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Why The Big Mistake Is Not Staying Small


17/03/2011

By Robert Craven, MD of The Directors' Centre

Wherever something is wrong," wrote the economist Leopold Kohr, "something is too big."

At a small scale, he observed, things are "flexible, healthy, manageable and delightful, even a baby's ferocious bite". Conversely, at a large scale, things become unstable and easily assume the "proportions of terror". A firework is fun, a cluster bomb is not.” (See article: Ideas For Modern Living from The Guardian).

Many businesses succeed in their early days when their founding entrepreneur is working “at the coal face”. Then he gets tired of that, and grows the business, gets away from...

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...the coal face, and everything starts to stutter. The business does not function as well as it used to. The founding entrepreneur gets disheartened, and casts around for grasses greener, so the business falters further.

So two big mistakes of small companies:

1. Letting the founder stop doing what (s)he does best — and the most common example of that is stopping meeting customers and clients, and stopping providing solutions her/himself for them. Delegation is necessary, but only when you have “cloned” (or trained) other people to be as good. (The problem is that most people don’t know why they are “good with customers”, so don’t know how to identify potential staff or train them)

2. Thinking that success means growing the company. Staying small and profitable may mean more satisfaction, better life-work balance, and a more sustainable (recession proof) business. We are obsessed with growth because of the example the media presents of “successful” people.

Staying small and staying close to the coal face may be the smartest things to do. Getting bigger should not be assumed to be the right strategy for every company.

That creates other problems — like succession and small-scale expansion — and that needs outside help from other people... continued on page two >

 

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