Making the move from a small company to a larger company is often difficult. Owners go from being elbow deep in the everyday work to having to delegate more and more of the things they used to do to others. Here are a few lessons learned about this process.
When a company has a handful of employees, any decision that the owner makes takes into consideration not only how it will affect him, and the business, but also Tom, Joe, Harriet, Tony and Beth, the employees. He knows the entire business, the products, the vendors, the customers and the employees. Decisions matter to the owner of a small business.
Once the business grows, and managers, accountants, personnel specialists and salespeople are hired, the owner must take on other tasks and delegate many of his original tasks to others. It is very easy to lose touch with the business and become focused on just how a decision will affect the owner.
In a large business, it is easier to make a large mistake. Owners can become focused on their goals and needs and forget that their business is no longer just them but is the sum of their employees, customers and vendors as well. The owner would never have willingly tossed Tom, Joe, Harriet, Tony and Beth aside, but many of those other 195 employees are just a name. It becomes easy to forget how the business got to be large.
Another mistake often made in the transition from a small to a large business is the unwillingness of the owner to give up control, to delegate.
I once sat in a meeting with all the upper management of a newly large company. The owners had paid a corporate culture consultant $10,000 to work us through the changes from a paternalistic style of management to a consultative style more suited to the company’s new size. The owners told us they were eager to surrender much of their duties and responsibilities. In return, we openly expressed the idea that we felt they could take a three or six month vacation without worrying about the business.
Within three years of that meeting, the owners had dismissed or forced out every manager that was present. The management team that was in place at the peak of the company’s success after a dozen long years was gone. The owners continued to make all the decisions. And, by themselves, all the mistakes. The business began to fall backwards because the managers that made it possible to be a large business were gone.
Many business owners take on that challenge for the challenge. Becoming a large business not only means that they are a success, but that they no longer have a mountain to climb or a new world to conquer. This is the point where business owners may take the company in an entirely new direction, surrendering the products and services, the employee expertise, that made them successful to begin with.
Few businesses, large or small, can survive an abrupt change in direction. The owners may, because the challenge is what they thrive on. The business will not, and it will take with it an investment of time, money and lives that cannot be replaced.
I have spent over thirty years in the business world. Nearly 25 years has been as the senior accounting manager, CFO, Controller, Business Manager, for a number of firms. These are some of the lessons I have learned as businesses I worked in or worked with grew and prospered, or suffered setbacks and losses.