Stages in business growth (Part 2)
Just like children, businesses grow through predictable phases. We talked about start life as baby startups, that progress to raging growth companies in our last email. Today we reach adolescence, before settling into a more stable “adult” phase in our next email. Here’s my version of this story focused primarily on B2B service businesses. See if you see any of your own experiences in it.
It turns out that not all of that work that’s coming in is for things that you and your team are good at, it’s not all even things that you enjoy. But the work keeps coming! You are getting referrals, and that’s great. But the work that’s coming in, the work you are doing, wasn’t the work you set out to do! You are working harder and harder, and even hiring more people, but the money you get to keep is still meager. Plus this whole thing seems less fun. Where’s the freedom? When do I get to make my mark?
The whole idea of growth starts to feel questionable. Maybe I should fire everyone and “get small” again! But being small kind of sucked, everything was so precarious. We were one project away from no work all the time…and who’s going to do all this stuff I don’t like to do.
Having a lot of young, flexible, inexperienced folks isn’t working anymore — the business owner becomes a bottleneck! The only way for the business to grow is for the owner to manage more and do more. It’s unsustainable!
This adolescent angst is a critical decision for every business owner. Everything that’s happened so far is telling you that the future looks like a lot more work, with uncertain outcomes and you don’t yet have the money to make doing that work and living with that uncertainty “worth it.”
That’s because becoming an adult business means setting aside some of the childish behaviors you’ve been living with and embracing a whole new identity as a “grown-up” business. What got you to this point in your business’ growth isn’t going to get you past this point, you have to engage in a whole new learning journey.
Embracing stable growth
So if you are in that messy adolescent phase where your business is doing a lot of things that customers are asking for, and you aren’t getting paid well for any of them the road forward is counter-intuitive. For your whole business history to this point, you’ve focused on bringing in as much business as you can. But to grow past this point you have to focus on doing fewer things, but getting paid more for them. In other words, you have to specialize.
Specialization means that instead of relying on word of mouth and referrals to grow, you decide what kind of clients you can help the most. The clients who need your services and who will pay well for the transformation that your services can bring to them, and you focus on finding them and converting them into clients.
Specialization means that you do fewer things. You don’t need to learn a new process for every project; you develop consistent, scalable processes that can accommodate many (similar) clients.
Specialization means you know the value your services create, and you so can charge accordingly.
Specialization means you know the skills that you need your team to have and you can hire seasoned, experience (and expensive) talent who can bring those skills enabling you to let go of more things.
Specialization is the key that unlocks stable growth.
Unfortunately, just as it takes a long time for that pimply-faced pre-teen to evolve into an adult, this transition can take a while. Just as adult-you ends up doing things that pre-teen you would think are gross and boring, your role needs to change to enable this transformation to happen.