Why Small Business Stays Small – Part I

I have worked with entrepreneurs that started as a one man shop and went on to build a multi-million dollar business. Each of these entrepreneurs had a dream and a vision of what could be. They put in a lot of thought, planning, preparation and after securing funding (some with bank financing and others with personal credit card loans) launched their business. The early years were always difficult and punctuated with long hours and little pay. With a reasonable degree of execution sales began to grow with profitability not far behind. The long hours finally paid off.

What next?

Entrepreneurs have three choices: grow, stay small or die. Today’s competitive business environment does not allow any business to maintain the status quo over the long term. If the business model is working and achieves a degree of success, it will attract copy cats who will offer a slightly different value proposition and variations on the product or service.

In order to stay competitive, entrepreneurs have to do decide whether or not they want to grow the size of their business or stay small. Lifestyle considerations and a lack of desire to manage dozens of employees may mandate remaining small. Remaining small is not a bad strategy. It often allows a business to provide personalized services and to keep a loyal base of customers.

However, if an entrepreneur elects to grow, a shift in management style needs to emerge before a business can execute on profitable growth. Unfortunately, I have seen dismal failures as small entrepreneurial companies attempt to migrate to a larger business format without making the basic changes necessary to adequately execute on a growth strategy. In making this transition to a larger business format, entrepreneurs often make three critical mistakes.

1. The inability to delegate properly.
2. Hiring the wrong people.
3. A lack of systems to support growth.

A few years ago I was coaching a mid career executive in a launching new business. He was a classic hands-on-manager. He was the production manager for a large manufacturing company. In his corporate career, he was involved in the initial product design through final assembly. When he started his own business he hired talented people and delegated the work but did NOT delegate responsibility. He maintained all decision making authority because his own money was on the line. He was perplexed when good people continually left the company. In a coaching session, I asked about his delegation style and learned he had a Lone Ranger delegation style. He would swoop in and make or approve (and often changing) decisions and then disappear. New employees would think, “Who was that masked man?”

With some help he gradually began to delegate both the work AND the responsibility and then simply got out of the way. The business took off and began to reach its potential.

The inability to adequately delegate decisions and responsibility and then get out of the way is one reason small business stays small.

The next installment – hiring the right people can super charge growth.

Why Small Business Stays Small – Part II

In my blog entry I gave one reason small business stays small. Today, I will share another reason small business stays small.


Why Small Business Stays Small – Part III

In my last blog entry we explored how hiring the wrong people creates a stone wall in growing a business.

Is Your Glass Half Empty or Half Full?

I have five children. They are all different. Two in particular are at opposite ends of the attitude spectrum. My “Half Full” child invariably deals with life’s curve balls with an optimistic point of view. My “Half Empty” child enviably assumes the worst is going to happen.

Over the years, I have learned that it is not what happens to a person that determines success or failure, but rather how a person deals with situations. The following cartoon illustrates how an outside force (in this case, the US Government) can impose a condition (such as a border fence) that is beyond any particular individual’s control. A “glass half empty” person might complain how the fence will inhibit business and how life is unfair. But a “glass half full” person would behave like Raul in the cartoon . . . make lemonade out of lemons.

Is your glass half empty or half full?

If you are considering becoming an entrepreneur and operating your own business, rarely will a day will go by without a curve ball being thrown your way.

Years ago, when I was launching one of my first businesses, a “key” employee abruptly quit. The departure was totally unexpected and very disruptive. I was upset, but instead of moping, I immediately began to search for a replacement. Wonder of wonders, the new hire was twice as good as the guy who quit. I realized the so-called “key” employee had been a crutch. Leaning on him was the path of least resistance, but also the path of least efficiency, since my new employee could get the job done much better and faster.

During my later career as a franchise owner, I observed franchisees become similarly devastated when key employees moved on to other opportunities. I noticed that the time these franchisees spent fretting over their “losses” usually just created further set-backs, as their negative moods spread to the rest of their employees. It is a true statement that an entrepreneur is like alike a meteorologist: A boss’ attitude can affect the “climate” of an entire office.

If you were the “boss,” how would you handle each of the following situations? What effect would your reaction have on the rest of your team?

You are informed that a new customer needs a huge proposal in only three days.
A new ERP system is being installed and your team must learn a completely new software platform.
You have a new supervisor, and in the first meeting, he rubs you the wrong way.

Will your attitude be “half empty” or “half full?” Your answer will largely determine your success as an entrepreneur.

Timing is Everything?

It is often said….timing in life is everything. If you can buy low and sell high, you can retire. The question is, “When is a high the high and when is a low the low.” When to start your own business is all about timing.

A while ago I was talking to a friend who began his career in the banking industry right out of college. He was loyal, hard working, giving 110% of his creativity and soul to his employer. After 10 years with the bank, he had been promoted to upper middle management. His future prospects looked good. He remembers well the day all of that changed.

Rumors were circulating in the office about the possible merger with a competitor bank. The rumors turned out to be well founded. He was downsized. In a few short months, he went from what seemed to be a promising career in banking to an unsettling series of employment interviews with other financial institutions. As he considered his options, he thought of changing careers but opted to stay with what he knew best because he did not want to jeopardize his family’s future on a high-risk lark.

