Each successful new business starts out with one clear objective: find a profitable, sustainable market and mine it. And for those that excel, the rapid growth of market share and momentum that follow are nothing short of exhilarating.
But this trajectory can only be sustained for so long. Why? Because as new products, locations and people are added, the complexity within the business builds. Soon balls are being dropped with alarming regularity, and profitability starts to slip. The natural inclination is to try to sell more to make up the difference, but this only ends up compounding the complexity and draining profitability even more.
So what's an organization to do? The answer is to put systems and processes in place that will enable it to scale. In other words, the business must learn how to do grown-up things - from hiring and firing professionally to making high-quality team-based decisions and working cross-functionally.
Sounds obvious, and relatively straightforward, right? And yet many businesses never make the transition from being small and growth-oriented, to becoming larger and able to scale.
Here are the three main reasons owner-managed businesses become stuck in a state of perpetual adolescence, and never reach maturity:
1. Addicted to Selling.
There's something beguilingly addictive about selling. And many founders and business owners find it close to impossible to relinquish the dopamine rush that comes from making a sale.
As a consequence two things happen: The founder/owners try to overcome the Whitewater of growing complexity by doing the very thing that will make the situation worse: generating more sales; and secondly, they balk at making the time available to engage in actually managing the business.
2. Inability to Say 'No'.
Early stage growth - growing by selling - is all about saying 'Yes'. Yes, we can deliver that product to you by next Wednesday. Yes, we can translate the user guide into Chinese for you. Yes, we can paint the widgets green if you'd like.
It's this flexibility and can-do approach that enables us to grab market share early on. By performing superhuman feats of customer responsiveness, we grab business that should rightly go to competitors 10, 20, even 50-times our size. It's an exhilarating period, and one during which the myths and legends of the business are born.
Problem is, scaling - building the infrastructure of the business so that it can grow to whatever size your industry will allow - requires the frequent, disciplined use of the word 'No'. For the first time, the business is faced with the situation that simply because it can do a thing, doesn't mean it should.
Strategic scaling means taking a disciplined approach to growth. For example, saying 'No' if that Chinese translation is merely a distraction from our strategic goals - something that is hard to do when you're hard-wired to say 'Yes'.
3. Fear of Failure.
Managing a mature business - one that has the systems and processes to overcome complexity, and the discipline to adhere to them - is entirely different from managing a smaller, growth-oriented business. Many business owners sense this as they begin to grapple with the consequences of success, and instinctively shy away from a challenge they feel may be beyond their capability.
And who can blame them? There's absolutely nothing wrong with sticking to what you're good at, and protecting an already successful business by capping growth. Better to stay small, happy and successful than strive for scale, only to be miserable. The key is to make a conscious choice and lead accordingly.
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