An unfortunate thing happens when an entrepreneurs launches a business and it’ s very successful. Often, the success is too much for the owners. They don’t possess the Management skills required to scale the business. They’re great with the technical skill, but have no idea about how to manage growth. Growth must be managed to become sustained. Before you are forced to scale or thinking about scaling to another level, have these four things in place.
1. Deeply ingrained Mission/Purpose
Your business Mission/Purpose is the supreme leader of your business vision, values and ultimately, your management strategy. It dictates the what, when and why of your business. According to current research ( see the Gallup Studies), the most successful businesses have Missions/Purposes that address three things: first, the promise to deliver services or products with quality and value to their customers; second, the promise to contribute to the growth and fulfillment of its employees and third, the promise to contribute to the welfare of society. Your Mission/Purpose is the force that will propel your business toward success. It is an important element of your business culture.
Chris Groscurth in “Why Your Company Must Be Mission-Driven”reports:
“In conducting a meta-analysis of 49,928 business units across 192 organizations representing 49 different industries in 34 countries, Gallup scientists discovered that margin and mission are not at odds with one another at all. In fact, the opposite is true. As employees move beyond the basics of employee engagement and view their contribution to the organization more broadly, they are more likely to stay, take proactive steps to create a safe environment, have higher productivity, and connect with customers to the benefit of the organization. Mission drives loyalty across generations. Understanding a company’s purpose helps employees answer yes to the question “Do I belong here?” Gallup’s research shows that ensuring employees have opportunities to do what they do best every day and emphasizing mission and purpose are the two strongest factors for retaining Millennials, Generation Xers, and Baby Boomers.”
2. Well practiced and applied Management skills.
Business research has revealed that many small businesses fail because of situations occurring in the business itself, not outside forces. Who controls the activities inside the business? The owner and the affiliates. A further analysis shows that the perspective of the owners, as he/she controls the operation, is hindering business development. The owner’s focus is on the technical skills he/she brings to the enterprise. For example, he/she may be an expert accountant, baker, computer scientist, plumber, or carpenter experiencing great success in their skill. However, as the demands of the business increase, various functions are not attended to such as planning and projecting resources for serving more customers. This also includes the negligence of critically important administrative functions. When this much is left undone, the business fails. Critical functions must be managed and performed for fortifying and sustaining a business which makes basic Management Skills extremely important for entrepreneurs. It requires Management skills with artful application because Management is art and skill. The skills can be easily learned but the method used for the application depends on the personal qualities and intentions of the manager. Each situation will require artful application, unique to the circumstances.
3. Clearly defined documented and working Systems
Small businesses that succeed develop systems of operation for almost every function performed. Your systems are designed to help you achieve each of your major strategic objectives. See “The E Myth” by Michael Gerber and “Stick With It” by Lee Colan. Business systems are activities performed in a consistent manner to achieve the organization’s goals. They are performed in several steps and the successful manager documents these steps for easy replication. To most, this will be boring and tedious but once the documents are completed, this will give the manager time to do what he/she enjoys doing and enable this owner to sustain and enlarge the enterprise. This is one of the great secrets of successful business that many small business owners avoid. Creating systems simply starts with documenting what you do and how you do it. It could be called an operations manual or a systems manual or some unique name that might come to you; but the object is to document the successful operations that you want to make routine.
How will these systems help you scale? You will be able to analyze each system, change or improve each system in a separate process while keeping others intact. Carefully plan to adjust or change relevant systems as you grow. For example, your financial system may require larger cash reserves before you scale.
4. Clearly defined targets for each System
Determine targets for all systems BEFORE you scale. Consider your marketing, product delivery, customer service, talent acquisition and all operations that are necessary for your business existence. For your financial system, you will set targets for cash reserves, profit, operating expenses and others. In fact, each component of each system will have targets.
Systems are what you create if you want to grow your business because it simplifies the process of growth or franchising. Working systems can be used at each stage of the business. No need to “reinvent the wheel”, just continuously ajust and improve them.
