small business adviser
by richard russakoff

Why do many great small companies fail to make the leap from a "mom and pop" company to a medium-size, professional company? Seventy-six percent of all companies have fewer than three employees, and less than 4 percent generate more than $1,000,000 in sales. Growing a company beyond 10 employees takes courage, foresight and, hardest of all, the ability to reinvent yourself at each level of growth. Quite simply, what took you to one level will not take you to the next.

The first step to take as a leader is to determine your company’s current growth stage. Stage I, externally sales driven, is all about survival. Generally, there are fewer than 10 people in the company. The company has loose structures, a flexible and creative environment, lots of trial and error, and a family environment. In this stage, the mission is clear—bring in sales and generate cash flow.

By Stage II, the company has a niche in the marketplace and sales of $1,000,000 or more. The focus now shifts internally and is operations driven, with tasks delegated and supervisors hired and promoted. Functional departments emerge and many of the people who helped the CEO launch the firm are promoted and given raises in appreciation of their hard work.

Stage III is often characterized as chaotic. Acceleration leads to turbulence. With more transactions, more clients, more personnel, the systems that used to work no longer do. Communications break down, the company loses touch with customers, and barriers emerge among departments. At Stage III, the CEO may also lack clarity of vision and not really know what comes next. With an even greater internal focus, the company performs reactively instead of proactively. This is where the recreating and transforming begins.

In order to get this far, the CEO must demonstrate the ability to do three things:
1. As the company goes from Stage I to Stage II, the CEO must be able to delegate. A business owner who cannot turn over tasks and responsibilities to others and allow them to make mistakes will never become a CEO. In order to delegate and grow, you must rely on good, well-trained people capable of making independent decisions on a day-to-day basis.

2. Be ready, willing and able to fire people who do not have the skills to take the company to the next level. Managing people is one of the greatest challenges in growing a company. CEOs can find many reasons to continue to employ personnel who are holding the team back. But a smart leader knows great people are three times more productive than good people—and it is your job to hire the best and fire the pest.

3. Reinvent yourself. As you grow beyond 25 people, your company requires systems and solid organizational skills. This requires most CEOs to re-focus their energies, upgrade their skills, and get out of their comfort zones. This is a good time to join CEO groups where you will be able to interact in a safe environment with other CEOs facing similar challenges.

A professional company has the right people, the right processes, and the right culture in place. The business is no longer driven by personality, but by systems, leaders, and managers who understand what their job is. The mantra we use is: "Managing the status quo is far more dangerous than launching into the unknown."

Rich Russakoff is CEO of Bottom Line Consultants. He can be reached by phone at (800) 359-2521 or go to his Web site at www.bottomlineconsultants.com