Breaking News: You’re No Longer a Small Shop

As small businesses grow larger, a kind of internal struggle occurs. They find themselves battling to manage the day-to-day challenges that, in the past, may have been relatively easy to handle.

In looking back at my own company, for example, I recall a time about 15 years ago when a few of us were trying to do it all – from sales and production to accounting, equipment, and more. We quickly realized, however, that we were getting burned out and our business was experiencing issues we had never seen before.

At that point, we realized we were no longer a small business; we could no longer effectively manage everything ourselves. So we began to methodically promote/hire additional people with specific skills to help manage our business. As a result, today we have a great team of managers who are continually being trained and mentored as to how we like our business to be run. Sure they make some mistakes, but not near the amount of mistakes that we would be making if we were still trying to do everything ourselves.

Is your company at a point at which you need to change from a small-shop mentality to a big-business approach? If so, let’s examine some of the indicators that you might experience as you’re making this transition, and identify some ideas to help along the way.

Has your company changed on you?
First, let’s define what “small shop” or “small business” means for our purposes. It doesn’t really fit the government’s definition of a small business. Rather, within our context, a small business is a company where one or two managers/owners manage the whole company

These folks are extensively involved in every aspect of the shop – they’re making sales; they’re on the production floor and shepherding jobs throughout the shop workflow; they’re hiring, training, and firing; they’re doing the billing and the books; they’re maintaining the plant and equipment, etc. They have extensive knowledge of just about every job produced. Virtually all decisions are made by that same manager or owner. As a small business gets a little bigger, then perhaps the overall management is shared by one or two additional persons. But realistically, in a small shop, everyone knows everything about what is going on.

That is, until one day, when you realize that you actually don’t – and can’t – know everything.
So how do you know when your company is no longer a small business? There are probably two different scenarios here. The first could be described as a “reactive” situation. You begin to see problems cropping up in your business that you never saw before. These might be quality issues with products. Maybe it’s a problem with shipments missing deadlines or even personnel issues that you never seemed to have before. Even more dramatic might be losing a great customer to a competitor – and it takes you completely by surprise. In other words, you realize that your company has changed on you, and you’re only now realizing that you haven’t changed with it.

A better situation would be a “proactive” one, which entails you initiating a forward-thinking plan of action. You devise a strategy that requires you to examine the areas of the business that will suffer as your business continues to grow.

For example, if you are strong in managing the sales side of your company, then it’s likely that the production side will struggle. Perhaps you realize that virtually every decision at every level is being passed up to you? Or if you find yourself out on the floor most of the day managing the production side of the business, then you might not be paying enough attention to sales as your customer base grows and requires more attention. The idea here is an obvious one: Try to determine the areas where you need help before major problems occur.

Managing your growth
Once you come to the conclusion that you do indeed need additional resources to manage your growth, you’ll then need to focus upon two areas: processes and people.

From a process standpoint, as you grow you’ll absolutely need to develop more processes to manage the jobs and the workflow in your shop, whatever your product may be. When you can no longer manage every job that runs through the shop, you’ll need to develop standard operating procedures (SOPs) – ensuring your people are trained on these SOPs and follow them.

And implementing processes should not only be restricted to production. For instance, establishing an effective system for entering critical data as a job comes into your shop is just as important. You’re already familiar with the cliché: garbage in, garbage out. If you don’t have a good way to accurately enter orders into your job system, you’re doomed to fail – and rather frequently. As your business continues to grow, this will become much more of an issue. Developing processes for all areas of your business is critical.

The people side of your business is also important. As you continue to expand, you’ll find that your problems will become not only more frequent, but also more complex. This will tend to move you out of your comfort zone as you face more complicated issues.

Figure out where your own weak spots are, then find someone who has that strength to be a resource to you. That might mean finding a sales manager or perhaps a production manager. You may need to add additional help to handle the administrative and human-resource issues – because these will be coming your way much more frequently. Accounting, too, is a department that will always need your full attention, to make sure bills are being paid and invoices are being collected. There will come a time when it will make sense to hire a company controller, or eventually even a chief financial officer.

You might choose to utilize people within your own company to fill these new management roles. The advantage of in-house hires is that they tend to already understand your business philosophies and approach to dealing with problems – so they’ll tend to solve those problems the way you would have. On the other hand, they may still feel like they must defer to your judgment even after they’ve been promoted to a management position, and they’ll expect you to continue to solve all their problems. Additionally, promoting your own people sometimes robs you of the opportunity to get fresh ideas and a different perspective of your business. Promoting within your organization and hiring from the outside both have their merits.

Get ahead of the train
Once you acquire additional help, your responsibilities as the head of the organization begin to change. Now, you must take on a new role of trainer, mentor, and delegator. Spend the necessary time helping your management staff understand the overall vision of the company. Share your expectations. Mentor them on how you might approach situations they will be challenged with in their roles as managers. Delegate responsibilities to them.

And perhaps this is the most difficult task of all: Allow them to fail. Don’t hover over them – physically or mentally – making them feel like they are being second-guessed. Most managers learn more from their mistakes than they do from their successes.

If your company is a small business growing into a big business, my challenge to you is: Get ahead of the train that’s heading your way. Be proactive in taking a big-business approach to your future.