Businesses often have a life cycle similar to people. Starting up is like infancy. Clean slate. Innocent. Impressionable. Learning rapidly but not accomplishing much. Lots of messes.
Thank goodness the mortality rate is much lower in humans than startups!
If a business survives infancy and makes to toddler, it starts moving forward, albeit a bit shakily. Through the tween years growth is slow and steady. It still has some innocence without full exposure to the big bad world.
The inflection point where sales start to take off is like hitting puberty. It’s a time of rapid growth, rapid change, and a lot of uncertainty. In those teenage years it can get away with being a bit wild and crazy. It can do dumb things because it doesn't know any better. It defies conventional wisdom. It can focus on the fun stuff and sluff the boring stuff.
Growing sales like crazy is fun. Putting systems and processes in place is not fun.
In business, the teenage stage is a good thing. There won’t be much of an exciting business without that period of wild and crazy growth.
However, if the business wants to make it in the world, it eventually has to grow up. It needs systems and processes to catch up to the growth.
Otherwise, the business may implode on itself. At the very least, the business will struggle to continue its growth trajectory.
It’s a common theme in any businesses I look at. The entrepreneur is focused on growing sales and doesn’t want to be bothered with the boring details. He will use minimal processes to get the job done, but will hesitate to make the investment of time, money, and attention to put robust systems in place.
But how do you know when it’s time to get serious? Here are some signs to watch for:
Waste becomes painful. When you’re small, mistakes don’t cost very much and are easy to catch and fix. A mistaken shipment, some missing inventory, or a billing discrepancy might not be a big deal when you’re selling $1000 per month. Waste is compounded when you’re selling $1 million per month.
Customers satisfaction drops. A small number of customers are easy to keep happy. You can personally make sure 10 customers are all well taken care of. It takes good systems to keep 1000 customers happy.
Employee satisfaction drops. This is similar to customers. When the team is small, you hire and work closely with each team member. You need good systems to maintain employee satisfaction when the team grows too big for you to personally manage.
You don’t know what’s going on. When you first start up, you know everything about everything going on in the business. You know about every order. You are involved in every new hire. You know what customers are complaining about. As you grow, you can’t and shouldn’t know everything. You need good systems to be confident everything is going okay.
Now you know it’s time to grow up, but what do you do about it?
Stay tuned to find out in my next post!
Question: How do you know when it’s time for your business to grow up?