Businesses in the adolescent stage, between 10 and 50 employees with a turnover of £2 million to £10 million, struggle to grow to maturity. Government data from the Department of Business, Energy and Industrial Strategy shows that a measly 0.002% of growth came from this portion of the business landscape. This is an area that was highlighted by the last Government as one which needed improvement and which could drive our economy onward.
Why, then, do businesses of this size struggle to get out of adolescence. Usually the reasons stated are things like access to funding and availability of top talent. However, these aren’t the route cause of the problem. I’m afraid the problem, Dear Reader, is you.
You are the problem
The problem holding businesses, and other teams looking for high performance, back is their Leader. So, take a long hard look in the mirror and let’s analyse at a major home truth.
When a business starts it is either with a single Entrepreneur or 2, maybe 3, Co-Founders who have complimentary skills. Whilst this period lasts, things go swimmingly. Either the Solopreneur multitasks and does everything from front line sales to packing up the product and sending it out to customers; or the Co-Founders create silos in which they operate and everything gets done. The problem comes when a business employs its first person, for this is when the Founder or Co-Founders start to lose their grip on what is happening.
Generally the first employee comes on board because they add another skill set or will complete a task that the Founder doesn’t enjoy doing. Generally Employee 1 is an expert in their field, someone who can be left to get on with their job. Because Employee 1 is seen as an expert, they have not been set any ground rules for what they do. They have no parameters within which to operate. They have not been told ‘this is how its done here’. As a result, they start to Ad Lib. They make it up as they go along. When they come across a problem that the business has not encountered before, they use their creativity to come up with a solution. Great! However, often it is not. The Boss starts to see that things are being done in a way which she would not have done them. When a creative solution has been devised, the Boss has not sanctioned its process and is uncomfortable with some small part of it.
In short, the Boss goes from Jack-of-all-trades, able to perform all tasks with heroic effort in a way which she has found that worked, to being a Control Freak for which no one can do things the ‘right’ way. So, she stops what she is doing and starts to manage Employee 1 and Employee 2 and 3 and 4…
Now the effort going in to the tasks the Boss should be focusing on, having employed people to handle the other tasks on which the business must run, transfers to managing the processes of the employees. The Boss’s tasks become neglected, or she starts to take them home with her and she works longer and longer hours in order to cope.
This process gets worse and worse the more employees a business takes on. The Founder or Co-Founders spend more of their time managing the processes of employees. It’s not the employees’ fault. They are generally very competent individuals, having been employed for their skills or specialism. They will be carrying out the work as they have previously been taught to do and have done efficiently their whole career. However, they aren’t doing it ‘the way it is done here’ and therein lies the problem.
So, as a business grows from a team of 1 or 2 Founders to a team of 5-10, the ability of the Leader to control the situation diminishes rapidly. The Boss spends his or her day firefighting, struggling to keep the business afloat and making sure that tasks get done they way they want them to. They become the gateway through which all work must be signed off before it goes out of the door. Clearly this is a serious bottleneck and hampers the efficiency with which the business produces its work for customers. It also means that if the Leader isn’t present, work doesn’t get shipped out to customers. They have to be ‘online’ the whole time. They can’t take a day off. Even when they are away, they get bombarded with messages from the team ‘running things past them’. This constant working in the business is not what you started out to do. If this resonates with you and you look at it objectively, you don’t own a business, you own a job…
From this situation there are three scenarios which can take place – 1. The business gets small again, 2. the business goes broke or 3. the business survives. You’ll be surprised to hear that the third scenario is the worst possible outcome. In this scenario the business survives, but YOU won’t. You are keeping the business afloat like a prize fighter. Ducking, weaving, punching and taking body blows trying to stay off the ropes. Then it comes, your breaking point. Like Mike Tyson has said, ‘Everybody has a plan, ’til they get punched in the face’.
Let’s look at those scenarios in more detail –
1. The business gets small again, in other words you start to trim your team to something more manageable. You shrink your business, your revenue and likely your income too. All your hard work to build your business has led you back to where you were.
2. The business goes broke. Hopefully this is self-explanatory. The business simply implodes because running the business and producing its work for customers has become unmanageable.
3. The business survives. You’ll be surprised to hear that this is the worst possible outcome. In this scenario the business survives, but YOU won’t. You are keeping the business afloat like a prize fighter. Ducking, weaving, punching and taking body blows trying to stay off the ropes. Then it comes, your breaking point. Like Mike Tyson has said, ‘Everybody has a plan, ’til they get punched in the face’.
So then, in all three scenarios your business either ceases to exist or stagnates its growth. Here is where the last Government saw there is a problem. Not only do adolescent businesses fail to grow, but NPI data shows that their revenue per employee has decreased almost year on year since 2002. In fact revenue per worker is now 12% lower than in 2002. Think about that. Entrepreneurs, the supposed life blood of the UK economy, are generating less revenue per employee and therefore a smaller share if GDP than 15 years ago.
Get out of your own way
How, then do you get out of your own way in order to grow your business? You need to have a solution which will allow you to work on your business, rather than in it. You need to disassociate yourself from your business and stop being a bottleneck in order for it to grow and survive.
The solution lies in a business model which has endured since its inception in the 1860s. In the five years to 2016, this model was responsible for 20% more growth than businesses with all other types of operating model. As many of you will have guessed, I’m talking about the franchise business model.
Now, bear with me. I know you that those of you wanting to franchise your business will be in the minority. However, there is one very important aspect of the franchise concept that you must adopt if you want your business to achieve sustainable growth – the Franchise Prototype.
The Franchise Prototype is the system which makes the model of UPS, McDonald’s, DisneyWorld, Swarovski, Clarks Shoes and Universal Studios entirely repeatable wherever in the world they are located. It is the repeatable process which makes a franchise model such a success, generate large profits and allowing continued grow.
In order to get out of your own way, you must think of your business as one which you wish to franchise and create a Prototype on which build. It is the process of building an entirely repeatable, almost fool-proof process for doing the work of your business, which will allow you to disassociate yourself so that you can work on it, rather than in it.
Take McDonald’s for example, the greatest franchise ever created. The Prototype formed in 1952, of which an iteration is still alive today, means that each stage of the process for making your burger and fries has been honed and set in stone. The prototype states that the pickles must be placed on the burger in a certain way so that they do not fall on your lap when you take a bite, because a burger that disintegrates is ‘not the way it is done here’. The fries are left for a maximum of 7 minutes in the warming bin, otherwise they are discarded for fear that they go soggy, which would be ’not the way it is done here’. There is a prototype method for everything McDonald’s does from preparing food to mopping the floor. This allows the concept to be repeatable wherever the restaurant is located and keeps customers happy in the process. A concept which can grow.
This goes far beyond just producing an employee handbook for your team to consult when they need to. Your Prototype for business processes must outline to the letter how each member of the team carries out their tasks. Your employees must follow this to the letter as well, in order for your Control Freak tendencies not to surface and you feel the need to manage.
Not only will the Prototype allow you to stop spending time in your business. It will also help with the two oft quoted reasons that businesses struggle to grow – lack of funding and lack of talent. The Prototype will make your business run like clockwork and therefore be less risky for lenders to invest in. It also means that you will not need to employ the most talented or skilful employees as there is a foolproof process to follow, which has the added bonus of reducing costs.
Forming a Franchise Prototype means that you can disassociate yourself from your business so you can do the important work on it, rather than firefight in it.