Business Owners Toolbox Blog Discussions and articles to help the small business owner solve the challenges they face as they grow their business.

August 2, 2010

The 3 Barriers to Small Business Growth

Your business is growing and profitable, then BOOM, you hit a speed bump. Or you get stuck in a swamp. What happened? The bigger you grow, the tougher it can be to grow yet larger. I call this the “paradox of small business growth.”

As your company grows, you’re likely to run into three barriers at different stages of growth. Seems to me these are dang near universal!

Barrier #1. You’re a solopreneur, yet you want to grow beyond what you can handle working by yourself. But you get stuck in “the business is moi” trap.

Your growth challenge: Learn how to find good employees, then trust and manage them well.

Barrier #2. It’s you and the crew, but further growth is limited because everybody reports to you, and it’s running you ragged.

Your growth challenge: Learn how to be the CEO and entrust day-to-day operations to your skilled managers.

Barrier #3. You’re a successful, strategic CEO of your growing company, and now it’s time to move on to the next thing—sell, retire, start something else. But you’re so tied to the business, you can’t bear to turn it over to others.

Your growth challenge: Learn to let go.

I’ve been working with owners at all three levels for a lot of years. Here’s what they have in common: They have a management style that has worked very well to get them where they are. But to get to the next level—and they definitely want to get there—they must change what works. “It works, but break it anyway!” And this is very painful.

Many can’t make the leap. They decide to stay the same, and come up with very convincing explanations why further growth is not desirable for them. Alas.

There are straightforward ways to tackle these barriers. Once you see them laid out, you say, “Oh yeah, I could do that. I just need some guidance.”

This fall I’m going to offer a program that addresses each barrier. (You can only be at one barrier at a time.)  I’ll elaborate on each of these barriers in later posts.

In the meantime, I’d love some examples from the Peanut Gallery. If you read one of these and moan, “Ohh, that’s me right there you’re talking about!” let me know your story. Where do you want to go; what’s in your way?

We learn best from each other. You learn to transcend your barriers by seeing how others have done so (or even by watching them be stuck).

July 28, 2009

Solopreneurs and Marketing Budgets

Q: I’m curious if anyone has a rule of thumb on what should be spent annually by solopreneurs on marketing. Would anyone care to share their own marketing expenses? Or percent of revenue?

A: Maria
I’ll bet that not 1 out of 20 of us knows how much we spend on marketing. Three reasons:

1. Our biggest marketing cost is the value of our own time we spend on marketing, and we don’t track that, let alone assign an hourly value, or check the results for the hours we spend.

2. We don’t collect all our marketing expenses under one account called “Marketing.” Instead, we have line items for Professional Services (web design, podcasts, etc.), Advertising (display ads, google ad words), Memberships, Business Meetings, Travel, etc.

3. We don’t create marketing budgets, then track how much money and time we spend, compare budget to actual, and compare effectiveness of different marketing activities (“bang for your buck”).

“A yacht is a hole in the water you throw money into,” we’ve heard people say. I think this is the way most entrepreneurs treat marketing. “If I’ve got some money, spend it on marketing. A free evening? Go to another networking meeting.”

So I’ll be very interested to see if anyone can give a meaningful answer to your question. I hope you can prove me wrong!

August 7, 2008

How do I grow beyond a one-person business?

Filed under: Entrepreneurship — Tags: , — Mike Van Horn @ 1:40 pm

Q: from JD, Consulting engineer (from LinkedIn Q&A)


A: I’ll answer your question with some questions. Use these to help you assess your growth options:


– How easy is it for you to bring in more business? Is there business out there for you to get, assuming you have the time and resources to service it?


– How competitive is your market? If companies don’t work with you, who do they go to instead?


If your answers to these two are positive, then growth is worth pursuing.


– What about your pricing? I often find that sole professionals like you underprice – esp. those who charge by the hour.


– How do you feel about managing others? Some professionals love the work, hate to manage others. Some are control freaks: can’t let go. Others get a charge out of coordinating a team. The latter find it easier to grow.


– How do your customers view you? Are they hiring just you, or are they hiring your company? For you to grow by delegating work to other techs, you must train your customers to do the latter.


– What is your best role in the business? Tech? Business development? President? Set it up so you do what you love doing, and what you do best, and hire people (even part time) to do the other parts. I work with professionals who hire a general manager to run their company, so they can keep doing the tech work they love.


– How much is your time worth? List in a column the things you do in your business, then in the next column how much it would cost you (per hour) to hire someone else to do each task. For example, strategic business development, $250/hr. Tech work, $150. Bookkeeping, $35. Office tasks, $15. If you spend time on the office tasks, then you are overpaying your office assistant by at least $150/hr!


– Can you price high enough to generate the surplus you need to grow your business? Here’s how you can justify hiring employees:

— Tech person. You must be able to bill them out for at least three times what you pay them. (For a subcontractor: two times their pay)

— Admin person. They must free up enough of your time so that you can bill additional work that is AT LEAST three times what you pay them. That’s break even: actually they should free you up to bill many more times what they cost you.

— They free you up to take more time off.


– How much are you willing to invest in your company’s growth? Some are willing to grow only what cash flow will allow. This is slower. Are you confident enough in your prospects to invest, say, $50k in hiring and learning curve time for people who will then make you a lot of money?


– How good are you at hiring excellent people? If you don’t give yourself an A, get some help with this from an HR professional. The biggest barrier to growth for professionals like you is not bringing in good enough people.


Your answers to these questions will point to the best growth strategy for you.


My book, How to Grow Your Business without Driving Yourself Crazy, is about this very question. You can get it from my website


Mike Van Horn



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