management and leadership styles need to change as a company grows. The management style that works best at the early stages of a company, might not work when the company starts to grow.

There are different management styles that suit different phases of business growth. These changes in management style happen gradually and all at once. Early on, the CEO is the primary decision-maker and team members are encouraged to contribute ideas during meetings. As a business grows, more managers are hired for specialized roles and responsibilities. Few people would disagree that running a $50 million company is very different from running a $5 million company. The business changes over time, the management priorities change over time, the information needs change over time and what got you to this level will probably not get you to the next level.

The Evolving Role of Management in Business Growth

When a company starts or as it’s small, often there are two or three core managers with similar values and aspirations. The focus is really on being lean and cost effective. The business is fairly straightforward and doesn’t have a lot of complications, formal processes or even formal planning. That small team is doing it all.

Eventually, though, as the business grows, those individuals will run out of bandwidth to do everything they’ve been used to doing. When this happens, the business starts to suffer.

As a company evolves the management expertise and focus must turn more to delegating, to having formal processes, to defining the corporate culture. Yet the leader, individually, has some more personal questions to answer. What’s your management style going to be? As you grow the management team, what financial information will you share? The management role evolves from really doing it all yourself, to really managing others. For some this can be a hard transition.

The Increasing Importance of Information

As a leader transitions from doing it all to delegating more, information becomes increasingly important. When you’re small and less complicated, companies can get by on feel and some rudimentary numbers. As things grow in the business you need better, more robust financial information. And importantly, you need clarity on this information: Is this the best information available?

For instance, as the business becomes more complicated, do you have good cost and profitability information down to your individual products, or product lines, or distribution? Without the necessary information and insight into that information, you’re going to have surprises. Additionally, assume your competitors will have that information, potentially putting you at a disadvantage.
The financial information should reflect, on a timely basis, what’s going on operationally in the company. The numbers need to be credible and should help leaders and managers make sound decisions.

The Role of the CFO in Helping a Business Grow

The first duty of a CFO is to oversee the financial health of the business. They are responsible for managing all financial dealings and transactions, including budgeting, managing cash flow, and ensuring that all accounts are up to date.

Additionally, they must ensure that their team is efficient and able to complete tasks on time. The CFO has the duty of ensuring that any problems with work flow or other issues are timely dealt with in order to allow for maximum productivity.

Your CFO should also be a resource that ensures the company has enough resources in order to maintain their growth over time. This can be hiring new employees or investing in new assets for production. As a strategic complement to other leaders, your CFO should help them delegate, assist in deciding on the key information and reports needed for growth, and provide important insight into what the information means – the context behind the content.

As a business grows, the management must change as well. Leaders will have to delegate tasks and responsibilities to others as they grow their company, and they just develop information and reporting systems that serve that growth.

 

 

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