By Frank Goley

As a company grows and matures, other factors in its successful management and growth become important. I will analyze a company’s Growth Stages and identify common issues, success factors and problems for each particular stage; identify Management Considerations and Challenges as the company grows and matures; and consider Future Planning Requirements. As a Company grows and matures, it is important the organization understands how to plan effectively for new challenges, issues, markets and problems.

Small Business Growth Stages

- Basic Existence Stage

- Main Issues and Characteristics

1. Obtaining Customers
2. Delivering the product and service
3. Viable Services
4. Expand from key customers to broader sales base
5. Have enough Cash on Hand to cover Cash Flow demands
6. Owner performs all Management functions
7. Often a lack of Planning & Systems
8. Business just trying to remain viable
9. Have yet to stabilize production or product quality
10. Trying to gain sufficient customer acceptance
11. Business has strong demand on the Owner’s time, cash and energy

- Survival Mode Stage

- Main Issues and Characteristics

1. Business demonstrates viability as business entity
2. Satisfies a base of customers
3. Focus shifts from existence to managing Cash Flow
4. Generate enough Cash Flow to break even, stay in business and finance growth
5. Focus on Market Niche exploitation
6. Simple organization and the owner begins to delegate to a manger. However, strong direction and control still rests with the Owner.
7. Planning concentrates on Cash Flow Forecasting
8. Systems development & implementation in early stages.

- Obtaining Success Stage

- Main Issues and Characteristics

1. Exploits its Market Niche
2. Obtain Strategic goals
3. Expansions is important but stability, control and profitability are key as well
4. Owner’s Options:
a. Expand and Grow the business
b. Maintain Stability as a means of support to the owner
c. Owner considers disengagement from the business
5. Market penetration
6. Competitive Edge
7. Functional Management & Owner Delegation
8. Management & Key Employee Competence
9. Generating sufficient Cash Flow
10. Planning for rough patches
11. Professional Staff: i.e. Controller, CFO, CEO
12. Production/ Service, Marketing, Strategic and Financial Systems established
13. Operational Budget Management
14. Growth Strategy Options
a. Consolidate Company, develop efficiencies and marshal resources
b. Use Retained Earnings and Cash Flow, leveraged with Finance, to grow the Company
c. Cash Flow Management & Profitability are key concerns to finance growth goals
d. Develop Key people and management
e. Strong Operational and Strategic Planning
f. Growth requires the owner’s deep involvement (verses disengagement)

- Rapid Growth Stage

- Main Issues and Characteristics

1. Committed to a Growth Strategy
2. Concerned with adequately financing the growth stage
3. Need good ownership delegation to improve managerial effectiveness.
4. Enterprise develops complexity. Performance Control Systems are important
5. Established Expense and Budget Controls to maintain strong Cash Flow.
6. Profitability Planning Systems are critically important
7. Effective Financial Planning, Forecasting, Modeling and Strategy
8. Very skilled, experienced and competent Management Structure
9. Company systems are tested, adapted and highly delegated, but there is strong Strategic Leadership from Top Management
10. Capacity to become a big business
11. Strong Potential for Business Sale Premium
12. Effective Delegation and reliance on talented Managers & Key Employees are keys to success
13. Founding Entrepreneur(s) can opt out of business and have a more advisory role

- Maturity Stage

- Main Interests and Characteristics

1. Consolidate and Control profits
2. Retain advantage of relative small size, nimbleness and flexibility
3. Quick market change response time
4. Still retains the entrepreneurial spirit
5. Growth causes inefficiencies so must ensure the Management Structure continues to grow and evolve. Strong Managerial Talent
6. Strong Budget, Operational and Strategic Planning capability and focus
7. MBO System (Management by Objectives)
8. Cost Systems
9. Extensive & well developed company systems and Management Structure
10. Strong Financial Resources
11. Convert Entrepreneurial spirit to a Formidable Market Force
12. Strong Market Niches and Competitive Edge
13. Exceptional Risk Management
14. Profitability boosted by successful Innovation
15. Strength in Market Branding and Recognition
16. Maintain Competitive Edge by anticipating Market changes and adapting better and faster than competitors

