We all like to operate in our comfort zone. This refers to business decisions too.
That familiarity and routine provides safety and predictability. Unfortunately, staying put in our comfort zone during periods of growth in our business doesn't do us justice in the end.
Isar is an entrepreneur, investor, business mentor, and an excellent podcast host at "the e-tribe" who pushed me to go deeper into the challenges in scaling a business.
This article is based on an interview with Benjamin Friedman, a founder of Build, Scale, Grow. He helps business owners with their visions. He helps clients put together teams and processes, track metrics, reduce risk, and assist new growth opportunities and exit plans.
Every business owner’s main goal is to have a mature, well-functioning (and profitable!) business. However, there comes to a point when the growth of the company outpaces the skills of the people within the company. This happens at different levels and different sizes of the company.
All businesses go through growing pains at different stages of the company. It happens to brand new startups and even to a larger companies who have decades of experience.
So how can you overcome being the bottleneck? What will be your next step to finally break free from this plateau and scale? This is exactly what we’ll cover today.
7 Critical Questions To Ask When Preparing For Small Business Growth
When talking with Benjamin, he mentioned that he gets a few frequently asked questions when it comes to gearing your company for rapid growth. Let’s get into them!
1. When does a Business Need a CFO or COO? Benjamin sees two scenarios for this question.
In the first one, a young company realizes that once they have proven their concept, they still need to build out a company to support it. Leaders are still going to be heavily engaged in their business model and will be more mindful towards their expertise, their visions around product or service and their vision development. This is when they need to bring in an expert, and this is when Benjamin comes in.
In the second scenario, the founder might be more seasoned when it comes to business growth and realizes that they are spending more than 20% of their time on company matters. Whether it’s hiring, training, building a team, or managing issues and promotions, too much involvement keeps them from being able to think strategically.
We see this a lot when the CEO is spending too much time in their business, instead of on their business. Bringing in someone who can run operations is ideal.
2. How To Identify What’s Stunting Your Business Growth? Benjamin has a couple of ways to look at this one.
First off, you want to Identify your original vision and mission for starting the company in the first place and make sure you’re still aligned. Regardless of how big or small the growth is in your business, in order to lay out your values you need to set both the destination and the guard rails for how you proceed.
Next, you’ll want to observe the daily operations of your company and how it relates to the market. Companies can provide a fantastic product or service but if it’s not compatible to your potential customers today or in the future, you’ll have to change it because this will affect your business market share.
Take Blockbuster vs. Netflix, for example. Netflix was mailing out DVDs to people and blockbuster had brick and mortar stores to rent videos. However, as the times changed, Netflix constantly questioned their product vs. the market.
They saw that people were not visiting big box stores and also switching to streaming services. They pivoted, and that is the reason why the name Netflix is so relevant while Blockbuster is only a distant (but loving) memory.
Another tip here is to analyze your different teams and consider your strengths and which areas to reinforce. Audit resources, team members, expenses, and strategy regularly to identify which pieces are missing or lacking.
PRO TIP – A lot of times, the idea you want to pursue the most is not entirely in your best interest. It might be that it falls in your comfort zone, or you’re stuck on a shiny object and therefore tempted to do something you enjoy versus something you actually need to do.
3. How To Eliminate Business Bottlenecks? Every leader needs to take time and think strategically. Identify where you want your company to be and what is stopping or slowing you down from reaching it. This is often best done with the help of a third-party.
It is important to get opinions from three to five people who are impartial—and ideally familiar in your industry. This is why everyone should have a business mentor they can trust to strategically look out for their best interest and provide them with the best advice.
4. What Type of Support Networks Should You Have? Something that came up in the podcast that really taught me a lot was the difference between challenge network versus support network and how they benefit you as a business owner.
A Support Network: A support network are people who believe in you no matter what. These usually are your family, your friends, relatives, and anyone who will support all the time regardless of your flaws or failures.
The Challenge Network: A challenge network is not the one who always pat you on the back, but instead really push you to challenge yourself, strive for excellence, and more than anything…grow. This network does support you in your long term goals but in the immediate conversation they might be tough on you at first, but only because they have your best interest at heart.
5. How Are Company Mindsets Shifting During COVID-19? COVID-19 helps us focus to meet more intentionally now that everything has moved online. So, it is more important than ever to focus on nurturing those online connections.
Since most interactions are virtual during these times, we are actually able to interact with harder to reach people now that we are all on the same level (and digital) playing field. With that being said, we need to be more focused on the outcome of having a relationship with that person and spend the time to nurture it organically.
6. How Does Hiring An External Person Increase the Chance of Success? If you are hiring a fractional CTO or COO (a part time external executive) you’re really looking to exponentially move forward in your product progress.
This external hire will ultimately focus on two main areas:
Increasing Capacity and Performance: Ideally, we always want to be improving whether that means increasing output, lowering expenses, or optimizing to increase efficiency. This will be one of the main focuses of a fractional leader and can easily be tracked through various metrics.
Reducing Risk: It’s critical to always be looking ahead to avoid any pitfalls the business may fall into. Companies often fail for unexpected reasons such as bringing in the wrong team, not hiring (or firing) fast enough, not recognizing the small business trends as it was going. These responsibilities are much harder to measure yet critical to your success.
In summary, every business should know their numbers. It’s crucial to track and measure metrics clearly and review them regularly.
7. What are the Benefits of Fractional Leadership? Fractional leadership (or fractional leaders) are part-time executives like COO’s and CFO’s who bring perspective and experience and are able to make your ideas come to life exponentially faster.
The idea of fractional leadership really comes through exponential thinking and building companies.
The perfect fit for fractional leadership is a company that is ready to grow, has a proven product or service, and that desperately needs a thought partner who is ready to make things happen.