Taking a business beyond the point where the founder can do everything themselves is a common limit for many owners. But putting in place proper processes and trusting others to do their bit could help organisations fulfil their potential, as Peter Crush reveals
Martin Norbury author of the just published business book I Don’t Work Fridays, which offers strategies for SME owners to help them grow, has a rather novel job title – he calls himself a Scalability Coach.
But the reason he does so is deadly serious. “People who start businesses are the worst for actually growing them,” he says. “Far too many businesses I deal with think about tomorrow rather than their real long-term future. In fact, it’s the very qualities entrepreneurs first used to launch their business – being spur-of-the-moment, impulsive and working all hours – that in later years actually prevent them from taking the next step. Growth has to be about process, organisation and delegation of trust to others.”
Mr Norbury is making the point that many small business owners instinctively reach, but often fail to acknowledge – the moment where they need to decide whether to change what they’re doing to take their business to the next level, or carry on as normal, and be satisfied with that.
It’s an issue that Government wants small firms to address, too. According to data from Unlocking UK Productivity 2015, by the Enterprise Research Council and Goldman Sachs, it believes there is huge, latent untapped growth potential – for instance, it estimates 110,000 more SMEs could export if they wanted – and wants business owners to do more. Its goal is often called making the shift from ‘survive to strive’ – but the reason it doesn’t often happen is because many bosses can be described as trying to grow, but failing to plan.
“There are lots of mental barriers at play,” says Mr Norbury. “Entrepreneurs are often control freaks. When they take people on, they find it difficult to accept they’ll do things as well as them. It’s too easy to carry on as they are, because that’s easier than developing skills to manage and grow people.”
In February, FSB published a discussion paper entitled Leading the Way: Boosting Leadership and Management in Small Firms, which found that better leadership is vital for boosting productivity and growth. It cites CMI research showing that only 23 per cent of businesses are ranked ‘good’ or ‘very good’ on leadership and management training. “A minority of small business bosses started their business with formal training and skills in management, and the day-to-day running of a business can be so intense that taking time out to think strategically can be too difficult, even though many business heads know they need to do this,” says Martin McTague, FSB Policy Director. “Even when small firms do hire, often it’s reactionary and ad hoc, reacting to short-term demand, rather than because they’re aligning their recruitment to where they need to be in three years’ time.”
Mr McTague concedes it’s difficult for small firms to hire in anticipation of future work, while Mr Wick says that “one person’s breaking point can also be another’s excitement”. “The feeling that certainly unifies both is fear about employment law ‘red tape’, and the worry of hiring people who turn out not to work, but then not being able to get rid of them,” he adds. “Sometimes it can be better not to risk growth, but carry on as you are.”
But all these reasons, arguably, make it more, not less, important that ‘proper’ business processes – finance, HR and marketing – are set up. Owners can fear doing this because they feel the essence of the business could be lost. But, according to Razia Aziz, Founder of cultural change consultancy the Equality Academy, it’s essential this is taken care of. “Ninety-nine percent of SME bosses are highly motivated, but they don’t set up HR because it feels like red tape. But certainly, by the time they get to about 100 people they need it to provide a blueprint for the future,” she says.
“Growth can’t come without keeping the culture going, and that comes from processes based on good relationships,” adds Ms Aziz. “The trouble is ‘relationships’ doesn’t appear on any risk register. When things get tough – as they invariably will – suppressed bad feelings can become poisonous. Managing the people element is vital.”
At events planning company Dynamic Conferences & Events, the lack of a blueprint was exactly what had kept a successful company ticking along for 20 years. “We were happy growing a little bit every year, but the day-to-day running of a business can be so intense that taking time out to think strategically can be too difficult,” says Chief Executive Malcolm Wallace.
Part of the incentive to take things up a notch was the fact that, by now, two clients were responsible for 50 per cent of the firm’s entire turnover, so that a sudden loss could hit it hard. “We decided to hire a business coach, initially through GrowthAccelerator funding. Now we pay for one ourselves, and it’s the best decision we’ve ever made,” he says.
“Three years ago, we set our first ever business plan, with the aim of reaching £5 million turnover in five years. Thanks to this, we’re up to £2.5millon – up by 25 per cent in the past 18 months – and have appointed a Business Development Manager. We’ll also be hiring two more people. We’ll definitely hit £4 million, and will still target the rest.”
Mr Wallace argues having a business plan has forced him to dedicate specific time, attention and budgets to what he calls “grown-up business functions” such as marketing, where his spend has increased from £5,000 – which was mainly ad hoc – to £70,000 this year. He says he’ll also be hiring a finance director soon, and has changed his role to do more of what he originally began doing – meeting clients.
One useful tool could be a skills audit, says Mr McTague, to help identify where the gaps are in a business’s capabilities that would need to be addressed to ensure growth is possible. “Our discussion paper finds 58 per cent of SMEs have never, or rarely, used a skills audit to see where they are. Doing so, however, can point the way forward.”
The key, he argues, is for leaders to transition to just doing that – leading. “A leader’s job is to set the vision,” he says. “A manager’s job is to set tasks, and look after the operations. Growth is about transitioning from just management to leadership, and bringing the rest of the organisation with you.”
But some organisations may be happy to remain as they are. “Ultimately, small businesses have to ‘want’ to grow,” says Ms Aziz. “It may sound simple, but that has to be the starting point. For some, growth can be a pressure that they don’t want.”
Recruitment start-up Flexiworkforce.com was only set up in 2013 and is still going through rounds of venture capital funding, but Founder Tracey Eker is determined to grow as fast as she can.
“I brought in interns at first to research the market, working on social media, and by August 2014 we received our first £150,000 of funding,” she says. “A year later we got funding of £225,000, which gave me the money to hire a further eight staff.”
“I had to acknowledge I couldn’t do everything,” she says. “My skills aren’t social media, or the technology or customer-facing side. I’ve had to rely on people to do their part of the jigsaw.” In time, she expects her own job to evolve to a behind-the-scenes role, while her core team looks after the day-to-day operations.
It’s not all been plain sailing, she says. “We’ve spent £50,000 on services that haven’t yielded any results, but we’re learning as we go along. My business plan is 60 pages thick.”
Martin Norbury, author of I Don’t Work Fridays, offers his top tips: