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.

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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.

It’s Bigger Than a Paperclip

Question: Some entrepreneurs create truly amazing products and concepts. What is their secret?

Answer: Would you believe that mindset has a lot to do with answering this question? When interviewing people seeking a sales position with our firm I used to administer what I called the “paperclip test.” I would toss a paperclip to the interviewee and ask him or her to spend a moment in thought and then sell me the paperclip. Some people would first try to determine my needs – obviously an excellent practice. Most would then launch into selling me on the virtues of the paperclip. They would tell me that it was made of the finest quality metal. They would tell me that it would grab like a vise and that it was guaranteed not to tear my papers in the process. A few prospective salespeople even did a very nice job of explaining the benefits of the features they were describing. But every once in a while, there was that rare individual who went in a totally different direction.

The rare person I’m talking about performed the need determination. But he or she ignored the practical reality that the object was a paperclip. I remember one individual who asked me what I was encountering that was my biggest challenge at the time. He heard me say that I needed to solve a property financing issue of some sort. He then twisted the paperclip into an abstract shape and explained that it was a unique financing tool and suggested how it was the answer I was seeking.

You can see why I thought this person was a rare individual indeed. His ability to think bigger led to the discovery of a solution to my problem. And that is the differentiator. Thinking big and then thinking bigger. So here’s the challenge for each of us. When we have an idea, write it down in all its glory. Then go to the next level with it and think about all the ways you can turn it into an even bigger idea. Don’t worry if some of the things you come up with are a bit off-the-wall – that’s part of the process. The whole point is not to be satisfied with the result of your initial efforts. Push yourself to go beyond the obvious. Collaborating with your colleagues may help. The more you practice the more you can create a new mindset that will push you and your ideas into the stratosphere.