It’s Small Business Month, so we thought it would be the perfect time to invite Mark to share a few thoughts on how your small business can grow and flourish, even during a pandemic…
The SME sector in Canada is the engine of our economy. The BDC reports that over 98% of all private companies in Canada have fewer than 100 employees and employ 70% of the entire private sector (learn more here). So, while a few big companies get all the hype, pretty much everyone you know is working for, or owns, a small business.
What I want to focus on here is the 75% of all employers who have 10 or fewer employees and generate less than $1 million in revenue. What is it about those two numbers – 10 employees and $1 million in revenue – that seems to cap the growth of the majority of small businesses?
Lack of ‘Infrastructure’ Investing
As companies start to bump up against that employee count (10) and revenue number ($1 million), the demands on the owner become almost unbearable. She is likely involved in every aspect of the business: selling, operations, hiring, training, keeping the books, etc. What seemed manageable (but an awful lot of work) in the early start-up period of the company has become impossible to accomplish in a 24-hour day now. The only way to get over this hurdle is to invest in what I call ‘infrastructure’ that supports the business. This usually means hiring someone to run the operational side of the company – a general manager or operations manager, for example. That new role will also require some additional investments in software support (financial or HR, maybe) or other tools. I know, it sounds expensive. That’s exactly why this step is usually avoided, and the company’s growth stalls.
Learning to Let Go
Besides the perceived cost, there’s another barrier I see all the time: a company can’t grow if the owner doesn’t give up some control and power. Letting go can be very difficult for a founder-owner. They’ve built the company from the ground up; they know where every dime goes and who does what. The problem is they can only keep track of every detail of what people are doing up to a point. That point is up until they have around 10 employees. (Usually fewer, in fact.) So, if you want to grow your business, you’ll need an operational or management team to support you. And that means you need to make the energetic choice to let go of some control. This will require a significant shift in your mindset.
“Cost” vs. “Investment” Mindset
When I suggest to owners that it’s time to start paying for operational and infrastructure support, the trigger response is often, “Are you kidding? I can’t afford that!” I’m not suggesting you start spending your hard-earned profits irresponsibly. What I am suggesting is that you need to think of these potential spends in terms of investments. If you need to spend $50,000 to hire a manager, what kind of return can you expect on that investment? If turning the day-to-day operations over to someone else frees up your time to go out and sell more of your product or service, search out new markets, find joint-venture partners, or design new products, then you can calculate whether this investment will generate a worthwhile return. But, if you see every dollar that goes the door as an expense – one that needs to be reduced to the bare minimum – then you’ll never put yourself in the growth mindset that you need to get over that elusive $1 million revenue hurdle.
Is growth possible without relinquishing some control, building a support team, and adopting an investment mindset? Maybe, but in 20 years in business, I haven’t seen it happen. I’d love to hear your thoughts on this topic. Please share in the comments.
Mark Fornasiero is the co-founder of ACE Coworking and an independent consultant specializing in growth-and-exit strategies for privately-held enterprises. Mark also provides professional consulting to entrepreneurs looking to launch and operate their own independent coworking spaces.