Posted: June 9, 2017 by Robert Craven
The reason why young small businesses do so well is that they adopt the “We Try Harder (and, in reality, pay ourselves less) Model”. As a result, they find willing clients who enjoy the benefits of working with a supplier willing to pay below-market value wages yet work bonkers hours while maxing out credit cards and mortgages in order to “live the dream”. Clients love them.
Slowly but surely the business takes on more staff and the owner realises that the high performance/cheap labour model is not sustainable or scalable. To make matters worse, most of these businesses are dependent on the owner’s unique skillset that isn’t always transferable or not at the right price.
Failing to transfer the secret sauce or building the business around the owner’s unique talents, such a model runs out of puff. Or at least it peaks as a small business. Which is fine if that is the ambition of the owner. But most have fallen for the dream of selling for millions and don’t understand why their early (and unsustainable) growth has stalled.
Some try and grow the business but what they do is run it and/or themselves into the ground. Some settle for their lot. And a minority get what is required and are able to grow the business to the next junction in the road.
The business will not grow unless it has some unique value offer for the client and the business is able to continue to produce this at a competitive price: this requires a full understanding of the marketplace, and how to manage the growing numbers of staff and systems and procedures. And having access to the money. And recognising that what got you here won’t get you there. And having the drive and ambition to keep the flywheel turning.
This is a lot of plates to keep spinning. Few see how the business model has changed or how the business requires different skills from the organisation in order to survive. Never mind thrive.
Most fail. I repeat, most fail.