I’ve noticed from working with lots of small business owners that one of the greatest challenges they face in the development of their business is how to grow beyond $1 million in revenue.
It seems that as they get close to this point, they get stuck and struggle to push beyond it. From my observations there are a number of reasons for this.
Start-ups are typically built upon the blood, sweat and tears of the business owner themselves. They provide the direction, knowledge, skills, motivation, and relationships the business needs.
They also drive and are typically involved in every area of the business from management, sales, fulfilment and collection to aftercare and follow up.
They might hire staff in some of these areas, but the business is very much reliant on the owner. Meanwhile, the owner is consumed with survival, working in the business to keep it going and avoid the dreaded fate of many start-ups that go broke.
It’s this passion, drive and work ethic that pushes the business to its first real challenge point near the $1 million turnover mark.
This critical juncture is when a business needs to grow rapidly or face a period of treading water, followed by eventual decline.
This is generally the point when the capacity of the owner is almost exhausted. They can’t manage any additional business and their passion starts to wane.
Running the business gets harder and the fun goes out of it. The risks become bigger because the owner has to move beyond their immediate sphere of influence and control.
They’ve generally already exhausted all their personal relationships and acquired the early adopters and customers that were easiest to get.
Continuing to operate out of their home, garage or the smallest and cheapest premises they could get with minimal infrastructure, staff and costs won’t enable them to expand the business.
Their start-up sources of cash aren’t sufficient to fund more growth and the tiny measured steps that inched them forward initially, won’t push them to the next level.