The Three P's: Three critical steps to growing your company

To grow a business, owners must focus strongly on three vital areas or risk derailing," says Ron Friedman, former president of Stonefield Josephson, a California-based certified public accounting firm. "When I sit with a business owner, we explore the creation and proper use of a business plan, the hiring and most effective use of the right people for immediate and future needs, and the best financial means of achieving goals." If you have a growing firm, Friedman recommends following these three critical steps:

Critical Step #1: Plan -- Create a business plan.

"Your business plan can include a mission statement, desired public image, target markets, products/services, geographic domain and expectations of growth and profitability," states Friedman, "but it must include financial projections and budgeting. Get your accountant involved at the earliest stage of the plan." Friedman further urges making regular use of your plan. "This is not a document that you stick in your desk drawer to take out at the end of the year and say, ‘How did I do?' You look at it every day and ask, ‘Are we achieving our sales goals? Are our bookings on target with what we're expecting them to be? Are our expenses in line with what we projected? If any of these.

get out of balance, what am I going to change so I still make the same profit? And if I'm exceeding my sales goals, what do I need to do to support the extra business?''" Continues Friedman, "I tell my clients to put their plan under their pillow and sleep with it, because you've got to live and die by your plan."

Critical Step #2: People -- Get your people in place.

"Once you have your best growth plan in place, you can then use it to attract top-quality executives," states Friedman. The more talented, the better, as far as Friedman is concerned. "Surround yourself with better people than yourself and encourage your executive team to offer and carry out innovative ideas."

Finally, Friedman suggests positioning your firm for growth by creating an advisory board to challenge you and help plan for the future. "The board will provide a framework for making good decisions and will hold you accountable for following through on business plans."

Critical Step #3: Picture -- Stay on top of your financial picture.

"Ensure that your internal accounting department is giving you the information you need to make timely decisions," states Friedman. He further urges entrepreneurs of high-growth businesses to monitor their bank's performance. "Are your line of credit and your ease of credit approvals appropriate to your business? Are your covenants outdated or unnecessarily severe? Your bank has much to do with your cash flow, growth potential, cost of capital and even your stress level." Need more capital? Friedman says, "The marketplace is full of investors looking to buy into a business. Use your customized business plan to lay out your vision and define your competitive advantages."

Friedman believes that in addition to the fun of growing a business, one must also have an exit strategy. "One day you'll want to cash out, sell the business, or turn it over to someone to take it to the next level." By focusing on these three critical areas, says Friedman, owners are not only growing their business but simultaneously incorporating a successful exit strategy.