Has the Growth of Your Small Business Just “Hit a Wall?”
Introduction by David Wagstaff
As part of our series of articles providing stories and insights to entrepreneurs, I met Lonnie through LinkedIn. He first communicated with me about the group early in 2010. When I looked at his LinkedIn profile, his title made me smile. “The Entrepreneur’s Yoda” – Experience That Helps Entrepreneurs & Small Business Owners Grow and Avoid “the Dark Side”.
Star Wars has been around for so long, the original film was the first film I recall I was allowed to see despite the age restrictions. Even for those who didn’t see the original film in 1977, the reference is universal. I love it.
I noticed we also share 29 mutual connections and share a similar background. As I read more about his background, I thought he could help provide some insights for our group.
In this article, Lonnie discusses how to overcome challenges of growth, a topic I also address with some of my clients. I like Lonnie’s approach and the questions he is asking. In addition to his list, in part because my background is a financial business consultant, I would add to his list of questions to answer:
- Have you reviewed your business model? This includes customers you serve, strategic partnerships, products and services offered.
- Have you reviewed your product or service profitability recently?
- Have you reviewed your customer profitability?
- Have you reviewed your financial performance to see if there are places you are leaking revenue or expenses?
Some of my questions are similar to some of Lonnie’s questions but may take a slightly different focus and complement his questions with a financial view.
For example, Lonnie asks “What’s the biggest difference in the company today vs. 5 years ago? As part of my client reviews, I have found expenses that were appropriate 5 or 10 years ago are now wasting income. For example, I had a non-profit client that was paying a very high rate for Worker’s Compensation because they were classified as a home health care provider- a very risky category.
Think about lifting a disabled person from a bathtub to a bed. They were paying about $80,000 a year for Workers Comp insurance. I asked the broker about the expense and he said “it was state regulated and there was nothing we could do to minimize that expense.”
I asked the state for an audit and we found that over the years, the organization had changed from being a home healthcare agency to provide social work in an office environment with risks that amounted to little more than paper cuts.
The rate was reduced from $80,000 a year to $7,000 a year. Better yet, the state allows for a refund of up to three years when they found they have the organization misclassified. That resulted in a refund check of almost $220,000. I hope you enjoy his insights.
Has the Growth of Your Small Business Just “Hit a Wall?”
If it has, know that you’re not alone.
Sustained growth is the single biggest challenge most small business owners face. But the dirty little secret to growth is that the most direct way to achieve it is the one we least want to face.
Change. Change scares us. It challenges us. For many, it’s kind of the last thing you’d want to do… like a root canal or a colonoscopy! Yet, it’s the basis for all growth – personal, professional, and corporate.
You, literally, can’t grow without it, at least not in any sustained way. And most small business owners don’t get that! They keep butting their heads against the same wall and expecting a different result. The status quo is the enemy of growth. So how do you fight this unseen but formidable enemy in your business?
The hardest part is doing an honest assessment as to where you are; what has to change in order for you to grow. Here are some questions to ask yourself (and your team).
They’re indicators of what might be holding you back, keeping your business in the land of the status quo. While they are sure to make you uncomfortable, the answers could and should form a foundation for change…and growth.
Your Strategic Direction/Operations
- What’s the biggest difference in the company today vs. 5 years ago (beyond the obvious, 5 years later)?
Oh, sure you might have some different people, maybe even some different products. But if you’re basically still doing the same things exactly the same way, with little change, that should give you more than pause…maybe a little heartburn.
Now, this doesn’t mean change for change’s sake, but nothing stays still for five years – not companies, not people, not products. At least not if they want to move forward. What’s the single biggest change and how has it impacted (or not) your growth?
- When was the last time you actually had a plan for the business?
Not a budget, not a couple of objectives, but a real executable plan? And if you had/have one, how much of it had input from your team or was/is it just your plan, with little or no outside input?
And if you had one, regardless of its origin, how effective was it and how did you track its execution? And if you haven’t had one, then you pretty much know why you’re at status quo!
- Are customers just a “necessary evil” to the business?
