How does a business grow?
Shirlaws interviewed over 700 small businesses to discover if there's a path of growth in businesses, and the answer is yes!
All businesses go through predictable stall points – what we’re calling ‘black holes’ because businesses can disappear into them for many years. In the small businesses market, that delay can be pretty catastrophic. Our understanding of these black holes, and what happens in between, has helped clients see why they get stuck and what to do to jump into far bigger growth.
Black hole #1: 80k
The first black hole occurs at 80k, usually when you settle on your first staff member. Given the size of the change, some people decide to stay within the 80k self-employed bracket rather than tip into 80k+ and start building their business. This black hole is the first point at which many businesses end up spiralling round and round... especially if you're in Brighton ;-)
Black hole #2: 750k
750k is the point at which people have typically built up a business to 7 staff, each reporting to the founder. There’s no business leverage without reporting lines, yet this idea often puts the owner into a quandary. ‘I need someone who can sell/manage staff/service clients like me. But I don’t think anyone is else is quite good enough!’
If the ‘someone else’ is good enough, then the owner will have to consider releasing equity. It's another big structural change and not everyone wants to make it. A business can grow quite nicely year-on-year until it hits 750k – only to spiral round this black hole for several years.
Black hole #3: 17m
At 17m a business is moving from an enterprise to a corporatized company, which is another massive shift. Managers in this size of business might consider creating a board with a non-exec director, and implement structural changes to release the founder from day-to-day management. The business will usually develop corporate-styled systems such as diligence, compliance and governance. It also formalises its processes, procedures and documentation.
At 750k the business couldn’t grow further without setting on more people. Now it can’t get bigger without corporatizing.
Where's your business NOW?
Get in touch to discuss your business and how to grow it!
adele.tomasin@shirlawsgroup.com