At the beginning of the business life cycle, most businesses lack structure. They exist on raw determination or effort and the things that people can sell or trade. At this point there aren’t a lot of rules for how things should be done. The only expectation is to make money.
At first this freedom seems wonderful because it gives the business owner a great deal of latitude; that is, until the company begins to grow. At the point of growth, mounting pressures on the expanding company force the owner to coordinate and arrange business activities in an orderly fashion. This order brings stability to the enterprise by requiring changes in the way work is done and information shared. It also means that leadership must adopt more disciplined methods.
Instead of everything being off-the-cuff; done one way this time, and another way the next; the company enhances its performance by adherence to exact rules that act as operating procedures. These rules can be applied to everything from go-to-market strategies to how departments are to be staffed and managed.
Instilling structure enhances the company’s effectiveness, efficiency and economy of operation. In short, things get done better, faster and with greater consistency. Because the owner shifts the emphasis from his or her personal sales and service performance to how well the company accomplishes its mission, the company, in effect, becomes more stable, if not profitable.
At this point, the company is positioned for real growth.
What happened? Well, by putting people in place who could replicate the owner’s initial work as well as expand upon it, more could theoretically be accomplished. Instead of one person doing everything, there are now multiple people doing specific things. The work has been divided and the results multiplied. Before long, the owner has formed a team or several teams of capable individuals that need to communicate plans, work together, share information, and perform complimentary functions. They all need to know what they are to do, where they are to do it, what resources exist to accomplish the work and the steps needed to perform their tasks. Finally, by having documented internal and external hand-offs to take place, they can see measures for quality, value, productivity and success? Together, leadership working with the team can determine the best methods for fulfilling customer needs from the initial contact to final handoff. Collections was made clear by documenting and communicating what had to happen in each phase.
In the beginning it is the owner’s job to make a living, but after a while, it becomes the company’s job to provide a living, not just for the owner but for all company employees and shareholders. This is a significant but subtle change that many business owners fail to observe. When this shift takes place the owner moves from being the “Chief Doer” to being the “Chief Executive.” He or she uses the business structure and its people to thwart competition and win new clients. The focus shifts from wanting to win a sale to wanting to earn a client while capturing terrific profit margins. In the end the company retains both the client and the margins based on how expertly employees work alone and as a group, to satisfy the client while at the same time, protecting the company in building its assets.
The more of its earnings a company retains, the better positioned it is to grow its structure and its offerings; thus enhancing its chances of satisfying existing clients while attracting new ones. Growth without structure is a costly, frustrating, and time-eating recipe for failure.
So what is the solution?
It is to build a company and not simply a book of business. It is to learn how not to do everything by oneself, but to leverage the benefits of collective thinking and planned activity capable of delivering consistent, exponential growth.