Management Considerations and Challenges

- Key Management Factors and Areas: The following are areas which change in importance as a company develops and grows, which often determines the success or failure of the enterprise:

1. Financial Strategy: Cash Flow and Finance
2. Personnel Planning: Amount, Depth, Structure and Quality of Key People and Management
3. System Integration: Product Development, Production Management, Cost Controls, Budgeting Systems, Marketing Systems, Quality Management, Customer Relations, Strategic Planning, Cash Flow Management, Profitability Analysis, Asset Management, and so forth.
4. Business Resources: Customer Service, Market Share, Market Growth, Market Penetration, Market Trends, Supplier Relations, Manufacturing Processes, Facility Efficiencies & Expansions, Distribution Systems, Sales Management, Innovation, Technology, Industry & Market Positioning and Business Reputation.
5. Company Goals and Objectives
6. Operational Planning and Abilities
7. Supply Chain Management
8. Owners Willingness and Ability to Delegate
9. Strategic Long-Term Outlook and Management

- The Role of Business Planning: A good Business Planning Structure will look at the mentioned factors (among others) and effectively plan, develop, install and implement systems and processes to manage and anticipate these challenges throughout the business enterprise. A company can grow, or for that matter, collapse, so quickly that it is very important to have Planning and Control Systems in place to manage all the numerous variables which a business encounters and considers. Therefore, as the business grows and changes, and as the markets and competitors change, the small business has established systems and resources in place to successfully handle and manage these changing forces and factors.

Future Planning

- Growth Considerations

1. Does the business have the quality and diversity of experience and talent needed to effectively manage a growing company?
2. Does the business have systems in place and in development to effectively handle the needs and demands of an expanding, diversifying enterprise?
3. Do the entrepreneur/ owner/ founder(s) have the foresight, inclination and ability to delegate decision making to management?
4. Does the business have the Cash and Finance structure, along with an understanding of the Risk Factors, to aggressively pursue rapid growth?

Application

In managing a growing, expanding and maturing Small Business, we presented a model by which to evaluate and plan for the current business situation and future concerns and challenges. By understanding the particular Growth Stage Characteristics and Issues, Management Considerations and Challenges, as well as, Future Growth Planning Considerations, a business can apply this planning format and model to anticipate problems and successfully sustain growth. This model should be an integral part of a Company’s Business Planning, Market Planning, Product Development Planning, Strategic Planning, Sales Planning and Financial Planning and Forecasting.

Conclusion

An imbalance of management factors and challenges can create serious problems for the entrepreneur and his/her growing enterprise. We illustrated how the problems faced and the respective skills necessary to effectively deal with challenges change and evolve as a company grows, expands, and seeks success. Therefore, it is vitally important for business owners to anticipate and strategically manage these factors as they become influential and important to the enterprise.

As I explained in this article on Small Business Growth Management Strategies, a company’s stage of development determines the managerial factors which are necessary and important. A Company’s Planning Structure is vitally crucial in determining which factors and issues must be faced and dealt with. Knowing its keys to success, development stage model and future planning needs, a company’s managers, entrepreneur, founders, executives, investors, advisors and consultants can make much more informed strategic decisions and plan for future challenges.

The Case for a Business Consultant

When an entrepreneur is starting and growing a company, it becomes vitally important from the outset to seek and obtain objective advice from experts. The Company Principals need expert advisors on their team to discuss decisions and obtain objective advice; challenge the founders’ venture needs appraisal; provide an honest appraisal of strengths and weaknesses; review decision making processes; identify survival tactics and needs; develop and implement a business plan, marketing plan, strategic plan, sales plan, and financial strategy; build market focus and niches; anticipate market trends; establish and sustain competitive edge; provide financial foresight and planning; focus on cost controls, budgeting procedures, cash flow management and maximizing profitability; along with obtaining the appropriate Financial Resources to augment self-investment and achieve growth goals and opportunities. In short, a Business Consultant, with an experienced track record, can fill this long requirement list, helping the entrepreneur and his or her advisory and management teams to successfully start, structure, plan, expand and profitably grow the enterprise.

