4 Stages of the Small Business People Pyramid

4 Stages of the Small Business People Pyramid

I am not clairvoyant, but I can get a quick estimate of the stage of your business based on answers to three simple questions:

  1. How many hours a week did you work in last year?
  2. How much has your profit grown in the last three years?
  3. 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.

7 Roadblocks to Your Small Business Growth

7 Roadblocks to Your Small Business Growth

Most small business owners wear many hats—service provider, marketer, salesperson, accountant, customer service, and for your team – trainer, project manager and coach.

But the more the business depends on you, the more you are limiting it’s potential .. you can’t do it all well.

In fact, only 8% of businesses grow to over $5 million in revenue.. something happens to most firms and they plateau around the $1-2 million mark.

Actually, not just one thing…

There are 7 main roadblocks to achieving your business potential— a lack of systems in 7 key areas.

  • If your firm lacks these 7 systems, it creates a bottleneck that flattens sales, prevents great customer experiences, and reduces profits.
  • Once you get the key elements right, you can grow smoothly and consistently, with a business on “auto-pilot.”

1. Plan

Roadblock - lack of dashboards measurement

Dashboards

Remember Steven Covey’s habit “Begin with the end in mind”?

There are four main plans to guide your activities and decisions to create the business you desire:

Strategic plan: It is crucial to provide a roadmap to guide your major decisions.

Budget: An annual budget is a planning document, report card, and decision tool.

People Plan: This plan outlines your current and future people roles— and forecasts what additions and changes to roles are needed to support sales growth and new business lines.
It also outlines individual’s work with organization goals (see People and Process below).

Owners plan: Owners, just like every team member, should be in a role that maximizes their strengths. Many owners continue to be the CEO- the Center of Everything Officer. This creates a huge roadblock for growing the business as the owner becomes overworked and overwhelmed.
An owner’s plan considers their current and future desired involvement, and outlines a plan to transition responsibilities to key people over time.

2. Sales plan

Most businesses have a reactive approach to sales—they do a bit of advertising or hire a sales person and then respond to the leads that come in.

Often the owner is heavily involved in all or part of this process. It is typical for a busy owner to be slow to respond to inquiries and provide proposals, and leads can be lost quickly without a tracking system.

There are several roadblocks in such an informal process.

Not only are you losing new sales that you already proposed, but you are also not pursuing qualified ideal prospects to have a consistent flow of new sales opportunities. A third sales area often overlooked is repeat business from current or prior customers—most organizations don’t have a solid process to keep in touch and offer additional services.

If you want to find, attract and cultivate leads into new and repeat customers, the solution is to have a consistent optimized sales process plan that is semi-automated.

3. Process

Process Plan

Define your process

We all have our own way of doing things.

While that is just fine in our personal lives, a business needs to ensure consistency and quality of the product and service we deliver to our customer.

This roadblock is the lack of three little letters: SOP—Standard Operating Procedures. 

Maybe you consider this super-boring, but this is the foundation of growing and scaling your business with few fires and chaos, not more. If you throw gasoline (more sales) on a fire (inconsistent work) you have an explosion.

If you want to grow smoothly, you need SOP’s.

SOP: Two key elements to a streamlined and consistent process are 1) to identify key tasks and results in standard operating procedures – SOP, 2) continually refine those SOP and implement projects to improve your process and delight your customer.

Employee involvement: To best way to process improvement ideas is to actively involve your employees in the process—they are closest to the customer and are more likely to see ways to do things faster, better, and cheaper.

Business success is about delivering an exceptional customer experience– and systems allow you to do this easily as you grow.

4. Rhythm

Your standard operating procedures are enhanced further by creating job responsibility profiles with key performance indicators (KPI) for each employee.

When everyone is clear about their responsibility, how it supports business goals, and how they will be measured, they perform better and are more engaged with their work.

One optimal practice is to create a firm-wide dashboard of key metrics, and then “cascade” the goals and metrics to the specific people responsible. These “report cards” show when company and individual results are on target, allow for quick adjustment in  areas that need attention, and  ensure focus on the main items to achieve this year’s goals.

5. People

Fabulous Team A Players

Fabulous Team A Players

Even with perfectly optimized systems and all the pretty dashboards with your key metrics, you won’t grow with a fabulous team of People, who work together to achieve business goals.

A Players: There is a simple measure to know if you have this—do you have 100% “A-players” in every role?

Virtual bench: When you have qualified candidates on a “virtual bench” (ready to hire as business grows), this allows you to plug in the team you need when you need it, rather than overwhelming your staff and disappointing customers as you reactively scramble to find more teammates.

6. Personal

Personal work life balance ikigai

What is your ikigai?

As the owner, you are both the key to your success AND your biggest roadblock.
If you want your business to run without your daily involvement, you need to:

  1. Build a trusted management team to optimize the business
  2. Delegate to handle the daily operations (no meddling)
  3. Hold them accountable via the goals and dashboards tied to strategy
  4. Focus your efforts on your genius—what you love to do, what provides the greatest long term value for the business

7. Profits

A lack of profits is a huge roadblock to your business success. Low cash flow causes you to make decisions out of scarcity— cheaper labor, old broken equipment, taking on low margin jobs,  not investing in process improvement, and working yourself harder.

