Five Reasons Exponential Growth Can Be Elusive

Toby founded a small construction company that does quality commercial work. While his company’s growth has been extraordinary, he is concerned that it doesn’t feel like he’s “broken out” yet. And his biggest worry is that he doesn’t see how he’s going to achieve the scale that he desires. In fact, there are signs that his growth is starting to flatten out. Toby is struggling to understand what is lacking in his approach to building his business. This is a very common problem for many small businesses where the founder has lofty aspirations . . . and even loftier expectations. Let’s look at some of the more common reasons that growing to scale is such a challenge.

  1. Lack of Differentiation – We win when we are able to offer a product or service that is materially different than our competition. Toby thinks his services are differentiated, but in reality they aren’t in a substantive way. He insists that he offers the best customer service of anyone in the market – but that’s a claim that all of his competitors make as well. What should Toby do to tweak his products and services so that they are in much greater demand? He should start by gaining a better understanding of his customers and prospective customers. Exactly what are the problems they are encountering with their construction projects? What are the most important things they want from their contractor? Toby needs to spend time interviewing as many people as he can to identify what the customer wants in the most granular fashion possible. Then he needs to refine his product/service suite to deliver what he has been told. Too often, we think we know what the customer wants – or what we think is best for the customer – rather than actually asking them over and over.
  2. Deficient Strategy – A Strategy Cascade starts with Winning Aspirations that leads to Where to Play, then How to Win, then Capabilities Needed and ends with Management Systems. Many small businesses have a poor to no strategy at all. Many entrepreneurs think tactically rather than strategically. Toby has this affliction. When asked, he says his strategy is to regularly attend various networking functions and try to identify business people who may be undertaking a construction project. Then he intends to do his best to convince them to use his firm. Unfortunately he has no real plan to get from Point A to Point B.
  3. Small Thinking – Toby says within seven years he wants to build a business with $10 million in annual sales. He’s already at $3.5 million. My question is – why only $10 million? Why not $100 million? I’ve met very few entrepreneurs that have BHAG – Big Hairy Audacious Goals. Look, there’s nothing wrong with growing a business to a respectable level. But if one of the objectives is to scale-up in a major way, thinking really big is requisite. Toby should start by dreaming as big as he possibly can, then work backward to see what will be needed in the way of resources to realize his massive dream.
  4. Working “In” Instead of “On” the Business – In addition to small thinking, entrepreneurs often spend too much time working “in” their business instead of “on” it. Toby is involved with every cost estimate. He spends a lot of time on job sites and performs the final interview of every employee that is hired. There’s no question that he’s a “hands-on” business person – and he’s very proud of this fact. In this case, Toby is his own worst enemy. He hasn’t yet learned that it’s imperative to delegate if he wants to scale his company. When a company is very small, the founder must spend a great deal of time as a jack-of-all-trades out of necessity. But this isn’t sustainable if real growth is to be achieved. The entrepreneur who can scale his or her company in a serious way has figured out how to stay focused on the big picture and leave the smaller details to others.
  5. A Lack of Patience – I’ve said many times that it’s difficult for fast-moving, hard-charging entrepreneurs to be patient people. I have had this problem my entire career. Nothing ever happens as quickly as I want. Toby gets antsy when his business isn’t performing to his expectations. Part of the problem is the lack of a Big Vision and a coherent Strategy Cascade. When a comprehensive business plan is created, it includes a timeline that can be monitored allowing for refinement of the plan to stay on track. Toby will become much more patient when he’s working his plan and can see how his performance is matched with his timeline.

There are other reasons that a business fails to grow and scale. But meaningful differentiation of products/services; a well-designed strategy; thinking big; spending enough time working “on” the business, and maintaining patience, are critical elements to the scaling equation.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 93 – Chicken Feed.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Inches

The drive from New York to Los Angeles covers 2,791.8 miles. Or put another way, that’s 176,888,448 inches. And to show you that I’m not playing favorites – for those of you who prefer the metric scale, the New York to LA trip spans 449,295,541.2 centimeters. Why the obsession with inches (or centimeters)? Simply put, it’s about progress. Totally confused? Let me explain.   

We all know that progress is “a movement toward a goal or to a further or higher stage,” according to most dictionaries. We entrepreneurs hold a steadfast belief that progress is the Holy Grail, and wheel spinning will send us spiraling into a major funk. Even progress that seems too slow to us can be cause for great angst. I certainly stand before you guilty as charged! But here’s what I’ve learned. Sweeping change may not be lasting. Here’s an example. Suppose that our business begins to grow at a very rapid pace. Year-over-year our top line revenues (fueled by sales) increases 35% to 50%. What a wonderful problem to have – right? Well, rapid growth comes with a price. Often, there isn’t time to lay a solid foundation of systems and processes. We’re just go-go-go all the time. And the success masks over the rickety infrastructure that may have been installed in haphazard fashion.

Let’s look at another example. We’re negotiating a new contract with a vendor that has proposed taking over our entire human resources function. There could be a substantial savings involved. But this is a big leap, and what if it doesn’t work? How do we rebuild our HR operation? Would making a change force us to hire another outsource provider because re-starting our internal HR department would be too difficult?

There’s something to be said for embracing incremental change. I’m not saying that taking the inch-by-inch approach is right for every situation. There’s no doubt that there are situations where making a big, honkin’ impact is the right thing to do. But I know that too often I want everything at once in nearly every circumstance. And of course this leads to mounting frustration when it doesn’t happen to my liking. I’ve written before about patience – a gene that is absent for most entrepreneurs. Embracing incremental change isn’t all about patience however.

