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Reasons Why
Small Businesses Stay Small
At one time or another, most successful entrepreneurs have probably tried and failed to take their business to the next level of profitability. Why is it so difficult to make that leap and what does it take to succeed? Lack of financial resources is most often cited by business owners as a reason for their failure to grow. While most business owners are savvy in their area of expertise, they lack experience in borrowing or raising investment money. Other times, lack of capital is simply a result of poor financial management or understanding of how to maximize the value of their assets, receivables and cash flow. Finally, developing a mindset that sometimes you need to spend money to make money will open up new possibilities for growth. Managing from day to day the way some employees live from paycheck to paycheck with the belief that "if I keep doing more of the same thing I’ll get bigger" is common among small business owners. Many currently successful businesses have no plan for future growth and put most of their efforts into maintaining their current level of success. Often it is a lack of time that causes owners to manage their business on a reactive rather than proactive basis. Taking the time to balance the demands of day-to-day operations with a broader view is critical to maintaining success. Growing a successful company requires a clearly articulated vision and a sound business plan. Think of a business plan as a practical game plan, blueprint or roadmap for your business — not a two-pound document that sits on the bookshelf. It will clarify your goals, focus your energy, give direction to your work and help you gauge your progress. Even successful CEOs may lack the appropriate talent or specific skill-set to take their company to the next level. Businesses require a myriad of skills and seldom are they all found in one individual. Small business owners in particular have difficulty transitioning out of the "founder mind-set" in which they try to micromanage others or even attempt to do everything themselves, limiting the ability of their business to grow. The myopic view that "I invented this, therefore I know best" gets in the way of sound business judgment. Learning how to utilize resources -
internal and external - is a critical element in growing a business.
Understand the skills and experiences that are required to grow
your company beyond incremental steps, evaluate your strengths and
weaknesses and those of your staff, identify skill gaps in your
company, then make sure everyone is focused on what they do best.
Often, this will mean bringing in outside resources to bring the
missing skills to the company. Consultants are available to help
with almost any aspect of a business. Many owners, however, don’t
trust outsiders, so they don’t hire them, or if they do, they
don’t take their advice. No matter how successful, one person
can’t know it all. When you consider hiring a consultant, ask
yourself if you’re ready to be receptive to new ideas. Another problem is failure to communicate with employees. Business owners often consider the company’s performance and results to be confidential. However, sharing this information with employees means enrolling them in the company’s success. It improves morale and creates a winning team. Educate employees on how they fit into the big picture and the role they play in helping to achieve business goals. Excellent internal communications, such as regular staff meetings, are an important part of the communication process. Treat employees well. Provide training. Give them a stake in the businesses’ success. With all their creativity and inventiveness, entrepreneurs sometimes can’t execute. They find it difficult to stay focused, jumping from one great idea or opportunity to the next. The thrill is in the "new," so good ideas or opportunities often go unfulfilled as excitement and energy is shifted elsewhere. Focus on the things that will grow your company and make sure they are successfully implemented Because it can be lonely at the top, regularly meeting with an adviser, coach or other entrepreneurs is a powerful tool for gaining momentum and getting an independent and knowledgeable perspective. Many a successful, growing enterprise benefits from retaining a personal business advisor or forming an advisory council made up of other savvy business people who can provide useful insights and help you discover options you may not have considered. The top performers in almost all fields, whether it’s sports, acting or business, have a coach to help them continue to perfect their skills and enhance their success. A willingness to listen and being open to criticism are prerequisites to growing a business. Steve Gross is president of the Enterprise Advisory Group which works with successful businesses to get to the next level of profitability and growth. He can be reached at steve@enterprise-advisory.com.
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