How to Grow a Small Business

This is one of the biggest questions there is.

How do I make my business grow, get more followers, referrals, make more money etc?

Please note that this article is in the Theory section and not the How To section. There is a reason. There is not single technical process that will magically make you into Richard Branson. Bummer! But before you get annoyed and leave please consider that every action is preceded by an idea.

There is a thing or 2 I have noticed about the difference between struggling micro-businesses and mega-corporates. You think that it is the money. They have lots and you don't. If you had lots of money to advertise you would buy the island next to Richard's from all your sales. That is looking at the tail and making assumptions about the head of the animal. How did they get this money and position in the first place?

A Cunning Plan

There is a saying that "failing to plan is planning to fail". I find it annoying when people use it as all too often they are not able to offer anything past this well worn catchphrase. The saying contains the truth though.

I have noticed that the greatest difference between small struggling companies and large mega-corporations is in the area of planning. Small companies tend not to plan at all. They stumble into the market and hope to find the "right stuff" that will make them a success. Larger companies plan their intended course and then roll out that plan with methodical actions.

I was told the other day that both Virgin and Microsoft had a board of directors when they were really 1 guy in a flat or garage with no product and no customers. This is real forward thinking. Richard and Bill planned to be successful and they made it. The core difference here is in a fundamental attitude in the business owner's minds. Richard and Bill saw their companies as being entities in their own right that needed guiding as they grew a life of their own. Note that the life belonged to the company and not to the men.

Most small business owners see the business as being themselves. The business has no animating force beyond them. If Dr Frankenstein had put on a bolt-headed costume and walked around then he was simply a guy in a costume not the creator of a new life separate from himself. Dr F put electricity into his monster to make it live - and it turned into an instant teenager!

The sad reality is that most small (and many mid and large too for that matter) businesses are really engaged in ego-managing and ego-marketing. They live on inspiration and hope based solely on their own desires at the time. This can pay off or it can simply flop. The rules on speculation I was taught in YR11 economics class was that 75-80% of all money speculated (gambled) is lost. This is not good odds. Far better to have a plan.

Plan Into Action

Most small businesses will start a website project by sourcing a host and e-commerce cart then start building. Notice that the attention goes straight to the technology and building stage with nothing in-between. This is a lot like a kid finding a hammer and then finding a use for it. The child will move around their environment hammering anything and everything. The odds of a new piece of furniture being built are very poor. The key is in planing and developing a process. Let's find a good use for that hammer:

Identify the Problem - Sitting on the floor to eat dinner is causing Grandmas across the nation pain in the hips. If you can't identify the problem clearly at it's root then there is no possible solution.
Study the Environment - Are there any clear solutions around, fallen logs etc. that solve the problem easily? If so you need to be careful that your table solution is special enough to move people.
Study the People With the Problem - Who will buy the table? Is it Grandma or is it her son or daughter? Is hip pain a bad thing to be solved or a sign of honor? Will local culture see a table as a work of the devil or a pure luxury? This is where you need to tap into the Dream - Reality - Trade Cycle of the people's lives by creating Customer Profiles.
Create a Solution - This solution is in the mind or on paper only. You could simply wade in and start making tables but there will be a lot of costly trial and error. Remember those odds on speculation. You would never build a house without first involving an architect, to save a few dollars. So why build a business or website without similarly planning to make sure the walls will hold up the roof? Why use trial and error when there is a lot of research and skills you can access that will minimize your risk for a price lower than you will lose on false starts?
Plan the Actions that need to be taken - For your table to get built to plan you need to gather the resources: lumber, nails, craftsmen, shops, local shaman... oh and yes that hammer.
Act - Now you get to put the plan into action and build the table. The hammer has a clear purpose and will hammer in nails (which is good) but it won't be hammering Grandma and the fish tank (which would be bad). If action turns up unanticipated problems then go back to stage 1 of identifying the problem and work forward from there.
Solution - Yes if you follow your plan rationally and avoid ego-managing and ego-marketing then you will be on the right side of the odds of business growing success.

Governance

OK, so governance is a boring word. Who wants someone constantly looking over their shoulder telling them what to do? Not me. That is the ego-answer. The real question is: Do you want your business to grow? Yes of course or you wouldn't be reading this long article with no pictures (because they would be irrelevant). If you run your company with ego-management and ego-marketing then the odds are against you. If you had a 3rd party who was invested in the decisions made but wasn't 100% part of the business then surely that person would call you out when you made questionable decisions. They would want to be sure their investment was going to grow and not fall in the dust. Sounds like a pain. Ego-answer again. Sounds like rational common sense and good judgment if your real aim is to grow your business.

This is exactly what a Board of Directors is about. The members of the board are literally a sounding board for all decisions to ensure that they are rational in and in the best interests of the business entity and not merely one or 2 of the owners. At times this will be a pain (and can fail) but if it helps the business to grow then it is absolutely the right decision to make as it is in line with the desire to have the business grow and make you more money. I owe this 2nd insight to Carl Bates of Sirdar.

Carl will advise (wisely) that a Board of Directors is the only real way to go. If for some reason you can't see your way to establishing a board who can hold you accountable then the 2nd option (and way 2nd at that) is to have paid advisers who you allow to really question you on your motives and actions. There are many business advisers and consultants who will claim to offer this service but be careful as many of them just want to get paid tomorrow so they will let you do things they wouldn't do themselves.

Now I notice that every time I speak of planning everyone nods sagely and agrees. It is obvious. Interestingly the next day a I see unplanned action, another website built without a clear and definite purpose. If that is you then please think of this article tomorrow and ask yourself brutally (as if you were an investor with cash to lose on the next throw of your dice) if you are really planning your next project before you start building it or are you building and then drawing a map of the monster after the fact and saying it is your plan?

Happy planning and growing.

A Planning Tool

Demystifying Six Sigma - Alan Larson

Drawn from Motorola's Continuous Improvement Program. A very simple read on planning and implementing programs. Aimed at larger businesses but just as applicable to small business as well.