How to Grow Your Business by Clearing the Way to Growth
Is your business growing as fast and effectively as it could, or is it stuck at the same level it has been at for years? Research (Larry Greiner, 1972) has discovered 5 specific stages of business growth. Most business never grow beyond the second level. At this level, the business is characterised by a small group of owners (if not a sole owner), supported by a small team of people at an operational level. This describes the 90 plus percent of businesses, which have 10 or fewer staff.
Why should it be this way? The Greiner growth model describes 5 levels of growth that are characterised by the type of organisational structure and leadership style at each stage. The model describes a very obvious and practical problem that is evident in all businesses that grow over time. Growth is never simply a smooth transition from small to large. It occurs in a series of jumps from one level to the next. Growth at each level is limited by the structure and leadership style. A business can grow at each level to a certain extent, but after a while, the activity created by growth makes the structure at that level unwieldy and inefficient, limiting the growth, until the next evolution of the business occurs to solve the inefficiencies at the previous level.
The issue is not that these growth crises occur, but that there is a clear solution to these crises which few businesses take the time to discover. I am sure there are some business owners who want to keep their business small for lifestyle reasons, but I am also sure that if most business owners could find a way to grow their business beyond the current level, they would.
Most businesses that are stuck at the level where the owner(s) work in the business full time (or more) and there are a handful of employees, don't do what it takes to overcome the growth crises that are created at the limit of growth at that level. These crises are evident in the issues of control, where the business is dependent on the skills and input of the owners for most of the results and the owners can spend little time away from the business because performance will suffer in their absence. When work increases, the informality of communication and organisation become a liability resulting in errors, delays, poor quality and unsatisfactory service. Costs blow out and profits shrink rather than grow with increased sales volumes. Many owners conclude that it was easier and more profitable running a smaller business and revert to a scaled down operation. Unfortunately, this means the business and the owners never achieve their full potential and end up living a life far below the level that could have been accomplished.
Rather than scale down, the business could continue growing by scaling up. The solution to the growth crisis at this level is very clear and the path to growth is well established by the successful ones who have taken the leap to the next level. The answer is to re-organise the business with the owners delegating more responsibility to the operator level, appointing managers to take responsibility for certain functions, combined with developing systems to assist in maintaining control.
Many businesses increase the problems at this stage when they only increase delegation without increasing control. This is the key to smooth transition through this level. Control tools provide the information to management to ensure the business performs efficiently and profitably, with adequate cash flow. This development is often beyond the skills and experience of business owners who have come from a technical background and have never had training in finance and management areas. It is wise for owners at this stage to seek professional assistance in creating and establishing effective operating systems and control measures. As the business grows, the need for greater professionalism grows as well. Owners are wise to commit to a self education program so that they develop the knowledge and skills to run a business at higher levels.
At the higher levels of growth, the crises are more evident in the leadership areas. With growth, the need for increased management and organisation grows proportionately. Sometimes businesses need to be restructured along functional lines, or sometimes organisation is more determined by geographic elements. Whatever the case, the need for strong leadership and communication with management levels about performance issues, motivation of personnel and strategic elements of the business are of greater concern than the technical issues were at lower levels. Business owners need to develop their own leadership skills as well as develop or employ highly skilled managers.
If you are frustrated that your business has the potential to grow, but can't find the way through the current hurdles you are facing, which create increased stress, over work and performance issues, perhaps it is time you looked at changing the structure of your business and becoming more professional about how you manage it. Unless you make the changes, your business will be forever held back. You will not be capable of further growth until you re-create your business to perform efficiently at the next level. You may be held back because your current situation makes you too busy working in the business that you don't have time to work on it, to develop new systems and controls. It is time to bite the bullet. Unless you free yourself to work on reinventing your business to clear the way for growth, you will continue to bounce up against that invisible ceiling you keep hitting, without ever being able to break through.
(c) 2005 Greg Roworth, Progressive Business Solutions Limited
Greg Roworth is the Managing Director of Progressive Business Solutions Limited, a business development consultancy firm with branches in Wellington and Auckland, New Zealand. Greg has created a unique business development program that assists business owners transform their business from a state of total dependency on them to a state where the business works so well they don't have to.
Greg is also the author of "The 7 Keys to Unlock Your Business Profit Potential," which descibes the fundamental keys a business needs to achieve this transformation. Find out more, get 2 free chapters, or buy the book online at http://www.small-business-success.ws
More Resources
Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exitingMore Strategic Planning Information:
Related Articles
Questions to Ask Yourself When Starting a New Home Business
I love the excitement of starting up a new home based business. I enjoy trying out new ideas and approaches with the new venture.
Memo: Sustaining Growth in Your Business
What gets measured gets done.How do you keep your business growing? How do you ensure the health of your business and your personal income against threats from competition, market cycles, commission payout changes, regulation of all kinds, and the human threat of complacency?The answer isn't to run faster on the same treadmill.
