One of themes I talk about at length in my first book, Alpha Dogs: How Your Small Business Can Become a Leader of the Pack (Collins, 2005), is reinvention. A CEO with Alpha Dog aspirations must regularly examine not only the company's position in the marketplace, but the internal operational structure that supports revenue growth. If he/she attends to the former but not the latter, the result is a company that grows, but doesn't grow up, and that's a recipe for disaster. It always strikes me how tricky this dance can be for even the most seasoned entrepreneurs. Over the past 20+ years, I've visited plenty of $5-$10 million companies (and some that are much bigger) that seem operationally stuck in the start-up phase. Why? Because growing revenue is really, really fun; creating systems and procedures really, really isn't. The result: cash flow suffers; customers are poorly served; employees have no idea what's expected of them; vendors lose faith.
It strikes me that young entrepreneurs are particularly susceptible to the "growth without maturity" problem. If they're savvy, they recognize what's going on before it's too late and they do something smart, like hire seasoned managers, reach out to mentors or perhaps even sell their companies. That's what Josh Kowitt and Scott Neuberger did. The co-founders of Boston-based College Boxes (and #23 and #24 on Inc.com's 2006 list of 30 Under 30: America's Coolest Young Entrepreneurs), sold their company in January to Store to Door, a mobile self-storage company that had been a trusted College Boxes vendor for years.
For Kowitt, who I caught up a few days ago, the final straw came last September, when operational snafus had him sleeping on sofas in a New York City warehouse for six weeks because the company had not properly tracked the boxes that its customers had mailed home from college. "I was digging through boxes all day," he says. "I lost 15 pounds. We had grown very quickly and we didn't keep up on the operational side. I think we kink of lost our way and we didn't deliver on our promise. We had moved into a fancy office in downtown Boston and I think that was the beginning of the end. Instead of spending money on rent, we should have spent it on bar code tracking." The company's systems are back on track now and Kowitt, who is leaving College Boxes in a few weeks to backpack around Asia, plans on starting another company within the next few months. Next time, he won't just grow his company; he'll also make sure it grows up.
What do you think? Do young entrepreneurs have more trouble scaling their companies than their older counterparts, or is there a little Peter Pan in every entrepreneur?
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.