Australia has almost two million businesses with five or fewer employees – over 80 per cent of all businesses. Most of these businesses will never grow beyond this level. For many, this is not a deliberate choice, but the result of a lack of confidence and ability of the owners to manage growth. The fact is that running a business will be stressful at times. But the answer to this challenge is not to stay small to avoid it, but to learn how to address the challenges and stress in a more effective way.
My own experience in my first business reflects this truth. I struggled to the point of almost going bankrupt, before I looked for help. What was revealed to me through the next few months was that I was making a number of mistakes that were limiting my success. I was creating my own growth crisis because I was working hard at growing my business in a fundamentally flawed way. I’ve since discovered most business owners make these same mistakes.
The reality is that hitting growth barriers will be inevitable for businesses that possess potential to be much bigger and more successful. However, the failure to progress through these crisis points creates unnecessary stress and keeps many small and medium-sized businesses from ever achieving their full potential. Most business owners never receive the advice I got and, as a result, keep working hard with continued frustration and stress. It needs a different approach to achieve the success they want.
The most successful businesses are those that break through the typical barriers and provide their owners with financial independence and freedom to enjoy the most enviable of lifestyles.
As a business grows it will encounter five distinct and predictable barriers. These barriers, or crisis points, were identified forty years ago by Harvard professor Larry Greiner.
At the ‘creative’ start-up stage, a business is heavily reliant on its owners who participate in every aspect of the business. With growth, this reliance becomes unwieldy, creating a crisis of leadership. Someone needs to take charge and organise specific responsibilities for people.
In the second ‘directive’ stage, the leader is responsible for making most decisions and directing others. However, as the business grows, the responsibility for all decision-making becomes too great. This leads to a third stage of ‘delegation’ to relieve the pressure, but businesses often fail at this level due to lack of control.
Businesses need to develop better control systems to break through this barrier so that efforts can be better coordinated. But with further growth the controls evolve into red tape, where bureaucracy becomes an end in itself and constricts the business with over-tight rules. At this point, the business needs to modify control barriers and develop a more collaborative style of organisation to move to the fifth level.
Awareness that these growth barriers will be met means they can be anticipated and the associated stress avoided by developing strategies to assist the transition through each stage. Many small business owners are obviously not aware of this, because they regularly hit growth barriers which become permanent obstacles to growth, rather than temporary hurdles.
The key message is that the desire to retain a small business puts a lid on potential, while unplanned growth creates stress and, in most cases, unnecessary risk for the business. Many more small business owners would break through the business growth barriers with better foresight and planning to anticipate crisis points and chart their transition through each level.
Proven strategies exist to enable business owners to bring about successful growth of their enterprises. However, only a few realise that their current approach must be abandoned for them to get onto the right path. The benefit to business owners who seek out and use these strategies is managed growth with less stress, lower risk and increased control, and with this control comes the achievement of higher potential, greater freedom and a more enjoyable lifestyle.