1Why Companies Hit The Barrier
“My business is really poised to take
off…if only the pain of growth would stop
getting in my way.”
Anyone who has succeeded in business knows that point where the success they enjoyed in the beginning stages of building a company stops working. Double-digit growth stalls while personnel issues climb. Silently the CEO thinks, “My business is good—if only my people were better.” A warning light that something needs to change has just gone off. The midsize1 company has hit a growth barrier.
In our individual careers we witnessed this barrier play out whenever an Emerging Firm attempted to become a Professionally Managed (PM)2 firm. Pushing through it in our own company, we discovered what breaks that barrier.
Coauthor Rosemary saw hints of it while working at KPMG, one of the Big Four international accounting firms. Although many of KPMG’s clients are large institutions, like banks, they also service a number of Emerging Firms. These young companies, less than five years old and typically under $10 million in revenue, are on a fast growth trajectory. Interestingly, they are organized and operate very differently from the well-established businesses typically being audited. As an auditor her job was to determine if these businesses had it in them to grow beyond $10 million. While some did, many did not.3 And that got Rosemary very curious.
She expanded her research to bankers who worked with these small businesses (lending either working capital or assisting in asset purchases). They said they preferred to work with any business over $10 million as they were a “much safer investment” (translate that into more stable and reliable). Business valuation experts recommend anyone wanting to sell their company as an exit strategy should drive their company value past $10 million to have any kind of real return on a sale. It seems there is a definitive before and after $10 million in revenue relating to success.
While our stories measure success in terms of revenue or profit growth (it being the industry standard) the business executives we interviewed said it is the shift in the staff’s perspective that made the real difference for them. They said when their staff aligned to the company why and culture and learned genius thinking, the company became fun. It is what the CEOs and leaders we interviewed for this book are most proud of: their people and the environment which was created as a result of this work. That is the kind of success we wrote this book to inspire.
Rosemary has had the privilege of working at and with some of the finest firms4 San Diego has to offer. When she asked them about their growth experience, they admitted that their companies got stuck—and that breaking $10 million was the key to real business achievement. They confessed that they struggled with letting go of the day-to-day decision-making and with finding the best staff and keeping them motivated. When asked what the problem