By Marty Lasker

There are almost as many definitions of leadership as there are writers about the subject. This in itself informs the reader about the elusiveness of any consensus what makes for a good leader let alone, how to develop them. At its simplest, the leader is the one who has followers though it would not be accurate to say that “the one with the most followers is the best leader.”

Successful leadership characteristics will vary by organization, culture, age, circumstances, and many more variables. Successful leaders don’t use the same skills and behaviors on every occasion, but often draw from an array of arrows in their quiver to be successful.

Good managers are not necessarily good leaders as a manager’s title is conferred upon them by the hierarchy in an organization. The title of leader is conferred upon the person by those who will follow. So, how do you get people to follow?

Among the many characteristics of effective leaders are:

Vision - is the description of the future and preferably a future that is better than the present or one that will comfortably address anticipated events. The vision must be believable in the sense of being perceived as achievable. It must be a statement with which follows can identify and aspire to and it must be articulated by one who has the confidence and trust of the followers.

Trust - is likely the most critical characteristic to any leader. Once it is gained it is difficult to lose and once it is lost it is virtually impossible to regain. A trusting relationship is created through consistent experience that the leader is acting in the follower’s best interest. Once trust is established it is assumed that the leader is acting in the best interest of the follow until proven otherwise. As a result, it is not uncommon to find people being led in directions that are not in their best interest. However, once this is discovered, the leader is usually abandoned.

Communication - is the link or connective tissue between the parties. An effective and highly skilled communicator can make up for lapses in vision and trust and an ineffective communicator will often fail as a leader regardless of the wisdom of the vision or the integrity of the trust. While there are many more characteristics found in effective leaders, it is clearly the formulation of a vision, the ability to communicate that vision and the existence of trust are the three most fundamental skills required.

By David Javitch

Difficult people present no problem if we pass them on the street, in the supermarket or in a building lobby. Nevertheless, when we have to work with them difficult people can become major irritants.

It seems that some people are just born to be difficult. We have all worked with them and most of us dislike them. Difficult people are easy to recognize–they show up late, leave early, don’t turn their work in on time and have an excuse for every failing.

Wait, there’s more. These difficult people harass you and others, ask too many self-explanatory questions, neglect details, distract you and repeatedly challenge you and others. Even worse, when they interact with customers, vendors and people lower than them on the corporate hierarchy, they can be grouchy, impolite, condescending, uninformed, misleading, inappropriate or simply wrong. Do you know anyone like this?

Naturally, no one wants to work with difficult people. When dealing with problematic employees, productivity decreases, frustrations rise, morale goes down and customers and vendors get upset.

How to Handle Them

1. Don’t ignore the problem. Assuming that the employee provides value to the company and possesses redeeming qualities, there are ways to deal with difficult employees. Most often, managers will simply ignore problematic staffers. Managers who live by this rule hope the problem will just go away; that these people will somehow turn themselves around or stop being troublesome. Ignoring the situation is the wrong solution to what could likely become a progressive problem.

2. Intervene as soon as possible. It is important to take action as soon as the negative behavior pattern becomes evident–when left untouched, this problem will only escalate.
Occasionally, the difficult employee has no idea that his behavior is a problem or that others react negatively to his actions. This is because most people tend to put up with the annoying behavior and “go along to get along.” At the same time, some employees just consider it a “job frustration.” Just like some managers, employees want to be liked by colleagues and subordinates and are therefore reluctant to speak up when a problem arises.

Ultimately, it is the manager’s responsibility to take the appropriate action to correct the problem. Whether the concern exists due to the employee’s lack of knowledge of the issue, lack of feedback or projecting the difficulty onto someone else, the manager has the responsibility of addressing and turning around the predicament. The manager needs to gather information from employees to discern the extent of the problem and personally observe the employee interacting with customers or vendors.

3. Research the problem personally. Armed with accurate data and examples, the manager needs to then take this person into a conference room or office–away from others–and calmly address the issue. To begin, the manager needs to ask the employee if he is aware of any ongoing issues to determine if the difficult person is aware of the problems.