Incremental change can be plain smart business. Take the example of the outsourcing of the HR function. Perhaps there would be a way to dip our toe in the water with the vendor. Maybe we outsource a portion of the HR function on a test basis and evaluate the results. If after a sufficient period of time we feel comfortable, maybe we move another portion of the HR function (or even the rest of it). Maybe rather than grow at 50% per year we throttle back to 25% or 30%, and intentionally invest resources in building a solid infrastructure. Instead of rolling out an entirely new sales training program, we prioritize our weakest areas and develop training around them. The ultimate goal would be to implement a new sales training program, but over the course of 18 to 24 months.

As much as we want everything to happen right now, sometimes we’re better served by making change inch-by-inch. We take what the market will give us. We take the gains that our team can generate. Sure it’s nice to score a touchdown with a 103-yard punt return in 11 seconds. But we score the same seven points when we grind out positive yards. Yes, sometimes we achieve a first down with just an inch or two to spare. If we’re in it for the long haul, the incremental approach may even be more rewarding because our wins are not the result of a fluke or a lucky break. We know how to win.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Audio Episode 12 – Second Place

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Ruler

Urgently Patient

We entrepreneurs are a pretty restless bunch. Most of us have an ultra-high sense of urgency. I know that I certainly fall into this category. I plead guilty to always wanting things to happen a lot faster than they do. And I do realize that this creates a level of stress for the people I work with. But I’m also one of the most patient people you’ll ever meet. Huh? Does this seem like a complete contradiction? Let me explain.

My urgency meter moves quickly into the red zone when I encounter bureaucracy or if there are delays in implementation. I guess I feel like we’re all living on borrowed time and there’s a lot I want to accomplish before my time is up. Thus, anything that wastes time or energy causes anguish for me. Recently I worked with a state agency on a particular matter that took two months to finally resolve. I had a pleasant conversation with the government employee and suggested that there must be a faster way to conclude the matter. She explained that two months in government time is “lightning speed.” Unfortunately she’s probably right. In the private sector the matter would have been handled in a matter of days or perhaps even hours. Fortunately I have a great relationship with the head of this agency. At the time of this writing, I’m working with him and his team to create a more expedited manner in which to deal with issues of the kind I encountered.

Here’s a key point. My sense of urgency is with the process. I want things to be efficient. I want things to be cost-effective. I want the manner in which something is accomplished to happen quickly. In my world there’s no place for analysis-paralysis or indecision. We don’t need a committee to make decisions. It’s important to get input from different members of the team and their buy-in is critical. But someone must then step-up, take charge and lead. Poor communications is a killer of initiative and creates bottlenecks. If communication isn’t clear and concise, time is wasted when clarification is sought. All of this is process-related.

I said I’m a patient individual as well as having a high sense of urgency. Here’s another key point. I am patient when it comes to results. I’m in the type of business where results don’t materialize overnight. I have come to realize this after more than 40-years in the trenches. My philosophy is that if we take care of the basics and fundamentals through well-designed systems and processes, the results will take care of themselves. I can wait months or even years for the results because that’s often what it takes.

Here’s an example of what I’m talking about. Suppose you and I are farmers. We must get a crop in the ground by date certain or we’ll have to wait an entire season to plant again. We know the steps that must be taken. The soil must be tilled, the seeds drilled into the furrows and covered, fertilizer must be applied and the crop must be irrigated. We’re racing the clock to get in and out of the field. There’s no time for a committee to decide what crop we’re going to plant and where, when or how we’re going to plant it. We work our process with precision and complete the planting with days to spare. Now we wait patiently for the crop to grow, nurturing it as required by our process until it’s ready for harvest.

We can have a high sense of urgency and be patient, all at the same time. Our urgency lies with developing and implementing an efficient process, and our patience comes in waiting for the results.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

stopwatch

The RPM Game

Question: I’m finding that I’m becoming less patient as I get further into my career. Sometimes my impatience doesn’t serve me well. Any tips on how to be more patient?

Answer: I’m right there with you . . . I hate to wait. As a matter of fact my sense of urgency is off the charts – my colleagues can certainly attest to that! It’s the worst when I’m in my car. I think that once upon a time a wicked witch put a stoplight curse on me because I seem to hit every red light known to man. In my world, things need to happen right now and right away. I have a perspective that life is a fleeting moment in the overall scheme of things and there is too much that I want to accomplish in a short period of time. So I’m not very tolerant of things that slow me down.

Yet, I actually have become more patient in many respects. What I’ve learned is that my impatience at times has caused me to try and muscle through situations where a more patient and finessed approach would have been much more effective. My sense of urgency remains as high as ever, but I’ve become more intuitive at backing off and being a bit more gentle and methodical in moving forward. At some point in the past I realized that my impatience with the people around me wasn’t helping them advance the cause. Instead it was frustrating and flustering them. That quite literally gave me pause.  

My sense of urgency is now tempered with my willingness to slow down and make sure that the people around me have clarity and understanding about the situation at hand. If they don’t, it’s my obligation to patiently take the time to help them gain a clear perspective. I liken this to the simple act of shifting gears in a car. In a lower gear the engine revs up and runs harder. When shifting into a higher gear, the RPMs drop and the engine doesn’t have to work as hard. The more impatient we become the harder our engine has to work.

Slowing down long enough to ensure that others have a clear picture of the road ahead is in itself, a practice in patience. And this actually allows us to shift into a higher gear and go even faster.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.