When a business starts to show real growth, it’s both thrilling and relieving. It usually takes about three years of very hard work for a start-up to prove their mettle. During this time, unpredictable markets, demanding customers, leadership challenges and stakeholder pressures will present one trial after another. When profits are finally soaring and expansion plans are well-underway, a little break from the frontlines may feel justly deserved. In fact, the reverse could not be more true.
A rapid growth surge can leave your business in a precarious position. Should the economy flip or your biggest customer go bust, your cash flow, and thus your very livelihood, will be severely challenged. Crisis cannot be predicted but it is the greatest test for any fledgling business.
In 2014, at Spencer Ogden we learnt this the hard way. Our rapid growth nearly brought the company to its knees but we managed to survive – and prosper. Here’s what we learnt from the experience.
Spencer Ogden launched in 2010 and in just 10 months we’d grown by an impressive 360%. At the time, 70% of our recruitment business was focused on the oil and gas sector: as the oil price climbed, so too did our operations and we opened new offices and hired more people around the world. This exhilarating ride came to an abrupt end in 2014 when the oil price plummeted unexpectedly – hitting historic lows that felled hugely successful companies. We almost became one of them.
As a hiring freeze descended upon the industry, demand for our services decreased dramatically. Nobody saw it coming and we knew we had to take decisive action or risk losing everything. Our first action was very painful but it had to be done. To save 350 jobs, we let some people go.
Roll the dice
Downsizing our workforce helped cut costs but it wasn’t enough to stay in business. Our back was up against the wall so we took a risk and chose to diversify the business. It was a big lesson for us and fortunately, it turned out to be a very successful move.
Growth had almost been our undoing yet it also presented us with an opportunity to survive. We didn’t abandon our existing customers by any means. Rather we reduced our dependency on the oil and gas sector to 20% and launched five new departments to cater to different markets.
Our efforts paid off and our annual turnover actually increased by 25% allowing us to finish the year with a total turnover of £98m.
In that time of chaos and uncertainty, we realised that we had to pay attention to our people more than ever before. Our employees were vital; without their full commitment we knew we wouldn’t make it successfully through the crisis.
Our company leaders made time for their teams, supporting their career development plans and encouraging greater collaboration between offices in other regions. Transparency is key and we made a concerted effort to include everyone in the company’s expansion strategy. I started sending a deal bulletin to the entire team every morning to announce new opportunities, ideas and examples of best practice. This created a sense of unity among the offices and reassured everyone that the business was still in good shape.
Our strategy worked, and continues to work. Our operations now include offices and teams in the UK, the Americas and Australasia – and there is more growth in the pipeline. Of course, we are making sure not to over-extend ourselves as we expand. Every move we make is future-proofed against potential instability: our risk is spread across industries so should one dip, another will tide us over.
Our rapid growth made us vulnerable but ultimately it was good for business – it pushed us to diversify, to become more flexible and to strengthen our culture and core values. Challenging times call for decisive action and effective leadership. If you’re prepared to journey into unknown territory to try and save the day, you and your company will only be the better for it.
By David Spencer-Percival, CEO, Spencer Ogden