How would you, an entrepreneur of a growing business, identify your top priorities from the demands placed on you and your business? If you could isolate the priorities affecting long-term growth, how would you know which required standard prepackaged solutions and which required approaches tailored to your business?
Many owners can list their priorities. They are whatever is important to them now and in the near future, but reactive management is no formula for long-term success. We need more objectivity when sorting conflicting priorities.
One way to clarify priorities at the entrepreneurial level is to look at the business from a variety of perspectives. Some priorities are very predictable given a company’s industry, size, years in business and location. Some are shared by all growing businesses.
I recently facilitated an exercise within a seminar on growth strategies based on this concept of identifying objective priorities through multiple perspectives. Attendees were asked to list a few issues we all share. The rising costs of insurance, wages and benefits topped the list. The problems associated with the poorly educated labor pool hit the list next, but the body language of the participants screamed that illiterate, lazy-thinking employees pose a more oppressive challenge to today’s businesses than rising costs or the uncertain economy. So every entrepreneur can see that no matter what he/she thought was important, these problems will require some attention if they want to keep growing.
When we divided our seminar attendees into subgroups by industry, we could all see that high-tech businesses face intense competition and the cost of research and development.
Professional service firms identified capacity utilization, billing and market saturation as key growth-related issues. Health-care-related businesses seem to share insurance and liability. Manufacturers cited product liability, the rising cost of goods and foreign competition. Construction-related companies face changes in the economy, tougher legislation and regulations. Retailers listed loss prevention, debt and leveraged buyouts as the greatest growth threats.
When we divided the group into subgroups by development stage and/or age, we saw another list of priorities and issues. Start-ups typically face the challenges associated with being undercapitalized, unproven and driven by customer demands or limited cash flow.
“Directional” companies need to let go of unprofitable pet projects and product lines. The first real company brochure is typically done during the directional stage of development. Market research is introduced in this stage.
Companies in the “adolescent” stage typically need internal management systems, specialization and consistency. Adolescent companies face the possible loss of longtime employees as tough decisions about future direction and major purchases are made. Major capital-investment needs come at a time when many adolescent companies have managers who cannot seem to agree on anything anymore.
As companies age through the “prime,” “stable,” and “aristocracy” stages, problems typically shift to things such as organizational politics, inertia and a preoccupation with profits.
For example, a 7-year-old professional service will predictably be facing limitations in its support staff, underutilization of its billable capacity, and the possible loss of a key employee over a decision about target markets, identity or investments. A start-up retailer will be hit by the challenges associated with lack of name recognition, paying a premium price for small lot orders and preventing employee theft.
Entrepreneurs of growing businesses react to this type of exercise in one of two manners. Some feel a sense of relief. Their problems do not seem as overwhelming when they can see how predictable they are. They do not feel so isolated or incompetent.
Others become irritated by the premise that their problems aren’t unique.
In reality, growing businesses do share some very predictable challenges, and some problems are indeed unique to an individual business. This type of exercise simply helps one see the common issues. Just because a problem is predictable doesn’t mean it is easily solved. It means the issue is not easily solved. Why else would it be predictable? The fact that a problem is unique to a given business does not mean it is a bigger problem. Many company specific issues simply need temporary focused effort.
Recognition of priorities is the first step, whether they were predictable or unique. Which approaches should be packaged and which should be tailored?
Software exists to help professional service firms manage billing. Consultants are available who have experience in your stage of development, size, or years in business.
So what if you are using the same software as your competitors? The costs associated with specialized software may not necessarily produce a greater return.
In the seminar exercise, participants could see which priorities were standard to their industry, location, size and years in business. The priorities that did not appear on the lists of predictable problems seemed to be the best candidates for tailored solutions. We also concluded that tailored solutions were probably indicated for companies facing a lot of the predictable problems