I am not clairvoyant, but I can get a quick estimate of the stage of your business based on answers to three simple questions:
- How many hours a week did you work in last year?
- How much has your profit grown in the last three years?
- What percent of your team are A Players?
The answers to these three questions are inextricably linked – the quality of your People is essential to your business profit and your personal work-life balance as a small business owner.
To describe these business growth and health stages, I created a model that I call the People Pyramid.
Stage 1: Fires Chaos & People Drama
When you don’t have a trusted reliable team, you are left to deal with fires, chaos and drama. You and the rest of the team are exhausted dealing with everyday crisis, and feel frustrated rather than productive.
You might have a few Debbie Downers who squelch the whole team, and leave things hanging or a mess that surface later. Good employees are annoyed they have to pick up the slack or deal with someone who doesn’t work as hard or care as much as they do.
Tensions may be high or between co-workers, lowering the team spirit and creating interpersonal drama. The chaos lowers the customer experience and distracts you from pursuing new sales and customers. The focus is on getting through the day, not improving the business.
This creates a vicious cycle that is definitely not the foundation for growth.
Often owners work too many hours, and go home feeling like they didn’t accomplish anything. They feel burnt out and overwhelmed, and think about exiting the business.
Stage 2: A Few Good (Wo)men
At this stage, you have a stable core of long term employees who share your values about how to care for your customers and are good at their day job.
Most people are decent performers but a few don’t seem committed to doing a great job all the time. These lower performers tend to drag down the team, and take a large part of your day assigning and monitoring work is done on time and correctly.
Work flows fairly well and employees are mostly clear about job expectations, although procedures are informal and not written down. New employees struggle in their first few months getting used to how you do things. You have a fair amount of turnover as some of the people you hire leave after 2-3 years, and you are not sure how you can keep the good ones.
To make decisions, staff ask managers questions and get approval for anything they think should be run by the boss. There may be a continual flow of people asking questions and running things by you.
Your days are busy but progress is slow, and you have a wish list of business improvement ideas that you never seem to get started [much less finished].
You would like more free time and you are afraid to leave since issues or problems surface when you take more than a few days off.
Clearly the business is relying on your presence and guidance to function. You have the CEO Syndrome [Chief Everything Officer].
Stage 3: Silos and Soloists
The natural progression for a business is to start to organize around functional areas- sales, operations, customer service, accounting.
This is typically the stage where you have team leaders or managers who now coordinate the daily work in each area. Just like an orchestra, each area head is a soloist- concerned with the work under her section. Sales is concerned with selling more to more customers, operations is concerned with onboarding and servicing the customer, and accounting is counting the beans and controlling the cash.
It is also natural for these soloists to make decisions in a “silo” [a tall structure sitting directly next to another structure, yet not touching or connected.] Sales might promise 7 day turnaround without checking with the team who has to do the work and has a 14 day backlog. Purchasing might find a great deal on supplies and place an order without checking with accounting, and now there is a cash flow issue.
You now become the conductor of the orchestra—making sure that each soloist complements each other’s work and that decisions are made based on the impact on the whole business, not just one area. This requires daily effort on your part, because silos can’t see what is happening outside their walls, and often don’t hear about the impact of their decisions unless it is a crisis.
At this stage, there are often team leaders or manager who now assign and coordinate the work of your employees. These key people now are responsible for the daily monitoring of employees and customer care, and putting out small fires.
Most employees are clear about expectations and you have another layer to assist with performance and attitude issues, so you only need to get involved with serious and persistent People issues.
Now you have time to have informal team meetings to keep people informed and tackle current problems, although you may not stick to a consistent meeting schedule. You and your staff may not know what to talk about and when, and some people find these meetings boring.
You want to grow your revenue but sales may have been flat the last few years.
Your business has a good reputation and sales often comes from referrals and repeat customers. You may have sales people who use the traditional methods of networking, advertising and responding to leads that are generated to convert into customers. You may not have a specific sales pipeline or track sales metrics on a regular basis.
You feel like you are progressing on the business, but may feel like you “pay for it” when you take time off.
Stage 4: Trusted Accountable Team [Ready for Growth]
If you want to grow beyond a few million in revenue or 20 people without imploding, these are the elements you need to for scalable business. (Or if you want your smaller business to be more valuable and less reliant on you.)
This is a business that runs on “autopilot.” Just like an airplane, the captain is setting the course and still there for oversight and monitoring, but the routine work of flying at the same attitude is delegated to the co-pilot and systems.
This is a business that does not revolve around the CEO, who can then focus exclusively on strategic long-term planning and implementation.
This is the highest valued business, since it doesn’t need the expertise or effort of a single person to create value.
Key tasks and results are defined in standard operating procedures and are followed consistently. There is a method in place to review and improve process to eliminate bottlenecks, increase efficiency and delight the customer.
There are “A-players” in every main role and the majority exceed performance expectations. There is an ongoing coaching process in place to give regular performance feedback, and everyone has a training and development action plan. People are engaged, committed and loyal and the culture is positive and values accountability.
Everyone is clear about their responsibility and how they can impact business goals, and have individual metrics and projects with “line of sight” to key business priorities.
The business has a strong brand, and a consistent repeatable process to find leads and turn into customers. Sales is not dependent on a single rainmaker. The sales pipeline is clearly defined and semi-automated, and is reviewed and refined by the sales team in regular meetings.
The business uses dashboards to evaluate key company & individual results weekly and monthly. Business decisions are based on data analysis of past, present and future modeling. Managers meet regularly to evaluate and revise their plans and projects for continual improvement and long-term value creation.
Owners of businesses at this stage spend most of my day doing what they love, and choose how much time they take completely unplugged from the business.