Growing and scaling are not the same thing.
Growth can be defined as increasing sales, creating a new location, hiring more staff or gaining more clients. Scaling is more profound. It entails boosting the company's performance and capacity without simultaneously raising expenses and complexity. Think about a food company in Accra that has developed a solid clientele via WhatsApp and Instagram. The proprietor individually oversees purchasing, production, packing, customer service and shipping in addition to receiving 100 orders every week. The company can be overburdened if demand unexpectedly doubles. Growth without scalability is that. Systems, personnel, technology, procedures, financial controls and leadership structures enable a scalable organisation to manage growing demand without relying solely on the owner. Therefore, the question for many well-established Small and Medium-sized Enterprises (SMEs) in Ghana is, "Can my business successfully handle significantly more customers?" rather than, "How can I get more customers?" These are the reasons why scaling is a challenge for many well-established SMEs.
Founder reliance syndrome
When a company still relies too heavily on its founder, it becomes one of the main obstacles to scaling. The founder authorises purchases, speaks with important clients, verifies inventory, manages challenging staff, authorises payments, resolves operational issues and occasionally even replies to WhatsApp messages from clients. This might have been required at first. Due to their limited resources, the entrepreneur had to be active in every aspect. However, the same things that kept the company afloat in its early years may later hinder its growth. The business cannot expand beyond the owner's own capabilities if the owner is the only one who understands how things operate. What happens if you leave the company for thirty days?
Weak procedures, systems establish bottlenecks
Instead of using systems, many well-established SMEs rely on experience. Although the owner is knowledgeable about the procedure, it is rarely recorded. Workers learn up knowledge by observing others. Memory is essential to stock management. Different staff handle customer concerns in different ways. Only, when necessary, may financial records be modified. As the business grows, this becomes riskier. Imagine a big corporate order coming in for an Accra fashion company. The company lacks a defined production schedule, quality control procedure and inventory system, despite the great opportunity. Suddenly, the owner takes on the roles of procurement officer, quality control officer, and production manager.
Revenue is increasing, cash flow, profitability are poor
Confusion between business growth and sales growth is another significant issue. Even if a SME's income rises, its financial situation may deteriorate. For instance, a business might obtain multiple big contracts, but it would have to buy supplies in advance, give consumers credit, and wait 60 or 90 days for payment. Although revenue appears outstanding, the business finds it difficult to cover costs for suppliers, salaries, and other expenses. Financial discipline is necessary for scaling. An SME must comprehend its margins, cash conversion cycle, working capital needs and cost structure before pursuing rapid expansion.
Many SMEs lack capable management
Long before the founder is aware of it, a company may outgrow them. A small crew could be adequate at the starting phase. However, informal management loses effectiveness as the company expands. Instead of training managers, the entrepreneur might keep overseeing staff members directly. Meetings become sporadic. It is unclear what is expected of performance. Promotions are given to loyal employees rather than those who possess the skills needed for the position. The owner eventually turns into the bottleneck. Management capability is necessary for scaling. This entails having personnel capable of overseeing operations, finance, sales, marketing, human resources and other crucial tasks.
Company's growth strategy
Some well-established SMEs are busy but lack strategy. They seize every chance that presents themselves. They add a new product after a customer requests it. They think about starting a second branch once someone proposes it. They respond when a rival joins a market. The outcome may be a company that performs a lot of different things without becoming very good at any one of them. Making strategic decisions is necessary for scaling. The business owner needs to decide: Where do we intend to go? To whom precisely are we catering? What do we want to be recognised for? Which markets ought we to pursue? Which goods ought to be discontinued? What skills do we need to acquire?
Survival to organised development
There are many of competent businesspeople in Ghana who have proven they can create successful companies. Assisting these companies in transitioning from founder-led operations to professionally run, scalable organisations is the next issue. This is where organised assistance can have a big impact. The E4Impact Foundation's Growth for SMEs Programme (GSP), in partnership with Università Cattolica del Sacro Cuore, is intended for established companies that have progressed past the startup phase and are prepared to pursue expansion with more structure, strategy, and assistance. Executive coaching, practical business education, consulting, mentorship, peer learning and growth-focused assistance are all included in the six-month programme. Founders, CEOs and general managers who are posing the crucial question, "What must happen in my firm for it to expand beyond where it is today?" will find it very pertinent.
The writer is a
Senior Lecturer/SME Industry Coach
Coordinator (MBA Impact Entrepreneurship and Innovation)
University of Professional Studies Accra
IG: andy_ayiku
@AndrewsAyiku
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