A High Potential for Failure!

Busting $10 million —The Need For Changing Culture

As a management consultant to small companies for more years than I care to remember, I can safely say that the majority of my clients wanted break the $10 million revenue barrier. This applied to start-ups as well as ongoing businesses and from high-tech too low-tech and service companies. Many wanted but few succeeded. The basic reason for failure lied in the culture of the company and the reluctance to change therefore the blame is usually lying squarely on the founder, the owner, or the president. A good example is when a one-dimension (engineer, finance) founder forms a company. What can they teach members of the staff who are finance engineers, sales, marketing, quality and manufacturing if needed?

Their inability to see ahead and plan accordingly is one glaring weakness in their experience. To make matters worse, there is a reluctance from the top to change old habits and add new people who been where they want to go. In fact, at this level of maturity many founders and presidents are reluctant to hire people better than themselves. This shortsighted perspective prevents the highest level of management from seeing, as the saying goes, “outside their box.”

The result: the culture becomes so inbred anyone trying to change or neutralize it eventually gives up in frustration and accepts or departs.

Success can be Relative

It isn’t necessary to bust $10 million to be successful. I have encountered clients who are successful doing less than $5 million in revenue; they were embarrassed to show me how big their bank accounts were. There have been situations where I have challenged presidents, “Why not continue to operate at the present level since you are taking more money home every year than you can spend.”

Invariably they claimed a desire to grow and play a bigger part in the market, perhaps an answer rooted in ego rather than financial objectives.

  1. P. Moore’s excellent book, Crossing the Chasm, though directed to taking products to successful markets can also be used as a model for understanding a company culture needed at different levels. Many small companies cannot get across the chasm even when they do try to build bridges. Up to certain level, this is where many companies’ stumble mistaking selling to early adopters and believing this is what lays ahead in the normal market. It is hard for a president to control all aspects of the business as it grows including customer selection and pricing, since he or she is operating at first in such a small niche. They have a dangerous assumption that they understand the big market. However, there are many obstacles that need to be overcome before the “Busting 10 million cultures can be achieved when the most important is related to marketing.”

The biggest, most challenging obstacle for company leadership is developing a level of trust among staff members that enables them to be decision-makers. It is no longer sufficient for middle management to be a rubber stamp for the President or CEO. To effectively change in today’s economy, they need give authority along with their responsibilities.

But trust is needed in both directions and it starts with credibility. Credibility can occur if the staff sees change in operating procedures, processes and in marketing. Trust won’t follow if change isn’t seen in the way of research, market savvy, cost controls, feedback, and the base infrastructure to face the new challenge, all driven by marketing.

To increase revenue broader market segments must be engaged. Entering a more competitive market necessitates shorter competitive lead times that force shorter delivery and better features than the competition.

Competition also puts downward pressure on traditional pricing for to be competitive and must be changed. Unfortunately, at this point the accounting department is usually more concerned with cash and tax management and with accounting procedures and financial controls. Today companies must have a good understanding of costs and be agile. Marketing will drive this change.

However, there are many obstacles that need to be overcome before the “Busting 10 million cultures can be achieved and the most important is related to marketing.

The move to a marketing mentality is a must for the growth needed. For growth some do it by learning as they go, slowly lowering the learning curve by trial and error. Others accelerate the process by adding talent and experience to facilitate the change more quickly. Unfortunately, the vast majority were reluctant to make the switch and failed to bust through the elusive $10 million

Growth? -Check Your Culture!

Busting $10 Million—The Need for Changing Culture- Ten million dollars is symbolic of the approximate revenue level that a company needs to achieve in order to make a major change in its culture so it can bust through that barrier and to continue its growth.

Looking Ahead, here are many of the changes that need to be made to “Bust $10 Million” 

  • Hiring people who are challenged by the situation
  • Hiring subordinates than can be better than their bosses
  • Trusting subordinates by giving them equal authority to go along with additional responsibility
  • Having new products in addition to the original entry
  • Making people accountable for their performance
  • Using outside help to supplement the weaknesses in the company and people
  • Introducing planning discipline to the method of operating
  • Adding the capability for cash management
  • Paying people fairly
  • Increasing the emphasis on processes, methods, and procedures
  • Adding a program to allow all the people to share in the rewards
  • Making sure the company is compliant with local, state, and federal laws
  • Defining a vision and mission, and making those clear to everyone in the company
  • Creating a challenging environment to attract and keep talented personnel
  • Form and listen to an independent Board of Directors and an Advisory Board, if it if is necessary
  • Understanding the importance of priorities, review them often, and reorder as necessary
  • Improving communications by letting the staff know the leader’s strategy
  • Empowering the staff by allowing them to communicate their approach to achieving the strategy
  • Form and listen to an independent Board of Directors and an Advisory Board, if needed with outside ideas
  • Being aware of the changing demographics and the changing culture of the market like the impact of on line services and the Social Media
  • Spread the ownership to key personal

Check out my books on management that were directed to the staff of small growing companies to help Bust $10 million in revenue.

You can find them on Amazon.com or buy from my garage.

Some titles:

Marketeer or Pied Piper, Salesman or Con Artist

The Anatomy of a Growing Company

As you can see Growth is dependent on the ability to change.

For the record I worked with the senior managements in 75-100 small business companies and upward to 100 start-ups, as an angel investor and students at colleges that have an entrepreneurship in their curriculum.