LIFE CYCLES, Part III
Now that we have a better understanding of the “Me” phase of a business, let’s explore some things owners can do to maximize their company’s and their own performance in this stage, regardless of whether the intention is to grow beyond it.
To organize my suggestions throughout this series, I’ll divide them into the three dynamics of the VMA growth model: Executive, People, and Business. (For more information about this model, click here.)
While all three dynamics are relatively equal in importance throughout the life cycle of a business, the role they play at different times, and thus the emphasis a business owner should place on them, will vary. One of the owner’s jobs is to maintain a relative balance or harmony between the dynamics. When one of them grows at a disproportionate rate compared to the other two, the company will start to experience problems that must be addressed if it is to maintain sustained profitable growth.
A good example is when a company is experiencing uncontrolled sales growth in the Business dynamic. Although it may seem like there’s no downside to this, if the owner can’t get enough people, or the right people, to produce the work and support the rapid growth, or if they aren’t equipped to manage a larger company, the business will likely stall. As mentioned above, an owner’s job then becomes to develop the other dynamics to bring balance to the three.
As we dive deeper, let’s start with the Business Dynamic.
When launching a new business, job number one is sales. A new owner can forecast, plan, organize, or conduct research until the cows come home, but until someone actually sells something, nothing else is going to matter. So, while the owner may not view themselves as a salesperson, at this stage of the business their job includes selling both to customers and also selling people on coming to work for the company.
Once sales are coming in, an owner’s next task becomes managing money. Cash is the life blood of every business, so this is pretty important. It doesn’t have to be complicated, yet it does need to be measured. Producing basic financial reports—P&L, Balance Sheet, and ultimately, a simple Cash Flow Forecast—is critical. The number of companies we’ve worked with who weren’t producing and using these basic financial reports and who continued to struggle year after year is alarming and so unnecessary!
As the business starts to grow and the owner spends less time on the truck, they’ll need to start building rudimentary systems and processes to ensure that their products or services are produced uniformly by everyone in the company. This becomes increasingly important as the business grows beyond the owner’s capacity to personally oversee the quality of the products or services and to manage all the employees.
In the early stages of the “Me” phase, there is usually a heavy emphasis on these technical elements of producing the company’s products and services and the mechanics of actually running the business, especially with new or inexperienced business owners.
In Part IV of this series, we’ll explore how the People and Executive dynamics express themselves in the “Me” phase.
