When Success Isn't Enough

John Keagy is co-founder and CEO of 6-year-old� ServePath, a San Francisco-based managed hosting company with 2,500 customers that is working to go from annual sales of $10 million to sales of $20 million. Its growth strategy is to target more sophisticated customers--namely accomplished Web 2.0 firms and software as a service companies--that have more complex requirements, but Keagy needs to build the 100-employee company's middle management layer to spur this growth. "Ten people can't fill out this whole company anymore," he says. "We need to teach the executives we've got now how to build executives that report to them."

Keagy is trying to keep the company's hiring costs in line with recurring revenue, which he expects to grow 60 percent a year. "I hope that our head count doesn't grow quite as fast," says Keagy, 40. "If our head count grows 40 percent and our revenue grows 60 percent, that's probably about right."

To grow, you'll have to balance your company's short- and long-term thinking, creating time and budgets that are focused on the future while also fighting today's fires. "You have to have both points of view," Greiner says. "You have to be short-term oriented to solve problems and get performance; you have to be long-term minded about where you're going."

For Siderean, balancing capital between short- and long-term growth is a struggle as the company alters its business model to expand into new markets. The company has taken on $12 million in venture funding since 2004, which only makes the push for aggressive growth more urgent. "It's easy to watch cash flow and to be able to manage expenses," Allen says, "but it's not necessarily easy to know when you need to increase your expenses to make sure you can capitalize on that investment with increased revenue downstream." Allen and his team constantly analyze market trends and talk about how to generate more repeat sales. At the same time, cost control is always an issue: To keep costs down, Siderean has shifted toward working with customers online. "It's about being very careful with spending," says Allen, "but also spending to be able to grow opportunities to address the market."

Ashwell has learned she's not the only one who wants something different: Sales of her three most recent bedding collections broke company records. "It showed me that I've got a loyal fan base, [but] they still need newness," she says. "That's been a great learning curve for me." And it's not too bad for the bottom line, either.

Rate yourself with this checklist based on questions developed by General Electric's Six Sigma Black Belts. If you answer no to any of them, it may be time to reassess parts of your company's growth strategy.