When your business is sucked up into the hypergrowth phase I call the Tornado, there’s good news and bad news. The good news is, no phase lasts forever. That’s also the bad news! The faster you shoot up the acceleration curve of the business cycle, the faster you’re likely to drop on the other side. The faster your production outruns your back office, the faster your Tornado will turn into an Avalanche.
The rule here is a lot like the rule for your physical health: if you practice moderation, you can minimize the pain. We’re all going to get old eventually, but if you live hard, acting as though you’re going to be twenty-one forever, the pain will probably be a lot more severe when it hits—and it will probably hit sooner than if you had exercised, eaten healthy foods, and quit smoking. When it comes to the business cycle, the ideal, then, is to stay in the Tornado as long as possible to get that growth while you can—and just as with your physical health, the way to do this is to practice moderation. Keep that upward curve you see on the graph from becoming too steep; try to keep it gradual so that you can keep up better with demand. If you’ve addressed all three angles of the business triangle—people, process, and technology—during your start-up (or consolidation) phase so that they’re scalable, you’ll be in far better shape now. If you haven’t, you may not survive the Tornado’s wild ride.
Tornados are phenomenally exciting, but keep in mind that any storm, no matter how thrilling it may seem at the moment, can also be destructive—and the ones that blow in the fastest are often the most dangerous. A Category 5 hurricane that builds up over the ocean and then suddenly veers overland will often sweep rapidly across cities and towns—but during that short period of time, its effects are catastrophic. Houses will be destroyed and trees knocked down. Power outages will last for weeks. No one will be able to live in the region for weeks, even months. On the other hand, a Category 1 hurricane often moves more slowly. It hangs around and dumps a lot of rain. It will certainly cause some messes that will have to be cleaned up, but it’s a whole lot more manageable than a Category 5!
So when your business gets swept up in a Tornado, keep in mind that the severity of the after effects can depend on how you’ve managed the upward curve. The more you can slow things down, the longer the Tornado will last. The deceleration point of falling margins is inevitable—but by the time it comes, you want to dominate your market. This will give you the strength you’re going to need for what comes next.
And once you reach that next transition point, pay attention! Recognize what’s happening. Not sure? Get in touch with us and we can help. Don’t keep going along the same way you were during the Tornado. Now you have other problems to address to make sure your Avalanche doesn’t drop too far, too fast. If you accept the phases of the Business Storm Cycle, you can learn to deal with them strategically – and moderation is the key to making it work.