Most small business owners follow a proven path of success by managing everything in their business. Specifically, they manage sales, marketing, business operations, human resources, and oversee the accounting and finance departments. Why? To keep costs down and maintain control over the business.
Eventually, the business employs 15 to 30 team members as sales increase and the staff grows, but mistakes and inefficiencies are also growing as the owner is becoming overwhelmed by directly overseeing leadership and management of each department. Something has to be done.
Challenges of Turning a Small Business into a Medium Sized Business
During 25 years as a professional accountant and CFO helping businesses grow, I have found that very few small businesses mature to the midsize company level even though they were successful small businesses. I think this often is because the skills of a successful small business owner hinder him/her in developing into a mid size business.
A small business becomes successful because the owner is directly involved with everything. Owner’s control allows the business to become efficient and effective due to central coordination of all critical activities by one person, where delegating processes and procedures to others is not necessary.
The Paradigm Shift
A successful midsize business requires people other than the owner to manage and lead department teams. It’s simply too much work for the owner to directly manage the staff in the business. Success is now a factor of the competency and experience of department team leaders. The owner’s job is to coordinate and lead them. Team leaders typically include a vice president for sales, another executive for operations, and a head of accounting and finance.
Developing the skill set of these new leaders and introducing competent new department leaders and managers into the team is key. Competence in this context means that the new leaders are both knowledgeable and experienced.
Empowering and delegating capable and competent department leaders to grow the business becomes imperative to continuing success.
Adding to the Team
At Nperspective, one of our objectives is to help clients grow a strong business. We specialize in providing a highly experienced and knowledgeable perspective on the strategic and financial leadership of your business. This can be an important addition to in-house accounting staff and an external CPA firm.
Because of our financial skills and experience, we help our clients forecast the future of the business and independently analyze existing operations for profitability. We rank your business products and services for profitability and growth. We work with your staff to understand the requirements and resources they need to grow further, and then analyze these expenditures in terms of profitability, payback, and overall impact on the business’ bottom line and cash flow.
Our CFOs each have over 20 years of experience in growing businesses. As external consultants we offer a high degree of impartiality. We come into each engagement with a fresh perspective on the client’s future and have the independence to be open in assessing what is successful and where the business is challenged.
To reach midsize status requires a new paradigm: The future growth of your business is a function of the team you engage, build and coordinate.