Within a few months, he landed a position at another financial institution. Finally, his life took on a rhythm of normalcy. He immersed himself in his work. His prior experience bore fruit. He rose through the ranks and became well respected among his peers and with upper management. Even though he had been dealt a wild card, he had landed on his feet and life seemed promising once again. Maybe this was all for the best?

Then it happened: déja vu. The rumors of another merger caught him by surprise. Was this the beginning of another nightmare? If there were another merger, would he be downsized again? He prepared himself for the worst.

The merger did take place and yes, my friend was downsized again. Being somewhat more reflective this time around, he seriously thought of exploring other alternatives. He even toyed with the idea becoming an entrepreneur. Yet, in the end, he decided to go with what he knew best. He accepted another position in the banking industry. This position was nothing to write home about, but it put bread on the table. The position had a more impressive title, except that it was with a small regional bank. Within two years this bank was swallowed up too. Now he had been jilted three times, he figured it was time to do something different. He was not going to take this anymore.

This “three times and out” experience may seem unusual, but it is not. There are many people who after decades of loyal, hard work find themselves on the outside looking in. Some of them are exploring what it would be like to take charge of their futures and control their own destinies.

Is it time to take control of your life and be proactive in charting your own course in life or are you going to wait for life to deal the cards? Is it time to start at least thinking about what else is out there? Is the time to consider being an entrepreneur? Yes, timing in life can be everything. Is it time?

So you want to go into your own business?

The other day I was talking to a friend who had been in the accounting profession for over 20 years. He was tired of the same old thing year after year. He wanted to do something new and different. Our discussion revolved around what kind of business he wanted buy or start. I told him whatever he decided on, it will be more exciting, more frustrating, more time consuming and more hard work than he ever anticipated.

What Kind of Business?

Everyone thinking about owning their own business inevitably will need to determine just what kind of business is right for them. I recently returned from an International Franchise Association Convention, whose membership consists of thousands of franchise companies and their franchisees.

At the convention, I had several conversations that dealt with starting a franchise business. I shared share my experience and answered questions from people who were considering a new business venture or who had just embarked on one. I especially remember my conversation with a woman executive at a national American company. She is thinking of becoming a franchisee in the senior care industry. She wanted to be in a business that served older people. When we were talking, I suggested to her: “Let me tell you the realities of going into business for yourself, the good, the bad, and the ugly. You’ve got to ask yourself – what business am I really in before you make a decision to buy or start a business? If you are considering senior care, just be aware you are not really of caring for senior. You will really be in the business of training, motivating, and managing minimum wage workers.” She looked surprised but gave serious reflection on this fact.

In any business, there’s always the question of what business you are really in:

> Are you an owner/operator where you and your employees work shoulder to shoulder and do all of the work yourselves – in essences a personal services business?
> Are you really in the recruiting and training of minimum wage employees business (similar to the senior care business mentioned above)?
> Do you have a bricks and mortar business where the brand or location drives people in the door and all you have to do is manage the business coming in the door so you will not need additional marketing skills? Or, is your business the type that you have to get and out and meet and greet? If so, do you have the skills to do this?
> Do you have a marketing oriented company where your advertising campaign is the business?

These are only a few of the questions you will want to ask yourself about any business you are considering. Knowing what business you are really in is often more important than the products or services you sell.

Journey to Entrepreneurship

If you are thinking of starting a small to mid-sized businesses, or if you are already operating one, this blog will provide you an invaluable arsenal of tools and information. This blog will help you implement the practices critical to entrepreneurial success, while identifying those practices to avoid.

The concepts I will share are based not only on academic principles, but on my own and others’ real life experiences. Notwithstanding that statement, I find this cartoon so insightful


Many people wish to venture beyond their existing worlds only to be blind-sided by unexpected events. It is a truism that today’s business climate is changing at an ever-increasing rate. This fast-paced business environment creates both problems and opportunities. These problems contribute to the high rate of new business failures. If you are an individual pursing the American Dream of owning your own business, you can increase the success of any business venture by anticipating potential pitfalls, while at the same time taking advantage of the opportunities that accompany the pitfalls. Being in a position to both capitalize on opportunities and simultaneously handle day-to-day problems is what this blog is all about.

Thinking about your current employment situation raises questions to ask yourself. Should you cling to the security of a weekly paycheck or venture out and become an entrepreneur? Maybe you are driven by financial necessity to plunge back into the job market one more time, but nevertheless curious to know what the business start-up landscape looks like? Maybe you’ve always wanted to own your own business or expand a hobby or skill into something that will earn you a decent living. Should you leave the safe shelter of being an employee? You don’t want to end up feeling like you have leaped into the unknown, only to crash on the rocks below. These are only a few of the questions you will want to ask yourself before leaving the safe and secure world or being an employee.

To me, starting a business is like embarking on a journey. A journey in a car requires a map, a plan, a route, suit cases and a time line. On the entrepreneurial journey, you need strategies, plans, financing, technologies, employees, and a general idea of the terrain. Yet there will always be surprises. Just as in real-life explorations, you have to prepare for unforeseen eventualities. Bookmark the Journey to Entrepreneurship, and you will discover a new and exciting world.