Q: How do you raise capital and get the right people for scaling?
Gaurang Naik, CEO Dollar Rows
A: As the adage goes, if your company is in a growing market and you are not growing with the market, then your portion of the market is shrinking.
Dollar Rows appears to be in a growing market, as evidenced by the success and current growth of similar retail discount stores, like Dollar Tree and Dollar General. For Dollar Rows to survive, it must grow, but growth puts serious demands on cash and human resources. Growth demands put many companies out of business.
Just last week, I was discussing the challenge that faces many entrepreneurs transitioning from the entrepreneurial leader to the growth leader, with my St. Thomas students. These are two very different skill sets and some founders successfully make the transition, some don’t, and others know themselves well enough to not even try. Those that do have probably developed an understanding of factors that determine the growth trajectory of small businesses.
One such skill set is administrative; building policies and procedures that facilitate the hiring, onboarding, training, rewarding and firing of employees. A significant step in becoming growth-oriented is developing staff who work on the business, not in it, charting and executing the growth strategy. Some of you reading this article have made the transition to an organization type that is dominated by administrative policies designed to support growth. Large businesses didn’t become administrative because they are big, they became big because they understood how to develop policies, procedures and structure to facilitate effective growth.
Likewise, investment bankers and venture capitalists who look at growth retail opportunities are also basing their investment decision in large part on the team in place to grow the company. The Catch-22 of this is that it takes cash to put the team in place and the team needs to be in place to get the cash. One bridge over this gap is to find an investor who can bring a growth management team or individual into the deal, along with the money.
Alec Johnson is an associate professor of entrepreneurship at the University of St. Thomas Opus College of Business.