Growing a business is a perilous journey, that can lead to the promised land of profitable growth, or the scrap heap of bankruptcy. There is no guarantee of success, and even when you survive the start up period, growing pains can kick in easily, and you find yourself way out of your own personal comfort zone. To understand this process, and paraphrasing the excellent Michael Gerber “E-Myth” books, it is important to consider not only the journey of the business in growth, but the personal transition that the business owner has to take.
Many will be familiar with the typical business life cycle – start up, growth, plateau and decline. Key decisions need to be made at each step, and the decline can be mitigated through innovation, acquisition, exit or many other strategies. The business requires different expertise at different stages, and this is achieved through recruitment, partnerships and many other tactics.
Life starts with a clear plan (or it should!). Where do you want the business to be in 3 years? Then the key question is how you get there? What resources do you need in terms of cash, facilities, people, skills? Do you clearly know the target market and the sales channels to attract these target customers? How will you communicate to them about your great new product and/or service? Once up and running, how do you continue to grow? Attracting new customers, opening new markets, innovating new products? All of these cost money, and as we all know, cash is king in business.
So you have started your business, and got some traction in the market, well done. What comes next is the most challenging period (in our experience) for the business owner. To use the analogy of Gerber, every start up business owner at some stage will have to wear three hats – the entrepreneur (willing to take the risk to follow their dream), the technician (probably the most comfortable hat – this represents the skill of the business owner in actually making the product (e.g. baking cakes, being an engineer, plumber…etc) and then the hat of the manager (least comfortable). The management hat needs to be adorned when you identify the requirement to step away from the front line of the business (i.e. baking, plumbing, engineering) and actually spend time working ON the business, rather than IN the business.
The growth stage therefore sees pressure on the business in terms of stretching resources to grow, but also a necessity for the owner/director(s) to step away from their comfort zones, and undertake a range of new challenges:
- Delegation to others to undertake the technical functions (but can they do it as well as yourself?)
- Managing assets and resources more closely
- Working more strategically.
From our experience, SME’s can grow to a small team and around £1m turnover without too much alarm. It is at about this size that they hit a crossroads – do we stand still (or go backwards in reality) or push for growth? Often the second option is selected, but the next phase can be painful unless managed and planned. Stepping away from day to day activities, recruiting staff, putting in key positions to facilitate growth – these are often new skills for the business leader, and present new challenges. Add to that managing performance, re-financing, investments, acquisitions, marketing, export opportunities – this is a long way from baking cakes and simple plumbing jobs…
It is at this time that a business could learn from advisers and experts who have coached others through this transition. If you are at, approaching, or just past this crossroads, call us now for a no obligation review.