The behaviors that make the CEOs of small, entrepreneurial distributors effective – a focus on cash, strong risk aversion, a hands-on management style and, usually, a dislike of change – can become less effective as businesses grow.
If you want to maintain the current size of your business, there's nothing wrong with a "lifestyle" approach to management. But if you want your business to grow beyond your own contributions, you may want to transition to professional management.
Here are three things that can go wrong when you don’t transition your management style as your company grows:
- Decisions take longer to make and are no longer guided by reality if you micromanage your business. As your company grows, it will accumulate a team of increasingly specialized employees who will ultimately understand their areas of responsibility more intimately than you do. And by forcing subordinates to run everything by you, you drag out decision-making, leading to frustrated employees and causing you to miss the boat on opportunities that require swift action.
- Risk and investment are avoided, stifling growth. The strategies that help a new business get off the ground are different than those required for continued growth. If you maintain the same cash-obsessed, risk-averse, reactive mindset that helped you start your business, you probably won’t invest time and resources in endeavors that will yield a return down the road.
- Innovation becomes impossible when you approach decision-making with a "this is the way we've always done it" attitude. When you don’t allow your employees to experiment with new ideas, your business stagnates, making it harder to get ahead of the competition or to adapt to new market challenges.
Mike Marks is managing partner of Indian River Consulting Group and specializes in helping distributors and manufacturers accurately diagnose problems and identify risk-bound alternatives, so they can take their next steps confidently. Call IRCG at 321-956-8617 or visit ircg.com.