Advice for business startups who want to grow big: stop acting like business startups.
By Jim Alampi
Entrepreneurial startup companies have long been the foundation of business growth in the United States. Unfortunately, many business startups never reach their desired potential; U.S. Census data shows that out of the country’s roughly 6 million employer firms, only 25% of them made over $1 million in revenue. Not only that, in non-employer companies, which actually account for about three quarters of all U.S. businesses, less than 1% were able to cross the $1 million threshold, according to 2011 non-employer U.S. Census data. Accountability for success or failure lies to a great degree with the founder/CEO and their ability to scale (grow) as the business does.
One of the greatest attributes found in entrepreneurial business startups is the tremendous somewhat chaotic energy of their “can-do” culture. During the initial phase of launching a company, this attitude can be a powerful strength. It gets tricky when your startup is ready to grow, it will begin craving less chaos and more stability. There comes a point when the mentality of business startups becomes dangerous to the future of a company.
Learn To Say NO
I love the passion usually found in fast-growth startups but too often entrepreneurs under-estimate the trauma they cause their growing organizations by frantically chasing every bid and business opportunity. Successful company executives that are trying to grow their business know when to say “No” and they do it quickly. They never waste precious resources chasing “opportunities” that don’t make sense for their business.
When I work with companies that are looking to grow their business to the next level, I try to get them to define their boundaries very early so they can get and stay focused on opportunities that will contribute to their success without stretching them too thin. Saying yes is easy, especially for startups that want to pursue every lead. Saying no is harder, but much more important if you want your startup to become established.
Learn To Delegate
The single most critical leadership skill in growing companies and business startups is delegation. The absence of this skill in the CEO or at the executive team level causes more companies to get “stuck” than any other behavior. In a startup, being a hands-on executive is a useful characteristic, but once the number of people in a company grows, organizational complexity grows too. In order to take your company to the next level of growth, you must become a skillful delegator.
The reason so many executives avoid delegating is because it can feel like a loss of control. Most executives legitimately believe they can do something faster and better than their subordinates. The problem is that as a leader, your job isn’t to do things, but rather to do things through other people. The leader who always wants to be hands-on doing things will ultimately become a roadblock to the rest of his organization, inhibiting growth. By doing rather than delegating, the next level of managers will never become prepared for greater responsibility.
Startup-savvy entrepreneurs often make too many quick-decision errors that impact profitability and reputation. The “seat-of-the-pants” management style that worked well in the early phases of business startups will never sustain itself in an established company. In my experience, only about 1 entrepreneur in 4 is able to recognize, admit and actually modify their leadership style to take a company to the next level of growth. The ones that do it are constantly learning, measuring themselves against other successful CEOs in larger companies, honing their leadership skills, asking peers to assess their performance and holding themselves accountable. The tempered maturity required of a CEO of a $50 million company is a far cry from the “culture of chaos” in a startup.
About the Author
Jim Alampi has spent his career leading companies, from a $325 million auto auction business (NASDAQ: IAAI) to a $1.5 billion chemical distribution business (NYSE: UVX). For the past twelve years he has helped entrepreneurs in the areas of leadership, strategy and execution. He has been a director on 20 Boards and has chaired four of them. He created the proprietary methodology, The Execution Maximizer to help CEOs get from vision to execution and results. Visit http://alampi.com/ to learn more.