The Evolution of a Small Business
After working with small to medium sized businesses over the last 26 years, I’ve had a front row seat to view how most companies evolve. What works and what doesn’t, how to hire the best people and most importantly, how to grow.
There’s definitely a pattern that I see again and again. When businesses go through growing pains, most owners think it’s their fault or everyone else’s, but in reality, it’s just how it goes. From the businesses inception, to it’s early toddler years and then into its teenage years, most businesses follow the same awkwardly steps.
Solopreneur
The excitement level is high. You are going out on your own and starting your own business. This can be scary and fulfilling all at the same time. The hours are long, but the rewards are big. Congratulations on being your own boss!
Biggest Challenge: You are doing everything yourself and it can be overwhelming. There is so much to do and you always feel you can never catch up. You have to make money, but you spend 70% of your time marketing/selling and the last 30% is spent on doing the work to make money, organizing the business and building the foundation.
How to Grow: Optimize everything. Your main currency is time. Look for where you are spending unnecessary time and shorten it. Change how much time you give to potential customers that are just window shopping and come up with a way to qualify them sooner. Organize your priorities and only work on projects that pay. If you can master discipline, you will get all of your time back and make more money.
Micro Business
Typically around 1 to 4 employees, this is where the business is going through the trial phase. You are testing out to see if you can really be a business or should you just stay a solopreneur. This phase is expensive and a bit of a shock. You may actually make less at first as a micro-business owner than a solopreneur, because of the added overhead and investment that you had to incur. If things go well here, it’s a good sign you are on the right track.
Biggest Challenge: Training, managing and sales are what you are mainly focused on at this stage. Every second matters when you have to train new employees to do the work that you used to do. The faster you get them trained the more money you will make. You now have to be a boss and hold the new employees accountable. Being on time, doing their work correctly and working as a team are the main attributes every new team member needs to embody at this business size. Be aware that at this phase is where most founders turn into micro-managers.
How to Grow: Have a detailed job description created for each new employee. Put together a training plan that explains what they should know by the end of week 1 all the way to the end of week 12. Be disciplined to hold your team accountable instead of doing the work for them. Make sure to have money saved up before you hire a new employee to be able to handle any down time that will occur for training that will take place of you out there selling. As the boss, celebrate the wins of the individual and the team. Employees will be more engaged when they feel appreciated.
Small Business
You’re getting bigger and at 5 to 99 employees, your micro business is very real and very busy. At this phase you should be departmentalized and have managers/leads for each department, depending on how you build your organizational structure. Employee onboarding, training and management will be a significant part of the business activities, as well as project completion, marketing and sales. Scaling slowly with bigger departments is one way to limit overhead and control costs, but still have a plan to foresee any additional departmental or resource needs down the road.
Biggest Challenge: Organization is absolutely essential for your business success. Every shortcoming will have a ripple effect. At this stage is where most businesses have a problem. They will unwittingly hire more people to get more organized and speed things up instead of figuring out what the problem is and fix it. It’s a knee-jerk shortsighted reaction that happens to every business. Unfortunately it’s months or years later that they discover they’ve over-hired and will have a layoff and they may or may not ever figure out what the problem is. Most companies never get out of this stage.
How to Grow: Hiring the right people that are capable and can take work off your plate is how it starts. The next part is being obsessively organized. This means from how the work is created, the priorities for it, how it’s delegated and how it’s managed. Businesses that can master organization, planning and execution at this stage will have the discipline and culture to scale. There will be many businesses that fake this phase to get to the next phase, but they will quickly come back down due to the inability to execute at scale.
Medium Business
At 100 to 499 employees you’ve hit your stride. To maintain at this phase you need to be profitable, organized and have an excellent brand. Companies at this level have most likely had several missteps already, learned from their mistakes, regrouped and persisted. To this point the business is very used to doing work their own way and is reluctant to change. “If it ain’t broke don’t fix it” is a recurring mantra at this stage.
Biggest Challenge: Staying fresh and relevant as a company ages is one of the hardest endeavors these companies encounter. It’s easy to let the years get behind you and not pay attention to what seems like less important tasks. It’s like eating a bad diet for years and then finding out you quickly need to change. Resetting ingrained behaviors company-wide can be monumental and for some unrecoverable.
How to Grow: To make these bold changes it has to come from the top and is always easier if there’s a history of the company needing to adapt in some way in the past. Advanced companies will continually challenge their team along the way to keep them on the cutting edge. Not accepting the status quo and staying active in their industry communities. Creating a culture of change and continuous improvement needs to be embraced at the onset. Every large company that’s around today has embodied that principle.
Starting a business is easy. Maintaining a business is harder. Scaling a business is one of the hardest tasks every business goes through. Despite these challenges entrepreneurs seem to have this unwavering optimism. It’s an incredible thing to see and an infectious personality to experience. With entrepreneurs, even a catastrophic event isn’t the end, just an inconvenience that they need to figure out how to get around.
I help businesses get organized, become profitable and scale. If you’re ready to go to the next phase Book a Call With Me