When you have the Right Plan, Process and People, the Profits start flowing (I call this the 5 P’s model).

This upward spiral of success finally provides you the security, freedom and funds to step out of the daily “running” of the business, and let you focus on your ideal role and ideal week (and ideal life). 

Discover Which Roadblocks are Limiting Your Small Business

Take our 3 minute quiz to find out how your firm compares to high-growth and high-profit firms.

Blog Author Diana Southall

Article by Diana Southall

About the author: Diana Southall is the creator of the People Plan. She helps owners who want to grow their small business but are too personally involved, and who want to learn how to “run a business” and build a trusted team to handle the day to day.

3 P’s Essential to Maximize Small Business Profits

3 P’s Essential to Maximize Small Business Profits

Most small business owners want two things from their business- a reasonable Profit for all their hard work, and the freedom to enjoy their Personal life (both in the business and outside it).

However, they often neglect the 3 other P’s that will create the Profit and Personal life they want.

To explain this concept, I created a formula:

Plan + Process + People = Profits —> your Personal life

You need to have all 3 P’s in this order:

  1. Planning— What are the Right Things? [the What]
  2. Process— What does Done Right look like? [the How]
  3. People — Do we have the Right People? [the Who]

Without Planning, people don’t know how what they do impacts your goals, so they are busy but not focused.

Without effective Process, you will have wasted effort, headaches and won’t deliver on your promises to customers.

Without the right People, you will be busy dealing with fires and drama, and trapped in daily effort to “manage” your people and customers.

—> You feel overworked, overwhelmed by your wish list of business improvement projects, and you feel guilty working long days instead of spending time with your friends and family.

Once you put the 3 P’s in place at your organization, you can transform into an organization with:

A Plan: when your staff know the “plan” and understand how they impact organizational goals, they work together as a purpose-driven team to improve and grow the business by delighting your customers.

Clear Process: when activities are standardized, clear roles and responsibilities are outlined, and key results are tracked to make informed decisions, this provides “autopilot” systems to run smoothly and scale easily.

Right People: when you have managers who build and coach a team of A-Players, you trust them to run the business and make decisions as you would.

This leads to your ultimate goal as a business owner:

  • The level of Profit (financial security) you desire, and
  • The Personal work-life balance you want … the freedom to do what you want, when you want to do it.

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Discover Which Plan, People and Process elements are Roadblocks in Your Small Business

Take our 3 minute quiz to find out how your firm compares to high-growth and high-profit firms.

Blog Author Diana Southall

Article by Diana Southall

About the author: Diana Southall is the creator of the People Plan. She helps companies that are missing out on opportunities because the owner is personally involved in every sale or client.

5 Week Plan for the Best Year

5 Week Plan for the Best Year

As another calendar year winds down, many organizations are focused on a strong finish to this year and planning for the next one.
Typically this centers on the financial side of the business.

As you do your year-end de-briefing, why don’t you also ask yourself “What did I enjoy this year? Did I make the impact I expected?”

Certainly we are in business for financial rewards, but I suspect you also want the rewards of feeling accomplished, fun, freedom and flexibility.

Even the business owner deserves to have a role they love, a sense of accomplishment and “work life” balance (not a J.O.B.)

So as you plan for your business next year, why not re-imagine your role?
For myself, I outlined a weekly action plan to create by “best year ever.”

Here is the outline, and the next 5 weeks– if you would like to join me and re-define your role next year.

My 30 day plan for my (your) best year ever:

  • Week 1- identify your *“ikigai” – the genius that you bring to the world and that you love to do [see ikigai image above]
  • Week 2 –write up your current “job description” and then create your ideal job profile
  • Week 3—highlight your delegation wish list — and who you can give to now or train for the future
  • Week 4- meet with those “delegatees” and share your ideas for these new duties, if they agree and commit
  • Week 5 – develop quarterly training action plans for the people with delegated items (to prevent your excuses above to keep these activities)
  • Week 6 and beyond— focus and maximize your time- schedule your important work first, build the habits and track your progress, implement weekly huddles and quarterly action plan meetings

 

Resources- Planning (Strategy, Budget, Sales)

Business Planning:

There are several essential planning documents to systematically craft, communicate and implement a roadmap and key results:

  1. One-page strategic plan (5 year)
  2. Annual budget and with annual goals and 3-4 key projects (rocks)
  3. Monthly company dashboard
  4. Sales plan and process

Outside Resources

These links are for resources from several groups that work with high growth organizations.

Documents & Instructions

Articles

How to Set An Annual Budget for Your Business, Inc Magazine

How to Setup a Budget for Your Business, SCORE

Five Steps to Create your One-Page Strategic Plan, Entrepreneur Magazine

To your People success,

-Diana Southall, People Coach and creator of the People Plan™

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Once you have an organization strategy and plan, you can get everyone on the team working to achieve it.
If you are ready to create your own People Plan, learn more about our Toolkit resources.