AN IMPORTANT MOMENT IN THE LIFE OF THE BUSINESS
In fact, before becoming great, it will become average. If becoming a medium-sized company is a necessary step for growth, it is also one of the most critical moments in the life of a company. Some bankers pay lip service to admitting that this is the segment where the losses are the greatest with the help of a M&A advisor. The risk attributed to this market segment is higher. (When originally written in 2015, some major American banks were refusing to take on new customers in this market segment.)
For a company, growth is not mandatory, but helping the entrepreneurial spirit is often the choice that is made. Each company, before becoming large, goes through an intermediate stage for a variable period ranging from a few months to several years.
OPPORTUNITIES AND CHALLENGES
The transition from small to medium-sized business is a time full of opportunities but also great challenges for the company that wants to grow. The choices that will be made during this period will be decisive for the future of the company.
Having accompanied various companies in their growth project, I realized that their main challenge is to move from a single manager to a management team. This is a unique moment in its history and this step will probably not happen again. Either the company goes beyond the single manager stage and never comes back to it; or she does not succeed and becomes small again. Those who did not pass the experiment suffered so much that they say to themselves: “No one will catch me again”.
Exceeded a certain size, it becomes impossible for the owner to manage his business alone. Either he delegates, or he reduces his growth, or he sells. When the business becomes too big for sole proprietorship cannot be precisely defined.
The number of employees, the quality of employees, the amount of turnover, the number of customers, the industry, the type of business and the type of management of the entrepreneur will have an influence, and are all factors that will influence the fateful moment when the company will have to go beyond the “one man show”.
HOW TO RECOGNIZE WHEN GROWTH MANAGEMENT BECOMES AN ISSUE
Here are some signs that indicate that business growth is becoming an issue:
- The owner’s working hours are getting longer and he is getting impatient
- Errors are becoming more and more frequent
- Customer complaints are on the rise
- The delays between the delivery of the product/service and the moment of the order are getting longer
- Little time is allocated to planning
- Leaders are starting to compare themselves to firefighters: they spend most of their time putting out fires
- People have little time to train new employees or transfer tasks
- Staff turnover is accelerating.
THE ESSENTIAL CONDITION FOR SUCCESS
This condition is simple: it is the manager’s desire to see his role evolve. A bit like in hockey, from player, he has already become a coach and now he becomes managing director. We no longer see him behind the bench and he does not always accompany the team on the road.
In fact, his role becomes more erased, he is no longer the first contact for customers, nor for suppliers, nor for employees. For this reason, many leaders experience a great moment of loneliness at this stage. They go from entrepreneur to manager. From the heart of the company, they become its brain.
It is the team surrounding the owner that becomes the heart of the business. This team will forever change the face of society. For some owners this is more difficult than for others. When this happens, the undeniable advantage is that the value of the company increases a lot.
THE MANAGER MUST KNOW HIMSELF WELL…
Even more difficult: to be more successful, the entrepreneur must know his strengths and weaknesses. He must surround himself with people who will be stronger than him in the areas where he is most vulnerable. This requires a good dose of humility, self-confidence and the ability to trust others through M&A advisory.
… AND KNOW YOUR TEAM WELL.
The same goes for his team. The good salesperson who has been with the company for several years may not be the best sales manager. It is a time when difficult choices have to be made and when important changes are implemented in the company.
In our society, success is highly valued and the growth of your business will be an undeniable mark of it. Growth requires profound changes and requires the delegation of certain responsibilities.
One of the keys to success is to fully understand the strengths and weaknesses of your organization and to take advantage of growth to improve where necessary.
This could not be truer than as the size of the business shifts from small to medium.