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How to Overcome 3 Business Barriers

Guest blog by Payscape partner Brian Baker, CPA and CFO at Fusion CPA

Did you realize very few businesses grow beyond $1 million in sales?  Of the 30 million businesses in the United States, 96% have fewer than 10 employees and only about .4% ever pass $10 million in sales. What prevents businesses from exceeding $10 million in sales?  What issues do you need to be aware of and overcome to achieve this success? According to Verne Harnish, Mastering the Rockefeller Habits (a book I recommend for any business owner wishing to achieve high levels of growth for their business) the three barriers to growth are:

  1. The executive team needs to grow as leaders in their abilities to predict and delegate.
  2. The systems and structures need to handle all the complexity of growth.
  3. The ability to navigate the challenging market dynamics that mark arrival in a larger marketplace.

Barrier 1:  The executive team needs to grow as leaders in their abilities to predict and delegate.

The strengths and weaknesses of the organization relate to the cohesiveness of the executive team and their levels of trust, competence, discipline, alignment, and respect.  Two important attributes of an effective leader is their ability to predict and delegate.  In forecasting you need to have a vision that anticipates market changes.  You just need to be able to predict briefly ahead of the market, competition and those that lead.  Regarding the second attribute of leadership, a business owner must be able to delegate in order to grow their business.  This is one of the hardest areas for leaders to get others to perform as good as or better than yourself.  To get to 10 employees, the owner must begin delegating those functions which they are weak at.  As the firm grows from 10 employees to 50 employees there needs to be an added layer of leadership in order for the company to grow.  The success of the company is determined by how well those leaders can train up the next level of leaders to predict and delegate.

Barrier 2: The systems and structures need to handle all the complexities of growth.

In order to grow your business, a company needs to invest in their systems (information technology) and structure (organization and physical) to handle all the communications and complexities to get to the next level.  A common issue with organizations is they throw people at problems and this only frustrates the customers and the employees more because of the lack of structure and systems in the company.

Barrier 3:  The ability to navigate the challenging market dynamics that mark arrival in a larger marketplace.

It’s critical that the organization build an effective marketing function separate from sales in order to keep the business focused on going after the right customers and the most profitable ones.  This function is needed to attract the right talent to keep up with the business growth.  A business may focus on four market dynamic phases (revenue, cash flow, gross margin, and predictable profits) as it goes from a start-up company to a large organization.  

In summary, growing a business is a dynamic process as the leadership team evolves through the different growth stages.  With hard work, you can overcome these barriers to growth and set your company up for success!  

To learn more about how Fusion CPA can help you tackle these barriers, visit them online at fusiontaxes.com.