If the employee is “unaware,” the manager needs to describe the unacceptable behavior. The employee might interrupt to disagree or deny the existence of any issues. Nevertheless, the manager needs to continue by giving clear examples of the unwanted behavior.

The manager also needs to allow the employee to respond to the allegations. If the difficult employee refuses to believe that the allegations exist despite the evidence, the most the manager can hope for is an intellectual acceptance of the possibility that a problem exists.

4. Help the problematic employee to get back on track. Once the employee begins to understand that these negative behaviors are real and experienced by others in the organization, the manager or someone from human resources should begin to coach the difficult employee in displaying more acceptable and appropriate behaviors. The employee needs time and practice in “trying on” new, more suitable behaviors. HR and/or the manager need to provide specific feedback to this employee on the success or failure of his efforts in minimizing the negative actions and implementing ones that are more positive.

5. If all else fails, termination may be necessary. If the employee continues to deny his inappropriate behavior and refuses to try to improve the situation, the manager needs to place this person on the fast track towards termination. Often this involves recording a series of well-documented verbal and then written feedback about the behavior. Strictly following company protocol, there should be a period for the employee to address the questionable behavior. If this trial period does not result in improved behavior, then the employee needs to be terminated.

Most employees will recognize the negative behavior and will at least attempt to turn it around. This is especially true during tough economic times when unemployment is high and finding a new job is difficult. In any case, the manager needs to follow company guidelines in recognizing the unacceptable behavior, providing direct feedback, providing input to try to turn it around and ultimately taking action in a timely manner.

Not doing so is a disservice to the problematic employee, other employees and the success of the organization.

By Mark A Frohman

The fifth “new” myth that resembles pineapple upside down cake:

To Fix Things, Create a Team and Turn It Loose

This myth has lead to many teams that suffer from “aimless empowerment.” The team are not given sufficient direction and guidance to be successful. Managers can not step back - rather they had responsibility to provide direction, priorities, and structure for teams to be effective. Too many mangers let their teams blow in the wind. To be successful you need a stake in the ground to tether teams and help them move in directions that benefit individuals and the organization. This is right as far as it goes. But this is looking at teams as one way - what management has to do to make it work. Indeed most companies install teams as something management does for the workers. But teams are a two-way street. The team has responsibility to make the process work, too.

A large utility company introduced problem quality teams throughout the company with statements from top management and training. After eighteen months the program was deemed a failure because there had been no improvement in quality measures. Using a survey it was discovered the team members, while feeling more involved did not feel more responsible for results.

In a company that makes food preparation machines, teams were introduced by reducing the number of supervisors, training facilitators and establishing regular team meetings during working hours. The major outcome was that management was accused of being hypocritical about teams whenever it did not go along with a team recommendation.

Do not believe the myth that teams can be created and let loose. The expectation must be set t that teams are a two-way street. Management gives something - more say - to lower levels and expects something - better goal achievement and competitiveness - in return.

Teams are a basic exchange offering people more choice in return for a promise. The choice is about having control over the way work gets done. The promise is about results. Decision making is pushed down in order to get results up.

Teams requires open and ongoing communication about the goals, priorities and problems of the company
We find these conditions contribute to successful teams:

• Link their assignment to strategic priorities
• Integrate staff support into the process
• Provide a strong orientation
• Communicate clear expectations and timetable
• Receive regular reports
• Provide full information as needed
• Include teamwork as a performance factor and in evaluations

To sum up, Franklin D. Roosevelt said: “There is a mysterious cycle in human events. To some generations much is given. To some generations much is expected.” Our generation requires both for teams to work!

Conclusion
The times are difficult, the answers are not easy, but subscribing to a new set of management myths is not the answer. Try this instead:

• Study your world and look for trends and issues to help become competitive
• Focus your management efforts on outside customers and select your efforts after a careful look at what you need to do to meet expectations in the market
• Give each unit clear direction and ground rules and let them figure out what needs to be done better and how.
• Encourage individual initiative. Ask for problem solving from everyone.
• Create teams with accountability for results and give them support.