This attitude may emanate from your desk. Has the old saying “familiarity breeds contempt” crept into the business? The message to all employees should be that all customers, regardless of size, are the “crown jewels” of the company, because “they pay our salaries.” Sometimes, we all forget. How would you feel if you were a customer…honestly?
- And when’s the last time you asked your customers – “how’re we doing?”
Rather than relying on what you believe, when have you asked customers, directly, with a survey, some hard questions? For example, “has our promise equaled our delivery?” or “what should we be doing better/why?” or “what’s the single biggest reason why you have or will remain a customer?” And this is something you should do a minimum of once a year.
- Are employees just a “necessary evil” to running the business?
What’s been the turnover over the last several years? How many good people have you had in the company, who didn’t stay very long? How many mediocre people have you had in the company that has been with you a long time (maybe too long)? What kind of programs do you have to grow your people?
- When’s the last time you asked your employees – “how’re we doing?”
Same as with customers, this is about attitude and you drive that bus! Rather than relying on what you believe, have you ever asked employees, directly, with a survey asking some hard questions?
Just as with your customers, you should ask questions such as “has the promise of why you joined the company equaled our delivery?” “do you feel like you’ve grown professionally since you joined us?” or “what should we be doing better/why?” or “what’s the single biggest reason why you will (or not) remain an employee?” Again, as with customers, this should be done, at minimum, on an annual basis.
Your Management Style
- How much do you really want or allow change/how much are you just paying lip service to it?
When’s the last time a member of your team actually disagreed with you or brought you bad news…and kept his/her job? What’s the last management webinar or workshop you attended or the last business book you read that expanded your vistas or ran counter to your long-held views? Are you part of a peer group where you can exchange views with owners like yourself in other industries or vertical markets?
- How much real authority do you allow others in your company?
How many decisions do you still make each day or week, that really should be made by someone you’re paying to make those decisions? How many functions do you still perform that you should have, long ago, hired someone else to do? When you delegate responsibility, do you delegate authority to fulfill that responsibility, along with it?
Change is scary. It disturbs our level of happiness. Makes us have to think and do things differently than, sometimes, we’re comfortable with. And running a small business is no “walk in the park.”
What I’ve tried to do, here, is get you started with some ways to analyze where you are and where you might begin the change process. Because, if you want to grow…you have to change!
“The Entrepreneur’s Yoda” knows these things. He’s been there. May success be with you!
Lonnie L. Sciambi: The Entrepreneur’s Yoda
Lonnie Sciambi is “The Entrepreneur’s Yoda.” He is Managing Director and CEO of Small Business Force, LLC (www.thesmallbusinessforce.com), through which he advises entrepreneurs and small businesses, internationally. Mr. Sciambi is the author of the best-selling book, “Secrets to Entrepreneurial Success.”
He has spent more than thirty years as CEO of both public and private companies. As an entrepreneur, Mr. Sciambi founded, grew and sold two of his own companies He has completed successful turnarounds of eight companies in disparate markets.
As an investment banker, Mr. Sciambi was involved in raising more than $350 million in capital and had primary responsibility for more than three dozen merger and acquisition transactions. As an angel investor, he has invested in more than a dozen small businesses and has been an advisor to several hundred companies.
His background also includes senior management positions with EDS and Citicorp. Mr. Sciambi started his career at IBM. He holds a B.S. degree in Electrical Engineering from Drexel University.
About Lonnie Sciambi.
Website: Small Business Force | Linkedin: @Lonnie Sciambi
Lonnie Sciambi is “The Entrepreneur’s Yoda.” and Managing Director of Small Business Force, LLC through which he advises entrepreneurs and small businesses, internationally. Mr. Sciambi is the author of the best-selling book, “Secrets to Entrepreneurial Success.” He has spent more than thirty years as CEO of both public and private companies.
As an entrepreneur, Mr. Sciambi founded, grew and sold two of his own companies He has completed successful turnarounds of eight companies in disparate markets.
As an investment banker, Mr. Sciambi was involved in raising more than $350 million in capital and had primary responsibility for more than three dozen merger and acquisition transactions. As an angel investor he has invested in more than a dozen small businesses and has been advisor to several hundred companies.