Why Small Businesses Stop Growing

Jan 3, 2012

In conducting research for our recent book, Let Go to Grow: Why Some Businesses Thrive and Others Fail to Reach Their Potential (Palari Publishing, 2011), we spoke with more than 100 small business owners. We found that what most frequently stalls the growth of small companies are owners who won’t let go.

These leaders are smart people. They have great ideas and exciting visions. They work hard―often harder than their more successful counterparts. They sacrifice continuously, missing time with family and friends. Their hard work has resulted in growing successful businesses. Then, slowly, things start to change. The owners’ work piles up, and some of it just isn’t done. Their capacity is simply exhausted, and the business stalls. Unwittingly, they constrain growth in their own companies.

These leaders can free themselves from this dilemma by letting go of the very things that made the business successful when it was smaller, however counterintuitive as that may feel. They will have to delegate the day-to-day operations to managers. This can be a very scary thing for entrepreneurs because it means giving up a measure of control.

It should be scary, because the only thing worse than not delegating when necessary is delegating before you construct the proper infrastructure. The business can veer off course without the owners knowing it.

Before the owners delegate, they must have three things:

  • The right managers. Delegating before the right people are in place is a recipe for disaster. Now-thriving businesses that we analyzed almost went under when the principals delegated responsibility to a manager who was not able to handle it.
  • Documented processes. It’s not very sexy, and no one will pay a nickel more for your product or service because you have well-documented processes. Even so, once businesses reach the point where the owners cannot be personally involved in every transaction, good process documentation is the best way to communicate to employees exactly how you want things done.
  • Robust metrics. Good metrics enable business owners to know what is going on in the bowels of the business even though they aren’t personally there. For example, tracking the number of late shipments will inform the owners if there is a problem while there is still time to fix things and before customers are lost. Good metrics enable the owners to sleep at night.

Successful delegation is key to continued growth. With this infrastructure in place, the owners can safely let go, and the business can grow.



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