The Reason Growth Stalls – Is It You?

People talk about growing a business as it were an option, a lifestyle choice. It isn’t. It might well feel empowering to ponder an imagined bifurcation in the entrepreneurial path, to consider a couple of jauntily-angled signs that point, on the one side, to frantic scaling and untold wealth and, on the other, to a genial working day that goes on (more or less) forever. Except it doesn’t quite work like that.

Like an adolescent offspring, a young business is a pain; it will keep trying to grow up. Despite your best efforts to hold it back – conscious or otherwise – there’s an inexorable internal dynamic that makes a business, if it’s any good, need to expand. No doubt a smart economist, or maybe just a decent accountant, has a good explanation for this. Whatever. For a business owner it is either a blessing or a curse;  for many, in theory it’s the first but in reality it’s the second.

Paradoxically, this unstoppable momentum doesn’t stop a lot of creative businesses staying more or less the same size for years. They grow a little, push up the evolutionary scale for a while, only to settle back down to where they were a year, or eighteen months, ago. Having briefly entered the choppy waters of growth, they beat a retreat back to harbour, to calm water. Only it isn’t calm, back where they came from. It’s just a different kind of chop: too much work; not quite enough revenue; too few hours in the day; too little structure; flimsy processes, management structures and profits.

I worked, briefly, with a business that has gone through this cycle every couple of years since its inception. It has tremendous expertise, a charismatic leader and enthusiastic clients who tend to get on board at the top of the cycle and ended up questioning the quality of outputs, the attention to the subtleties in the brief and the evident chaos in project management.  What they experience is the point where the business has the opportunity to push through to the next level of growth but fails to grasp it.

A whole sorry catalogue of causes get blamed for this sort of entrepreneurial Groundhog Day, including – surprise, surprise – our old friend, a lack of investment. The most common culprit, though, is much closer to home; it’s the entrepreneur themselves.

Indeed, the syndrome  is so common it defines a key rule of entrepreneurial expansion; a business only grows at the speed with which the MD and directors can increase their personal Management Bandwidth.

The peak, from which these businesses invariably fall back, marks the limit of the leader’s (or leaders’) current management capabilities. Commercially, growth is there for the taking. The vision, goals, confidence and skills to grab it are not.

They need to be acquired, in either sense of the word – learned or purchased – for the cycle to be broken.

Advertisements
9 comments
  1. jayacg said:

    great article and guilty as charged! So, Digiogi, do you have a top ten of pearls of wisdom that us entrepreneurs can take into the New Year, in the hope that we can break the cycle and grow in a recession? Some quick wins would be nice :).

  2. digiogi said:

    1. Be expert:specialise. Generalists reinvent the wheel over and over, making it hard to build anything longer-term.
    2. Worship simplicity: distil your offer to the market down to its absolute essence.
    3. Talk straight: express your offer in the simplest language possible (I’m a prime – wordy – example of how not to do it!).
    4. Maintain multiple conversations with your network: being busy on ‘client work’ is no excuse – you just have to do this.
    5. Stop multi-tasking; it’s the devil’s work. Divide your time into 2 hour – no less – chunks for clients, projects, financial etc
    6. Put project management right at the heart of your business; don’t tell me it’s already as efficient as it can be. It’s not.
    7. Ruthlessly review project implementation and staff utilisation; this is where all the profit leaks away in creative SMEs.
    8. Tune-up your systems so your management information is as close to real-time as possible; you have to know.
    9. Implement quarterly rolling budget updates, so your forecasts are evidence-based rather than annual finger-in-the-air.
    10. Make sure you are unsentimentally pursuing a real commercial opportunity; beware the ‘Introspection Principle’ *

    * see: http://calnewport.com/blog/2010/01/23/beyond-passion-the-science-of-loving-what-you-do/

  3. jayacg said:

    thanks Steve – much appreciated! So many ring true as things I *ought* to be doing and end up getting tied up in knots over the minutia. We’re actually doing 6,7 and 8 right now, and still trying to mitigate the risk of not doing (4) whilst on maternity leave (did you say something about multi-tasking?!).

    VERY helpful. I needed that about now. Thanks. From the bottom of my balance sheet :-).

  4. steve.. thanks for spending time articulating your experiences and insights. this article is interesting and imho high quality work and so very true, almost too painful to read (well, walking through treacle … certainly resonates with me)

    good to hear a fresh, confident voice that’s not afraid to challenge the blame culture, lame leadership and organisational low self esteem that is often a part of creative industry small business development.

    looking forward to reading your book and will be recommending it to my trendy colleagues and trendy friends.

    • digiogi said:

      Cheers Simon. I passionately believe that many creative (in the broadest sense, embracing digital content, publishing, broadcasting, creative production etc) SMEs really do have the means to grow right there, in the business itself. Hence the provocative title – of course I know that investment is necessary at the right stage in growing a business – but I want to divert creative entrepreneurs from what you call ‘blame culture’ (if only we had more investment, more government support, clients who weren’t obsessed with tangible value, blah, blah) and into looking honestly at the real barriers to growth.

      “The best place to succeed is where you are, with what you have.” Charles M. Schwab.

  5. Well put. Many are unable to recognize or acknowledge their own bandwidth limitation so openness to feedback becomes essential. This is somewhat similar to what leadership author John Maxwell calls ‘the law of the lid’.

    • digiogi said:

      Thanks very much for joining the conversation. I’m not familiar with ‘the law of the lid’, so I will read up on it and comment in a more informed way a little later.

      • In that case, here’s something (my opinions, of course) to help get started.

        Yes, John Maxwell, is a prolific leadership author/speaker and he is American but I find his content, examples and style more balanced and deeper than some of the other popular gurus.

        One of the examples he gives when talking about The Law of the Lid in his book, “The 21 Irrefutable Laws of Leadership” (one could excuse the bombastic title given that publishers are supposed to decide these things overriding author’s preferences–so I have heard) is that of the McDonald brothers who were happy with their drive-in food outlet. It took the bigger vision and possibility thinking of Ray Kroc to sense the world-dominating potential of what became McDonald’s.

        The topic of scaling up of small organizations has piqued my interest in the past few years. It has many dimensions to it: mindset, bandwidth, processes and systems. The biggest mistake the top management (typically the entrepreneur-founder) often makes is to postpone preparing for the next phase with the thought that “it is too early”. By the time they are ready to accept the need for more robust frameworks, it is too late to do it right. Compromises are naturally made, which then constrain future growth.

      • digiogi said:

        Totally agree – exactly what I say in ‘After The Watershed’

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: