Business Won’t Grow? Are You The Problem?
By Jayme Broudy, Contractor’s Business School
Dear Jayme:
My business grew steadily to about $1.3 million and then things got weird. When I tried to keep growing, the business would increase somewhat but then fall back to around the $1.3 million level. This happened a couple of times. The market is out there, but there just seems to be too much for me to handle when the business gets bigger. Am I stuck here forever?
- Josh
Dear Josh:
First of all, building a profitable $1.3 million business is nothing to sneeze at, so you’re doing something right. Here’s what’s probably happening to limit your growth:
Repeatedly growing and then slipping back is a sign that you’re too personally involved in one or more of your business’s key operations. It means that at some point (around $1.3 million in your case) there begin to be too many balls for you to juggle and/or not enough hours in the day, and things start to fall apart. The business (and you) automatically adjusts back down to where you can handle everything and the balls are manageable, but you feel stuck.
Let’s suppose Marcel owns a plumbing supply store that depends on him for one or more key day-to-day functions and he’s currently working about 50 hours a week. Then he opens a second store across town that also depends on him in the same ways. What’s going to happen? Marcel will pull it off for a while, running between the stores and working more hours, but he’ll be killing himself and the performance at both stores will suffer. After a few months of this Marcel will throw in the towel, shut the second store, and go back to a one-store operation.
Bottom line: the business is too dependent on you for day to day operations and you’re the reason that the growth can’t happen.
Up to about $1 million contractors can get by on their trade skills, intelligence, and energy. Things can be managed in your head and you can keep an eye on everything yourself. Beyond $1 million, however, the world changes. The owner must transform from being not only an expert tradesperson to being a true business manager, and this requires a completely different set of skills that most contractors didn’t have a chance to develop.
Effective owners need skills like delegation, monitoring & control, strategic thinking & planning, systems development, role modeling, human resource techniques, communication, and financial management. You didn’t just pick up your trade expertise by chance, and you won’t develop these management skills without some conscious effort and practice. They’re no harder than the skills you already have, they’re just different.
Once Marcel uses these skills to create a standalone business that doesn’t depend on him for day-to-day operations, the limit to growth is gone. The second store (and the third, fourth and fifth) are relatively easy to establish. It doesn’t mean that growth doesn’t require effort, but it means that the stone wall that made growth impossible is gone.
Once upon a time you started with just yourself and maybe a partner. Then you hired an employee or two and transformed from lone wolf to a real (though probably seat of the pants) business. Now it’s time for another bit of change: transforming yourself into a skilled business manager and your business into a true stand-alone enterprise that isn’t limited by your own time and personal involvement.
My best,
Jayme
Jayme Broudy is the founder and principal of Contractor’s Business School® - a coaching, training and consulting firm specializing in helping contractors produce more profit in less time. Since 1993, Jayme has worked with hundreds of contractors in many specialty areas to build successful stand-alone businesses. Visit www.contractorsbusinessschool.com/assessment to complete a free Business Analysis, or call (800) 527-7545 to get the FREE CD "10 Key Strategies to Build a Business that Works."
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