Why don’t small businesses become large businesses?

We are a country of small to medium sized business which is the strength of our economy. Of all people employed, 36.7% of them work for small sized companies and 11.7% work for medium sized companies. Only 36.9% work for companies that are already large.

Why do so few of these small and medium sized organisations not make it to be large? Surely some of them should be able to grow and become a major corporate or at least of a significant size? Yes there are some, the most famous ones are Richard Branson with Virgin and Anita Roddick with Body Shop. However, the number is low.

Money is probably a significant reason in many cases. The finance needed is, for many, a hurdle that is difficult to overcome even with the range of finance organisations in place to provide the support.

One of the significant reasons for the lack of growth is the person leading the organisation. Think of the person who set up his or her business. They are often experts in a particular skill or have a specific knowledge that enables them to develop a product or service. However, that very ability is often the reason for the inability to grow the business above a certain level.

The ability to step away from being ‘in’ the business to working ‘on’ the business, is a big step that few can manage. It requires a new level of courage.

 The courage to let go and allow others to do things that they once did  The courage to think bigger  The courage to stop managing the day to day and start leading  The courage to stop doing what they have been doing and try something different.

Many are under the impression that their ability to get the business to this level is what will also ensure that they can take it to the next level. The truth is that the skills needed to set up a business are not the same skills as what is needed to grow the business. In many cases the skills needed to set up the business are the very skills that hold the business back from growing.

We only need to look at what is happening in many schools. Teachers become teachers because they like teaching. They don’t become teachers to run a business. If they wanted to manage they would have gone to management school or do an BA rather than a teaching degree.

Most professions are limited by this issue. Doctors become doctors to heal people, lawyers become lawyers to practice law, etc. In most cases none of these people want to run a business. Many appoint a Practice Manager to run the business side of their operation so that they can concentrate on what they do best.

So what is the ingredient that is needed?

In simple terms it is the ability to recognise that being a leader is completely different to managing or having a particular skill. Leaders recognise that their job is to get the most out of others rather than trying to do it themselves.

Managers see people as a necessary evil that they endure and wish that people would just do as they are told.

A manager is a managing ‘things’. They generally has a specific skill or knowledge and so is good at what they do and manages resources (of which people are seen as one) and implements systems to achieve what they want to achieve. So a chef will manage the way the kitchen is run, makes sure that things are done in a particular way, produce is of a certain standard and food is prepared in a way that they believe is just right. The restaurant owner makes sure that the they have the right Chef with the right staff to support the Chef. The owner is making sure that all the components are working in harmony so that they get the best result for the restaurant. The owner is a leader.

The owner may also manage a section of the restaurant, but they will know the difference between managing a department and leading a business.

Leadership is about getting the best out of people or making sure the right people are in the right place and all facing the same direction. The Leader is setting the tone for the business. The Leader is defining the culture of the business and ensuring that people know what is expected of them. The leader is making sure that all the players are going in the same direction. It requires managing expectations of both people and customers. It is about being hands off rather than hands on in many cases.

When starting a business from scratch it requires being hands on. It is about knowing everything and in most cases being able to do just about everything in the business.

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