I love startups because they are a chance to design a business on a clean sheet of paper. However, growing an established business can be a real pleasure for me, and the business owner(s), as much for the development of the people as the financial outcomes. It’s not always all about the numbers, quality of life is a big deal too.
Good businesses are built on doing your best and keeping promises but often companies get to a point where growth stalls. They can go for some years with a general upward trajectory as they accumulate customers and those happy customers recommend others. But then it’s like hitting a glass ceiling.
These businesses were typically started by a person good at, and known for, what they do. The first customers come relatively easily, perhaps lined up before even starting trading, and the next few come from referrals. There’s no concerted sales and marketing effort as such, it “just sort of happens”. Because there’s more work, more people are hired to do the work which means the company can say yes to more customers more often. This company structure classically comprises the Managing Director, some workers and, usually, a part-time bookkeeper.
The glass ceiling becomes evident when sales plateau and the MD’s sixth sense tells them that hiring any more workers will exceed their capacity to manage them. There’s opportunity out there but the thought of getting any bigger is burdensome.
Capacity is the key word. In so many cases where the founder is ‘good at their job’ (operations) there is little understanding or experience of the other two pillars of the three pillars of enterprise: marketing/sales channels and finance/administration. In these situations sales have come relatively easily and record keeping has been perfunctory. Directing the business is instinctive, shot from the hip and merged with management. The structure is flat: the MD organises an operations team to do incoming work that “just sort of happens” and records are kept to satisfy the accountants’ and HMRC’s expectations.
To take the next step requires structure, which requires the MD to delegate beyond setting work for the operations team. Marketing and sales need to be actively driven in harmony with adding operational capacity. Administration needs to be elevated from being a mildly resented statutory obligation to an essential dashboard that enables decisions to be based on up-to-date facts.
The next employees will be, for a short period, a small step back which will trigger a giant leap forward. How about doubling revenue in two years after several years of stasis? Those next employees, in contrast to hiring more operational staff, will be people who take workload from the MD (like operational management, customer service and financial data preparation) to return them some essential capacity to think and to regain confidence in hiring further operational capacity.
Take a look at THREE, Pillars of Enterprise and Directors, Managers & Operatives.
Managing Directors of startups begin with not one job (MD) but spinning the plates of all jobs. As well as MD, they must direct operations, business development and finance. They must also manage the same three disciplines. And actually do the work. That adds up to 10 roles. If all were addressed equally in a 40 hour week, that’s 4 hours available for each. Something’s gotta give! What gives is just about everything except the “MD” bouncing between taking the customer calls and getting the work done. It’s thrilling to be at the centre of all this … until the glass ceiling, and fatigue, strike. But it’s not really being an MD. Which is at the core of what a chairman does for a Board, even if it’s only a Board of one. In particular: supporting the chief executive/MD.
In contrast with the startups where I will guide the structural route map of the business in the original plan, to grow an established business requires backfilling the missing roles to get the MD where they need to be. We don’t need to hire 10 people for 10 roles, we do need to make sure we have enough people with enough capacity to make sure the 10 roles and their responsibilities can be continuously met.
One of my favourite case studies involved creating a bespoke management system that introduced transparency of all the company’s projects, enabling others to help the MD propel projects forward. The first hire was a financial administrator, then one of the operational staff was promoted to Operations Manager. Next, as the operational team began to grow again (more staff, more subcontractors) an operational administrator joined the team. My role included guiding through tax efficiencies, pension options, marketing, rebranding, asset acquisition, commercial contracts and recruitment policies. Throughout this process the company was doubling in size (and is now doubling again) while the fatigue has inexorably subsided from the MD who, I should add, is a great leader. Their phone rings less on holiday, they can watch the dashboard I built on their phone/tablet/computer any time, any place. They’re in control, directing a fast growing business.
There’s no glass ceiling, the world’s their oyster and they have a growing team around them to share the load and the success.
This is how to grow a business. If you’d like me to help your business grow, please contact me.
Leave a Reply