The Scale Up Trap: How SMEs Can Avoid Stagnation by Letting Go
Small and medium-sized enterprises (companies between $2M-$50M in revenue) are the lifeblood of the global economy, contributing significantly to job creation and innovation. Yet, beneath their outward success lies a hidden threat: scattered operational excellence, sometimes because the company is scaling too fast to establish the operating way of the company or the desire to run the company in the same way that made it successful in the first place.
Yet, one thing is true to most things in life… What got you here, won’t necessarily get you there. While most founders and scale-up CEOs understand this, some become so entrenched in daily operations that they lack the time or courage to embrace different approaches. This fear of change can stop growth on its tracks.
Three things fuel the stagnation of SMEs, and three main things can unlock the power of these companies to succeed.
The fuel to stagnation or slower, profitable growth…
Three main things sit behind slow growth for SMEs: Limited time and knowledge to expand operations sustainably, knowledge silos, and everyday operational pains.
Passionate but limited time and knowledge: scaling demands expanding operations sustainably, which requires experience and expertise that founders may not possess or the time that CEOs may not have. This can lead to micromanagement or not enough oversight of important aspects of growth. Both can hinder delegation and decision-making.
Knowledge Silo: Valuable knowledge resides solely with the founding team, creating a single point of failure and impeding information flow, crucial for effective growth.
Scaling Pains: As the business expands, the founders' capacity to handle everything becomes overwhelmed, leading to burnout, missed opportunities, and even business closure.
These issues can be seen not only in small companies that are founder led, typically $1-10M revenue companies. Medium size enterprises and their CEOs experience these very same issues – they are passionate about growing the company but are limited in time or knowledge of how to bring in revenue, profit, and develop a structure that supports both.
Unlocking the power of growth through flexibility and expertise
Scaling comes with some strong complexities, yet it doesn’t have to be daunting. From people related issues, marketing campaigns, communications to the outer world, communications within the company, integrating new IT systems, making processes clear for all employees to follow… there’s a lot to tackle, and all at once. Three things can be tremendously beneficial for Founders and CEOs when dealing with a scale-up operation (these may seem obvious, but as we’ve mentioned in other articles, the common is sometimes not so common): Delegate and get a support system, seek specialized talent, and embrace flexibility.
Bring in the Support System: Don't be afraid to delegate! Hiring a Chief Operating Officer (COO) or experienced manager provides dedicated leadership to streamline operations, freeing up the founder for strategic vision.
Seek Specialized Talent: Look for individuals with proven experience in scaling up companies. These ‘been there, done that’ experts have the scars already and understand what needs to get done to scale. Their expertise in process optimization, team building, and growth strategies can bridge the knowledge gap and propel the business forward. Importantly, don’t be afraid to listen to their recommendations.
Embrace Flexibility: Consider parachute or fractional executives whose expertise and support can be invaluable but without the fixed costs of a full-time employee. This allows for tailored solutions and adaptability to changing needs. The relationship between the leadership can be just a strong with a flexible team member that has the ability to also bring in fresh ideas from many different industries and past clients.
The benefits are undeniable: smoother operations, improved decision-making, and a founder s and CEOs empowered to focus on what they do best - driving the business vision. Letting go isn't easy, but it can be the difference between stagnation and soaring success.
Take Action Today:
Don't let the fear of change hold you back. Embrace the challenge of scaling by leveraging flexible expertise and streamlining operations. Break free from the bottleneck and lead your business to even greater heights.
Remember: You don't have to navigate this journey alone. Numerous resources and experienced professionals are available to guide you on the path to sustainable growth. Take the first step today and unlock the true potential of your SME!