Under Construction During the Storm - A Hurricane Guide for Businesses that are Under Construction
As a business owner, you've likely created a hurricane plan for your business and your family, but did you overlook your construction project? Don't worry, you're not alone. Most people don't even think about preparing their construction site because it's not written into their "construction timeline.
How to Snuff Out the Competition Without Leaving a Mark
Does the competition drive you crazy?Are they relentless about taking your clients away?Are customer loyalties becoming a thing of the past?In our ever changing world, it seems securing business these days comes down to, who will provide the most service at the lowest possible price.To add insult to injury your previous customers have taken on a new militant attitude about obtaining your services.
Why You Need a Business Planning System NOT a Business Plan
When someone mentions business planning we have been conditioned to think about writing a business plan. There are hundreds of books and articles, tons of software, an army of consultants, and a multitude government programs to help you write a business plan.
Abstract Thought; Business Strategies and Biological Systems
To stop a computer virus you must understand how it works, grows and what it's innate purpose is? What is its program, evolution and future vectors. The fastest way to expand a business or exploit a competitor on a sports team is to use the organizational patterns of nature like swarms, ants, and viruses.
Mobile Franchise Business Expansion Strategy
If you own a mobile franchise business and wish to expand you will need to have a strategy that involves your franchisor. Additionally if you are a franchisor it is important to have some sort of policy in place in advance so that there are no hurt feelings as franchisees expand.
Creating a Vision That Achieves Results
How important is a vision statement to your company or division? Well, have you ever thought about embarking on a journey without knowing where you are going? The same can be said about running a company, without a vision statement you are going places but who knows if it is in the right direction or even if you want to go there.A vision statement should paint a picture of what you want your business or division to look like in the future.
6 Steps To Laying Out Your Competitive Strategy
Why do so many companies languish and watch as their business turns into a zero profit zone, while others seem to thrive?When you look at your business, whether it's a new venture or a company with a long history, can you answer the following questions?What does my company do better than anyone else?What unique value do I provide to my customers?How will I increase that value next year?Companies that fail to answer these questions, and don't believe they are of paramount importance, relegate themselves to marginal profitability at best and failure at worst. But companies that can answer these questions are able to raise the value bar for their customers and reap the benefits of success.
Business Process Methodologies
I've either been involved with or held a process-related role since 1994. It started in the government with TQM (Total Quality Management).
Scheduling of Additional Auto Detailing or Mobile Car Wash Units
If you own a mobile car wash business or auto detailing business then you realize that when you are parked working you are making money and when you are stuck in traffic you are losing money. Sure you can say when you are in traffic people see you and write down the phone number, but you are not making money, that is potential future income, which is work you still must do in the future.
Bounced Checks in Your Business Location Outlets
The new check cashing instant clearing will take some time to get use to. If checks clear immediately and deposits take a few days then franchise outlets may find more bounced checks in their establishment.
Turning On The Lights
Fun From The StartFor those with the will to start a new business the rewards, both financial and emotional, can be excellent, but the risks can also be significant to both sanity and mortgage. Of course, the chance of success increases if a company has a good, well thought through strategy before they strike out.
Strategic Planning Consulting
Strategic planning and consulting is the strategy roadmap to manage business very effectively. To improve the performance in each business level, business strategic planning & consulting is essential.
Troubled Waters Require Capable Leaders at the Helm
Canada's lean leaders need to look beyond the horizon and chart the futureIn stormy times, true leadership skills emerge, says Larry Coté, the President of Lean Advisors Inc. (www.
Have You Identified the Enemy?
One of the most powerful driving forces in human nature is competition. The desire to overcome something or some company, the need to win, the cause, can in many cases be more important than the day-to-day work of the company.
Action Planning
ACTION PLANNING: Action Planning is a process to develop strategies for changes in the organization based on an analysis of the problems which precipitate the need for change. It is a collaborative method of planning which involves the people working in the organization and permits the people who will be influenced by the decisions and change to have influence on the product or outcome.
Microsoft Great Plains Implementation: Placement/Recruiting Agency example - overview for consultant
Microsoft Great Plains does wonderful ERP job for horizontal markets and clientele. However in our opinion placement software market is underserved and needs custom modules to be developed.
The Importance of Value Mix
( * - the word 'product' can be substituted to mean 'service' too; and vice versa )Every consumer looks at maximizing value accrual while engaging in act of purchase of products* or services*. Marketing as a domain plays a very important role in influencing a purchase.
Six Key Areas For Evaluating A Strategic Alliance
Strategic alliances are increasing at a rapid rate. It is
good for business, good for the consumer.
Innovate Today for Great Leaps Forward Tomorrow
How often does your company make a quantum leap forward? My guess is that, on a scale from "frequently (10) - to - never (1)" the answer is much closer to "never" because few companies have a process to innovate or think creatively. Very few attempt to formally think through their business model, their relationships with staff, clients, and vendors, and their product / service offerings.