When it comes to this growth journey, we would all like to think our business is different but the reality is that they all generally go through a standard evolution process, and with it the leader needs to go through a similar evolution in parallel if the business is to continue growing.
To determine which role you will need play, let’s start by breaking the business’ lifecycle down from start-up operator to strategic navigator, and the leadership requirements at each step. We’ll ignore death because if we’ve gotten there then it’s usually too late, and the only thing that can be done is to salvage any value that’s left.
Businesses typically get started by an individual with any combination of the following:
• A particular skill e.g. a trade, profession.
• Strong industry network/contacts e.g. fashion design, forestry.
• A purchased or inherited business unit e.g. a family business, a branch of an existing business you used to work for.
You start off as a one-man-band and jack of all trades. Your position as a leader is simple. You are the decision maker and doer. You encompass the entire vision, strategy and idea generation, or lack-thereof.
You mostly let orders come to you, but over time start to realise that some types of customers are far more profitable than others. To get to the next level, you’ll need to shift your sales approach from being opportunistic (what’s in front of me) to strategic (what types of customers will make me more profitable, faster).
Assuming you have the ambition, and sufficient commercial ability to grow your business, you eventually reach a point of profitability where you can’t keep up and will bite the bullet by beginning to employ others to keep up with demand. You now have a growing team and office.
There are more and more profitable customers and they’re coming back for more. Suddenly there is a need for designating tasks and managing the outputs of others. They want to know where the business is heading and what they’re supposed to be doing. If you didn’t know about management and leadership before, you do now.
Businesses who continue to do the basics well will start to move beyond small consumer/customer niches and start to discover the amazing world of mass-market appeal to a much bigger audience (even Facebook once started as just a local university website).
Gone are the days of easy solutions and decisions. You now need that cliché term you probably always dreaded “systems and processes” to keep the ship efficient and start to wonder how you ever got this far without it. Recruitment, management and development of talented staff begins to chew up the majority of your time which is a shock to the system as this is not what you got into business for. You got into business to do stuff! “If only you didn’t need people to run a business” you sometimes wonder.
The great news is the business is on its steepest growth path yet. If your end goal is to sell, wouldn’t it be a great time to know that this may be the best opportunity you’ll ever get to do so…
The rapid growth has slowed and, while still hectic with a lot going on, the place and pace is hopefully a lot more manageable now. You’re either content with where you’ve got the business to, or you’re not. If it’s the latter, then you start to question more than ever whether you’re the right person to take it to the next level.
If an exit sale was your strategy, you might have missed your best window to sell. That said it’s always possible to breathe new life into any business at risk of decline. Sometimes it’s as easy as expanding your target audience or product range. Just ask Disney or Lego, who both hit a saturation then decline point, and were on the brink of going under.
FAMOUS REINVENTIONS – LEGO In 2004 Lego was close to bankruptcy. They had a wide variety of product lines but sales had declined to €0.8 billion in revenue, off the back of a large cost base. So, Lego revised its strategy by creating relationships to license children’s brands, focused on new toys that pushed creativity, and developed digital products too. In making this shift, Lego reported 2014 revenue of €3.84 billion, an increase of 480% over 10 years!
This is where we never want to be as a leader. The high energy levels you had at the start has now become a tough grind as you have to deal with resignations, redundancies, and making cuts to other parts of the budget. Despite your best attempts to remain positive there is desperation in the air and many staff, and suppliers, are starting to look elsewhere for their next opportunity.
You need to balance survival with motivation. You led the business here so either need to change the way you do things to lead it back out again, or find someone who can. It’s tough as you’ve lost some key people, lost team morale, and money is tight. The choices are to cut your losses now and get out, or radically change the way you do things.
If this is where your business is, remember again:
- If it was easy, everyone would be doing it.
- Everyone finds it business challenging, even those who don’t show it.
- There are always businesses in a worse position.
- We’re here to help.
- There is always a way out
“Tough times don’t last, but tough people do”