“Achievement comes to someone when he is able to do great things for himself. Success comes when he empowers followers to do great things with him. Significance comes when he develops leaders to do great things for him, but legacy is created only when a person puts his organization into the position to do great things without him.” – John C. Maxwell
I hope you’re convinced of the reason business owners need Management skills with an artful application of these skills when successfully scaling an enterprise. Your Mission/Purpose must be so ingrained in you and everyone involved that there is never a question about your basic business intentions. Management skills will help you reach your business targets efficiently and effectively. With these elements in place, you will strategically manage clearly defined systems at every stage of your business development. You can achieve your goal of continuos scaling to higher levels in your industry.
“Bobby Fischer, the great chess champion, once said, “Winning in this game is all a matter of understanding how to capitalize on the strengths of each piece and timing their moves just right.” ― Verne Harnish, Scaling Up: How a Few Companies Make It…and Why the Rest Don’t
Easy guide to basic Management skills: “20 Directives for Small Business Success: Do or Die”
A growing business will experience all kinds of change. Your Business Core may be strong and your Systems may be efficient and effective but various types of change that impact your business are inevitable. According to the Business and Industry Portal of the Queensland Government, Australia,
there are three major types of change that may influence your business:
This is a change that you may make to your Systems or operations. If you have created a fortified Business Core, you will have documented Systems already working in your business. When you designed your Systems they were the most effective operations that you knew of at the time. However, as you move forward, there may be improvements that you should make to a system to improve its effectiveness. This is easy when all you have to do is analyze the elements of your existing process and change only certain parts of it.
These are mostly, small steps that can be implemented without a lot of effort and your workers and affiliates can see exactly how the change will adjust what they are currently doing. Sometimes, technology and industry advances may be the reasons that indicate change and training on new skills will be required. In this case, you should bring in experts if necessary or you may decide to do the training and coaching yourself. Always use your best training and coaching skills if you are the teacher. If you keep your workers informed and they understand how the change will improve your Business Core, the change should evolve smoothly with acceptance by all involved.
At some point, you may discover that a System needs to be added or completely replaced. This may result from technology advances or industry changes. This change will probably be very uncomfortable for your workers or affiliates because it will disrupt strongly ingrained and habitual practices. This is hard for anybody. It is critical that you help everybody understand how this change fits into your Business Core and what the potential benefits to the business and employees will be. Leave no unclear and potential impacts out of your introduction to the change. Help everyone know that you will need any suggestions or questions shared as soon as they come up. If training is required, use experts or good training and coaching skills.
This by far is the hardest type of change to manage. In this situation, you may be required to implement complicated technological changes, change the nature of your service or product, or make severe changes in several systems because of market competition or some other force. A strong Business Core will make harsh change manageable although still difficult. In most situations, the Mission and Values will remain static, but a drastic change may involve changing your Vision, Management Strategy, Talent requirements or Systems.
This type of change is extremely difficult, but it can be managed efficiently also. Using your established Business Core as a reference, you can address each element of the Core one at a time, changing what is as needed. As in all important business decisions and processes, involve your workers and affiliates in the planning, implementing, and evaluating of your new Systems and objectives. A positive approach and desire for learning new things will help you become successful as you work on this complex challenge.
Change management skills are some of the most valuable skills that an entrepreneur can possess. Mastering change management skills will help you grow faster than many of your competitors who don’t recognize their importance. Change will occur whether we manage it or not.
A study of why small businesses fail is quite helpful for the entrepreneur to understand before he/she starts a business but it can also help an existing small business understand why their business is not as successful as he/she hoped for. A full investigation of why startups fail is reported in the CB Insights article “156 Startup Failure Post-Mortems”. One of the major reasons found was the owners did not understand the complexity of the business before they launched. When the real complexity of the business is not understood, the owners will experience all kinds of problems. Among the problems are missed deadlines, inefficient systems, financials issues and customer acquisition and retention.
