Entrepreneurial Adolescence

(27303)

Description:
1. Getting over the $10 million threshold to have a solid business making $2 to $5 million a year
2. $10-$50 million in revenue
3. 51-350 employees (Second-tier people hire third-tier employees to work for them)

Problem: Your systems are strained and customers are starting to notice

Challenge: To turn the chaos of your business into order

Opportunity: Learn how to establish protocols, systems and procedures that work

Skills:
1. Get going
2. Selling
3. New products
4. Managing well

By the time your annual sales revenues exceed the $10 million mark, it will start to feel like the business has somehow got past your abilities to manage it. Everyone will be so busy addressing problems that it seems like nobody is focusing on taking the business higher. Temporary patches won’t help, so it’s going to be time to get more professionals involved in running your business.

In fact, instead of having all the key people report to you, it will be time to revamp your management structure. You first inclination will be to put in place a traditional hierarchy with you as CEO, a senior management tier and vice presidents of different functions on the next level down and so forth. That’s fine, but a better way to organize for growth is more like this:

CEO–that’s you:
1. Chief Operating Officer
2. Profit Center Manager
3. Profit Center Manager

Group all your operational functions and their respective managers together under the COO.

Set up each of your product lines as a separate profit center, with each being managed by a Manager who then appoints his own Marketing Manager, Sales Manager and Product Development Manager.

This allows you to devote the bulk of your time to assisting with marketing and product development, which is more than likely where you add the most value. You can leave the operational part of your business to the professionals. It also means you have six or less people reporting directly to you, which is preferable.

To morph from being an entrepreneurial company into a professional corporation, two major changes are required:

1. You have to make changes yourself: meaning you have to become an effective corporate leader. In practice, you have to get good at:

Working through other people.

Communicating your vision for the enterprise.

Networking to generate joint venture opportunities.

Negotiating deals that work.

2. You have to learn how to hire and keep great people: because it’s vital that you fill your Stage Three business with stars and superstars. Stars are the hard workers who show up every day and do exactly what you ask of them. Superstars do that as well, but they also have the rare ability to create growth. It’s unusual for these people to be out of work, so more than likely you’re going to have to hire very good people and teach them how to be stars and a few great people that you can mentor personally to become superstars. Recruiting the right people and training will the bulk of your time and energy in a Stage Three enterprise.

By the time your revenues are breaking through the $10 million barrier, you’ll no doubt all sorts of bottlenecks and collisions are occurring. Bureaucracy is starting to make itself felt, and there will even be some internal politics coming into the mix, which is unhelpful to say the least. These are the natural and inevitable consequences of growth.

So what should you do to keep moving towards that $50 million in sales mark? Some possibilities:

Start by making sure you’re not the bottleneck everyone else can see. Don’t be so involved in day-to-day aspects of your business that people are constrained by your availability. Hire great people and then get out of their way and let them perform. Don’t insist on signing off personally on anything.

Set up a legal department to handle all compliance issues that might come up. Empower them to work with Profit Center Managers to everyone to ensure your company doesn’t fall foul of any regulations or so forth.

Ask all your managers to work towards a culture of efficiency. Be on the alert for anyone who is trying to set up systems on procedures that slow things down rather than speed up and improve things. Encourage everyone to focus on focus on what can be done to serve customers better.

Eradicate anyone who is trying to establish an internal fiefdom. Create a meritocracy where the people can compete openly with each other internally and where the best ideas win. Encourage everyone to share and have almost no restrictions on product development or marketing. That’s the kind of environment where politics cannot survive.