DILEMMA: My squash partner's business is going great guns. But although margins are high and she's making lots of money, it's getting a bit out of control. She's asked me for some advice. Frankly, I'd die for her problems. After a period of high growth my own business has just fallen off a cliff. What should I say?
ISSUES: 'Welcome to enchantment, gateway to disenchantment' goes one of my favourite cartoon captions. The joy of achieving success is often dwarfed by the anxiety of sustaining it or the challenges of managing a larger organisation. Chaos may also reign when good luck becomes confused with competence or when hubris distances a leader from the real world. So what is going on here?
The first clues will emerge from an examination of exactly what's out of control. Is it product quality, customer service, the numbers, supplier relationships, the top team, herself? Is her finance director up to the job? She should be able to pick the areas where operational excellence has most leverage and where the lack of it is undermining the business. What the company does itself and what is outsourced also needs regular consideration.
Although understanding what is causing the stress is important, it's also worth understanding why the business has done so well. Is it a superior offering, superb marketing or something else? Whatever the advantage, how sustainable is it?
What is the composition and quality of her board and operational team? Change may be necessary. A realistic assessment of the gaps and overlaps in relation to what's required always helps. It could be just a case of more training and development.
How strong a leader is she? Does she have a coach? (It sounds as though you have an influence.) How good are communications across the company? Do people have clear roles and objectives?
Most important is her ambition. What does she want to achieve? Separating her ambitions as an owner and as a manager might be helpful. There's nothing wrong with a 'nice little earner', but she may have a vision for a much bigger business. If she has the potential to grow with it, that's great. If not, the earlier she recognises it the better.
- The business owner must decide what she wants.
- Analyse why the business has done so well and where improvement is required.
- Revisit what the firm does in-house and what is outsourced.
- Consider staff needs and possible training and development.