Being an entrepreneur is not for everyone. Often there is a false assumption that a good product or service idea will be a guaranteed success. The “If you build it they will come” mindset is a great cliché for a movie but seldom plays out as a winner in real business.
No, success and long-term sustainability require a whole host of ever-changing variables. The truly successful entrepreneur figures out how to navigate these choppy waters, making changes as frequently as they might be required. Plus, when the demand is for them to change, they will accept the proverbial writing on the wall and go with the change.
Nimbly and gracefully making the right changes is what differentiates the highly successful business owner/founder from the rest of the wannabes (as in I want-to-be successful). Wanting and doing are wildly different positions to be in.
Several factors, which change in importance as the business grows and develops, are prominent in determining ultimate success or failure.
A study done by the good folks at Harvard Business Review identified eight such factors in a research project(1). Four factors relate to the enterprise and four to the owner. The four that relate to the company are as follows:
1. Financial resources, including cash and borrowing power.
2. Personnel resources, relating to numbers, depth, and quality of people, particularly at the management and staff levels.
3. Systems resources, in terms of the degree of sophistication of both information and planning and control systems.
4. Business resources, including customer relations, market share, supplier relations, manufacturing and distribution processes, technology and reputation, all of which give the company a position in its industry and market.
The four factors that relate to the owner are:
1. Owner’s goals for himself or herself and for the business.
2. Owner’s operational abilities in doing important jobs such as marketing, inventing, producing, and managing distribution.
3. Owner’s managerial ability and willingness to delegate responsibility and to manage the activities of others.
4. Owner’s strategic abilities for looking beyond the present and matching the strengths and weaknesses of the company with his or her goals.
Small businesses are built on the owner’s talents: the ability to sell, produce, invent, or whatever. This factor, in the early stages, is of the highest importance. The owner’s ability to delegate, however, is on the bottom of the scale since there are few if any employees to delegate to.
As the company grows, other people enter sales, production, or engineering and they first support, and then even supplant, the owner’s skills—thus reducing the importance of the owner’s personal skill set. At the same time, the owner must spend less time doing and more time managing or even leading the enterprise.
He or she must increase the amount of work done by other people, which means delegating. The inability of many founders to let go of doing and to begin managing and delegating explains the demise of many businesses during the latter stages.
As a business moves from one stage to another, the importance of the factors changes. We might view the factors as alternating among three levels of importance:
If we categorize each of the eight factors listed previously, based on its importance at each stage of the company’s development, we get a clear picture of changing management demands.
The changing role of all of these factors clearly illustrates the need for owner flexibility. An overwhelming preoccupation with certain factors is quite important at some stages and less important at others. “Doing” versus “delegating” also requires a flexible management mindset.
Holding onto old strategies and old ways will not serve a company that is entering the growth stages. Failure to find the nimbleness to make these changes can even be fatal.
If you run your own business but are feeling the pressure to make some changes, perhaps you need a Master Coach to come alongside and guide you through the thought process. That is what I do. I’ve been doing it with successful entrepreneurs for decades. I’ve seen businesses of many types. You are not alone. Leave a comment or write an email
(1) To read the whole study, visit https://hbr.org/1983/05/the-five-stages-of-small-business-growth Please note that the study’s findings were written in 1983. Some may argue the findings and recommendations are therefore irrelevant just because of their age.
However, ask any businessman who has made one of these mistakes along the way. They will affirm the need to be this kind of nimble in order to make the best possible changes for the true good of the business. The principles are timeless.
Originally posted on DougThorpe.com
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Hi, I am Doug Thorpe. Author, speaker, entrepreneur, and business coach.