Roger Sessions, author of “Simple Architectures for Complex Enterprises”, estimated that Information Technology company failures cost about $1 trillion dollars in loses for the U.S. economy. His report analyzed IT enterprises and their software projects only, but not being aware of the complexity of the business occurs in various types of startup enterprises across the board.
This situation can be avoided by basically doing your homework before you put too much effort and money into your business. Of course, there are many things that you can include in your pre- business homework, but I’ll highlight two here that will help you begin to understand the level of complexity you will be working with.
Prepare Benchmarking Targets – A benchmark is a reference for checking your business operations against your industries best practices or standards. You will be doing this before you design your systems or if you are already in business, you can use what you learn to make the necessary adjustments that can fortify your enterprise. In other words, check to see how the most successful enterprises in your field operate. This may be time consuming because all of your research may not be available on the internet; you will need to actually visit similar businesses to understand how they operate. This kind of study can help in so many ways. It might help you determine whether or not you really want to go forward with you venture; but it could also help you realize the uniqueness of your business idea and how your brand will be different form the others. Most of all, this study will help you realize the level of complexity that you will be dealing with.
Conduct Pilot Studies – Conducting studies to determine what your customers need and how you will deliver your product/service can serve various purposes. First, it will help you to see whether or not your product/service is something that customers want and will pay for. This is what is called “product market fit”. It’s determining if your offering is valuable to the customers or does it solve a problem for them. As entrepreneurs, we see the value of our business idea but sometimes the value of a new offering is not evident to potential customers. Second, the studies will let you know what procedures are needed to get your product/service to the customer quickly. It will also allow you to simplify and enhance the experience of your customers as you serve them. Customers want a system that is easy to use and hassle free when dealing with your company. The complexity of both of these processes will be revealed when you conduct tests or pilots.
Developing and simplifying your business systems will be one of your most important tasks. Learning about the inherent complexities of your industry systems will help you determine your readiness to work with and simplify the necessary systems for your successful business. Simplification could be your most important contribution to the industry!
“The first problem (for entrepreneurs) is not fully understanding what they are letting themselves in for. It’s important that you go into any new venture with your eyes wide open. In all honesty you cannot do enough research and homework before you start. The more unfamiliar the territory is to you, the higher the implementation risk.” David Mellor
Change is an unavoidable element of our rapidly changing environment. The entrepreneurial venture is not immune to this rapid change. So what can a new business owner do? First you should accept the fact that change management is a constant part of business existence and it can provide many benefits. Following are just 3 of the most prevalent.
- The most important benefit is that it helps to keep your business current. As you adapt to relevant changes your business remains valuable to the customer and increases your credibility as a professional in the field.
- You can clearly see new opportunities in your discipline. Change affects certain areas of all disciplines particularly, technological changes. They can help you be more effective in the various operations of your enterprises and can help you identify new markets or products/services.
- Change enhances the learning attitude that is so important for a growing business. A study of the most successful businesses reveals the importance of learning and innovation as unchangeable values that lead to successful change management. Adapted from “ 5 Steps for Managing Explosive Company Growth”, by Steve Cody
It is not the strongest or the most intelligent who will survive but those who can best manage change. –Charles Darwin
Managing change requires a clear set if skills that have been proven to be effective. I will only list a few tips that will give you an idea of what’s required.
1. Maintain and manage your business core. That is, practice and reward actions toward your Mission, Values, Vision, Systems and talent requirements.
2. Anticipate and prepare for changes by being aware of trends in your discipline. Stay abreast of what is going on in your technical field by reading technical books, magazines, blogs, attending conferences and collaborating with peers.
3. Stay in touch with customer expectations. Use good customer relations management to know how you are affecting your customers and touch bases with them frequently to reveal needed changes.
4. Stay aware of technological advances and incorporate them into your business as needed.
This is a quick review of change management to help you see the need to make it a permanent part of your business management. Understanding the presence of change and the need to manage it will give you the confidence you need to continue to grow your enterprise.
