Last month we talked about the difficulty of starting a business versus growing a business. This month I’d like to focus on growing the entrepreneur.
Many entrepreneurs with whom I work have no formal education past high school. Some didn’t finish high school. Add to that that many have not spent time in the management system of established firms going through exposure to different sections of the business. What they do have is spunk, a willingness to work very hard, a willingness to take a risk, commitment and in many cases a great idea.
As a SCORE mentor, my goal is to help small business owners achieve their dream of building a business and preparing the business and owner for eventual successful transition out of the company. It may seem strange to think about transitioning out of the business when just getting started but it does help to focus on what will make it all worthwhile. It also leads to a discussion of how the entrepreneur must be willing to grow personally out of the entrepreneurial beginnings of the company to create a business that is growing and creating more value for the stakeholders and eventual new owner of the business.
We focus on going through three stages of operation. The entrepreneur who starts the business and grows it to a point where staff must be added, which is when you become a manager and then with continued business growth and staff development, you step out of the process of running the business and become the leader of the business. More about that later. What are the three stages mentioned above?
Entrepreneur. This is the person who starts the business and is actually “the” business. You do everything. Unfortunately, too often everything doesn’t include enough research and planning. Statistics show that 42% of new businesses fail for lack of demand for the product or services. Another major cause of failure is a problem with cash flow. Pity the startup that is financed heavily with credit cards.
Manager. The business has grown and is cash flowing from revenue. The time has come to hire staff. How many times have I heard small business owners say, I’m not good and don’t like managing people? And that’s a major problem for many if not all small business owners, hiring the right talent. There is also a problem of not moving mistakes out of the business fast enough. It is the job of the manager to firm up the operating process of the business. Most problems are defects in the process and not the employees. This is the point where your vision of the business in 3-5 years, the mission of the business and values should be put in writing, communicated and be the way “we” operate. You must set goals, understand, and use your data, both financial and operational.
Leader. Leaders are chosen, not appointed from above. That is why it is so important to have the right talents in your employees. This is why it’s important to have stretch goals that your team will find exciting and worth achieving. It’s a win-win for them and you. You are no longer running the business, your team is. The company should be operating to a strategic plan developed by you, the key employees and maybe your board of directors. You are now the coach and are helping your people to grow, you tweak the process as needed using the data you need to be sure the company is on track. The time may have arrived to plan for transition.
Growing is hard and challenging. None of us can avoid this task and be vital, happy, and successful. You grow or stay in place; we are all different and there will be mistakes and perhaps sleepless nights. There is help available from so many places and so much information available. SCORE is here to help.
Dick Jordan, certified SCORE mentor may be reached at email@example.com or 218-251-4413.