Just as people go through distinct life stages, so do small businesses. Moving through these stages can lead to different challenges and changes in behaviours, which is essential for a business if it is to move to the next stage and continue to grow.
Many small businesses start with one person and a large proportion stay that way for the life of the business. This can be because this kind of business-starter is a loner and not that interested in working with others. For this kind of person – and business – it is often a mistake to think of success in terms of traditional measures of business growth. Not having to deal with other colleagues is instead a powerful measure of success.
However, many businesses do grow. Other businesses start with two and the stereotypical husband and wife team is an example of what is can often be a stable and productive business type. Where a business owner has employed their first employee, there is often a close working relationship. This pairing is a naturally stable number and just like with one-person bands, successful two-person businesses often last a long time.
The trouble starts when a business grows to three or four. With three, one person can get left out and with four, two groups of two can gang up on each other with the resulting conflict.
Size matters
Businesses with between five to ten people can be very stable. There are enough individuals for the oddities of one to be counter-balanced by those of another. The skills-set is wide enough that the business can be effective. Many businesses stay at this size because it is easy to lead them. Everyone knows what they are supposed to do; the leader knows each of them and can manage all aspects of leadership. It usually takes a small business a few years to get to this size. One of the facts about business growth and life stages that surprises many people is how few businesses grow beyond this size – in a typical year, only 1500 to 1600 UK businesses will grow beyond ten employees. Once a business gets beyond this, the business leader is spending almost all of their time managing the personal relationships in the business.
What is interesting is how the different personality types of business owners – passionates, experts and money makers – deal with this issue. The danger for passionates is that they over-communicate and exhaust themselves trying to manage these relationships – which in turn are crucial to how the passionates measure their own enjoyment of the business. For the money maker, the danger is that they disengage from the relationships process, treating the business simply as a way of making money and belittling the contributions of those actually making the money. For experts, they can be come too focused on their ‘be the best’ approach and measure harshly those who they don’t feel measure up.
The rocky road to success
From the 10 to 12 person tribe up to those with 20 people or more, can be a tough ride. What the business leader needs is the first of his or her lieutenants, people who share enough of the leader’s vision to be the ‘leader-lite’; to take some of the communications and management load from the leader whilst still making the same decisions.
Instead, what can happen is that the leader delegates those parts of the business he or she doesn’t like to someone who takes the problems away so they can be ignored. This of course sets up other problems.
However, by this stage, the leader is regularly having to wrestle with giving away authority to trusted delegates, and for the first time often to people who know more about the delegated area than the business leader.
This is the beginning of a management structure. Businesses from 20 people up to 150 or so have these lieutenants whether they are continuing to be successful or not. The degree to which these individuals buy into the leader’s visions is instrumental in whether the business is in fact continuing to be successful and enjoying growth.
The final stage occurs when a business gets beyond 150 people. The business is now too big for the leader to have a personal connection with the others. He or she is too far from the day-to-day business to safely make decisions about the day-to-day running. At this stage, a successful business employs the leader to think about longer term planning rather than running the business.
This is a huge shift and often impossible for even very successful leaders to make or to enjoy. The business no longer needs the leader for the very thing they have proved so good at. They have in effect made themselves redundant and in doing so, marked their business as genuinely mature, and ready to ‘fly-the-nest’.
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