Monday, February 25, 2008

Moving Stage NEXT

Resources for startups are all over the place, but small companies need help stabilizing and managing their expansion, too. What should be No. 1 and 2 on their priority list? Make a "stop doing" list and a "process" list.

"CEOs in growing companies have to think about creating innovative systems that allow them to have control, but they don't have to be the one looking over the shoulder" of employees, says Dino Signore, who runs leadership programs at the Edward Lowe Foundation, a Michigan nonprofit dedicated to helping second-stage entrepreneurs, which it defines as those who head up companies with about $1 million in annual revenue that are beyond startup stage but not fully mature.

Business owners must understand that they have to start working ON their business instead of IN their business. That means both a "stop doing" list (i.e. doing some of their employees' jobs for them) and a "process" list (ex: repeatable and duplicatable procedures for every aspect of the organization to maximize productivity no matter who is performing the job).

The stakes are high. Companies beyond the startup stage thrive or fail based on their organization, according to Eric Flamholtz, a management consultant and co-author of Growing Pains: Transitioning from an Entrepreneurship to a Professionally Managed Firm.
"You ultimately win with infrastructure," says Flamholtz. "Most people think you win with markets and products. You're looking in the wrong place." He says there are some key signals that should tell companies they need to change: when many workers don't know what others are doing, for example, or when sales rise but profits stay flat.

Of course, business owners seeking organization can overdose on new systems and lose the agility that made their startup successful. You need the right balance of internal processes. On that note, be watching for new products and systems in the Ideas to Go section here... we have LOTS of tools-you-can-use coming soon!

The core lesson is that CEOs should create entities that don't depend on them. You want your business to be a legacy... to thrive and grow far past your day-to-day involvement. After all, that's why you went into business on your own in the first place.

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