Author Archives: Brian Methner

Four Stages of Business Owner Growth

If your goal as the founder of a small company is to eventually move from an integral day-to-day worker to the leader and owner, then you will need to grow as a business owner through four stages with your company. The stages are start-up, build-out, run-it, and own-it.

Stage 1: Start-Up

Many owners take a skill, such as a cooking, and start a food truck or restaurant in hope that mastery of a technical skill will translate into a successful business. However, in order to create sustainable long-term growth, the business owner should define the companies business model (value proposition and revenue model), vision for the company, and conduct an analysis of the competitive landscape.

Stage 2: Build-Out

At this stage, you will take the results of the the work from the first stage and align your processes, procedures, and marketing with your business model, vision, and competitive differentiation. Your focus is on processes (systems) and the goal is to build the foundation for a cohesive culture, message, and valuable customer experience.

Stage 3: Run-It

At this stage you will need to start managing others by focusing on the execution of the processes. Your job is to manage and train employees on the ways of your company. You will implement measurements (KPIs) to measure the effectiveness of processes and the financial well-being of the company. These measurements will become the basis for future innovation, growth, and company health. As well, you will need to remain aware of your companies strengths, weaknesses, opportunities, and threats, so you can begin to make top-level decisions about the companies direction.

Stage 4: Own-It

This is the final stage. At this point, I would argue the transition is more about belief and desire. If you have never been the “owner,” then you are developing a new set of skills that will allow you to entrust the daily operations to people you hire to run the company. Your job will require reliance on others. You will need to develop your ability to lead, relate and communicate, and take a big-picture approach.

Unless you are the rare person who already has these stages mastered, you are going to have to put substantial work into yourself and break the dogmas that may be holding your business back. Invest in yourself at each of the four stages of business owner growth and your company will transform into what you always dreamed it could be.

Sometimes Simple is Best

Sometimes it is the simple things that make the biggest impact. I have memories of a few simple rules about business and life that have stuck with me and have far more value than more complex theories that I have long since forgotten. Here are a few of the simple things I remember:

  • make lists – David Allen, Getting Things Done
  • pursue your passion
  • invest in business models not products – Professor Markman, CSU MBA Capstone 2014
  • call the person you have a problem with
  • let things happen
  • question everything
  • invest in yourself
  • make plans
  • it’s the journey
  • if it’s worth doing it’s worth doing now
  • good leaders know how to relate to people

There are many more, but what I find fascinating is how often the simple rules are the one’s that can be relied upon. My advice … keep it simple.

Question Blue Ocean Strategy

Sometimes I just want to question contemporary thinking on business innovation and this is one of those times. My question is why strive for an exception, a Blue Ocean requiring restructuring and risk, when you can just compete within a given reality (current structure and risk)?

For those who are not familiar with a Blue Ocean Strategy it is when you look for a business opportunity where you are creating new demand, decreased costs, and greater value. This is in contrast to a Red Ocean, where you are doing business in a highly competitive environment and your industry is being commoditized.

I think one of the central questions you should ask yourself before you strive to create the mythical Blue Ocean is why? Isn’t a Blue Ocean more like a home run? A grandiose and generally unrealistic idea centered on being a business superstar?

In general, life does not create many superstars and even superstars come and go over time. Why not you just strive to do your best and make adjustments (ex. contract and grow as needed)? I would argue the majority of businesses are better-off focusing on maximizing their given reality and doing the best they can to differentiate themselves from the competition (i.e. act as structuralists).

A Blue Ocean strategy should be used as a way to think outside the box and come-up with new ideas, but may never lead to creating new demand, decreased costs, and greater value. And why does a Blue Ocean Strategy have to accomplish all of these elements? If you use the strategy to push the company to continually improve, then you will likely remain successful and competitive even though you still have to deal with the business cycles of your current environment.

The Blue Ocean is just another tool that may lead you down an imaginary or impossible path (ex. snipe hunt), and, at worst, a waste of resources that increases risk of business failure.

I wrote this post after reading Blue Ocean Strategy  by W. Chan Kim and Renee Mauborgne.

Leadership is Your Next Business Strategy

I was reading Entrepreneur magazine and there was a profile of a business owner of multiple franchises. The owner was asked about keys to successfully operating multiple businesses. His answer was that he had to hire others to be in charge – he had to become the owner and lose some control.

For me, the business owner’s answer perfectly described the moment when an already successful small business owner decides to either maintain control of details and restricts future growth or moves to the next level of leadership and business.

When your business is ready to move to the next level, then leadership is your next business strategy. The next action for a successful small business owner who wants to make it big is to learn to manage and allocates resources to people who can help the owner lead the business.

This post was inspired by the article More Is More in the June 2014 Entrepreneur magazine, in which they profiled the business owner Aziz Hashim who owns 35 franchises and employs 700 people.

 

Why Your Small Business Growth Strategy Won’t Work

I was reading an article on Inc.’s website discussing how small businesses can become big businesses. I take issue with the article, because it advised small businesses to focus on their growth strategy. This misses the mark. If you want to build a big business, then you must innovate a business model before pursuing a growth strategy.

The advice from the article can be summed-up as follows: develop a growth strategy and make sure your risk-reward is favorable. Your business growth strategy will be based on one of the following five options:

  1. Market Penetration: Sell more of what you already provide/produce (ex. baking soda for baking and deodorizing)
  2. Market Development: Sell more to an adjacent market (ex. expand to a new location)
  3. Alternative Channels: Sell your product in a new way (ex. online versus in store)
  4. Product Development: Develop new products for existing customers
  5. New Product for New Customer: Diversify by developing products for new customers (ex. Polaris makes an atv as well as a snowmobile)

So, here is the problem. A small business owner, who wants a big business cannot start the process of creating sustainable growth and expand their company by selling, developing, or diversifying their products. Before any of these growth strategies are in place the business must develop a business model.

The business model will need to include at the very least an appropriately defined value proposition and revenue model. As well, there must be some sort of customer lock-in or barriers to entry. Otherwise, the growth from the above strategies may be very short-lived as competitors quickly mimic and take your customers.

This blog post on small business growth strategy is based on the article How to Develop a Business Growth Strategy by Darren Dahl and his review of Keith McFarland’s book The Breakthrough Company on Inc.com.

Measuring Employee Behavior or Results

How do you know whether to measure the behavior or results when managing an employees performance?

The answer seems simple at first. Measure behavior when you want to reward effort like being on time or doing the right thing for the company or customer. Measure results when the employee is responsible for an outcome, such as drafting a marketing plan.

However, jobs often have tasks that are based both on behavior and results. As well, it is not practical to measure the individual tasks of each employee. In these circumstances you may have a conflict. For example, a manager may have a production goal for a salaried employee (result), but a 50 hour work week requirement (behavior).

If there is a conflict, then the overall priorities of the position should govern. Otherwise, you may have an employee putting the breaks on production in order to meet behavioral expectations, such as “face time.”

The bottom line is to make sure that you are measuring employees behavior or results in alignment with organizational priorities or you may water down both behavior and results.