See also: “Adapting to Change in a Rapidly Changing Business Environment” BOMI International
Everyone who starts a business wants it to succeed. Many “fly by the seat of their pants” and most end up failing. Some may succeed for a while, but they soon learn that using the shoot in the dark method does not work. So rather than going the blind way, you can used tried and tested methods to increase your chance of success. I have greatly simplified and summarized 5 ways to grow your enterprise. Of course, these are not in any way definitive, but they do offer a general framework
for your envisioning and planning that are the most important things that you must do if you want to be successful.
1. Keep control of your Vision
It is important to keep your Mission and Vision in mind always. We can easily become distracted in the complex world we live in and it’s sometimes difficult to stay focused, however, building your business is the most important thing in your life right now and a commitment to stay focused on it will be the most rewarding thing you could ever do.
“Focus and determination beat brains and intellect every time. If you focus on the right things, and work at them often, you will achieve exceptional results.” Unknown
- Design Systems.
Systems help you manage your enterprise, with orderly procedures that can be taught to others, used for measurement and documented. This is one of those things entrepreneurs with great technical skills don’t want to do. They want to keep busy providing the service or product that initiated the business, however, I can’t emphasize enough, the importance of taking time to document all of your working processes. These Systems are the objective measures you will use to actually see the progress of your enterprise and will help you know when to persevere in a direction or change something. You can think of many businesses that work through well designed systems. The fast food industry is an excellent example.
“Organize around business functions, not people. Build systems within each business function. Let systems run the business and people run the systems. People come and go but the systems remain constant.” Michael Gerber, E-Myth Revisited.
- Commit to constant improvement.
We live in an ever changing environment; improvements in all areas of life are constantly required. As entrepreneurs, we need to keep up with the best processes and information for our businesses. Therefore, we must constantly learn and constantly improve. We must also think of unique new approaches or products to bring into our businesses if we want to lead the industry. If good systems are in place, it’s not difficult to see where new methods, equipment, software, or innovation is needed. Great business owners have a learning attitude and can see how new learning can improve their enterprises.
“Innovation distinguishes between a leader and a follower” Steve Jobs
- Use good people management skills.
You need people to help your business survive and flourish. Knowing how to manage people in a way that contributes to the growth of both your business and the people involved is required. The employees of today expect their jobs to offer a better quality of life as well as monetary rewards. Knowing how to do this is an invaluable skill for the manager of a growing business. It is important to hire the right people from the start. You will need people who share your Mission, Values and Vision as well as owning the knowledge, skills, abilities and talent necessary to work your systems. After people are hired, an efficient on-boarding system will eliminate many problems that sometimes occur with new hires. Today’s employees also want to continually grow; so, incorporate advanced training and learning into your systems that will help you motivate and retain good employees. Your systems will help you manage performance effectively.
“Inventories can be managed, but people must be led.” Ross Perot
- Build a great business culture.
The way people work and relate in your business is defined by the culture that you, the Founder adopts, models and promotes. Do you have a culture of extreme professionalism or a laid back fun culture or something in between? Current research has identified the most productive cultures, but before you can move toward the ideal, you must first determine where you are as it relates to business culture. The way people work and relate in your business is defined by the culture that the Founder is comfortable working in. Do you have a culture of extreme professionalism or a laid back fun culture or something in between? Current research has identified the most productive cultures, but before you can move toward the ideal, you must first determine where you are as it relates to business culture. Learn more at geniuscore.info/?p=1255
“Businesses often forget about the culture, and ultimately, they suffer for it because you can’t deliver good service from unhappy employees.” Tony Hsieh
Resolve to eliminate debt before you add any new expenses. Use your first profits to get out of business debt or don’t get into it and after that, all of your profits can go into building the business, not paying debts. Increase efficiency where possible because this will decrease costs; clear up blockages in your systems and increase free or low cost marketing efforts to attract more customers. This will provide slower growth, but you won’t be burdened with dreaded bills to pay or actions to justify for investors. Look at this example:
“We’ve proven that it can be done.” “Myself and the leadership team at Dreamstime.com have never taken loans, used credit cards or tapped angel investors to grwo our business.” N. Federico
Consider these methods as you grow your highly successful business.