Knowing just when to hand details to others is a fine art
Jose Bloch is an entrepreneur who dislikes letting go of the day-to-day details of his business. Like other entrepreneur clients of his small-business consulting company, Kendall Square Associates in Cambridge, Mass., Mr. Bloch would rather keep in touch with all the details of running the firm.Skip to next paragraph
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But -- echoing the experience of many of his clients -- the rapid growth of Bloch's business makes this impossible.
This is common among entrepreneurs, says Lee Johnston, professor at the Colgate Darden Graduate School of Business Administration, University of Virginia in Charlottesville.
An entrepreneur's attention to detail is very important in the start-up phase. But as his business reaches a certain size, he often runs out of skills and runs out of time, Mr. Johnston adds.
Eventually an entrepreneur reaches a point where he has to delegate if he wants the business to keep growing. He usually doesn't have all the skills -- in marketing, finance, and other areas -- needed to manage the business and make it grow.
So Bloch has learned to delegate. It's tough letting go of a task to watch someone else do it differently than you would have, he says. But to help himself let go, he has learned to enjoy encouraging his people to stretch into new and more complex career roles.
In his role as adviser to other small businesses, a large part of which are minority owned, Bloch points to several areas of concern that beset fast-growing companies.
``One is the relationships with the people,'' he says. When you are small, it's very easy to accommodate individuals. But when you get larger, you start putting in layers of managers, and you see the president only once a year at the Christmas party.
The small company atmosphere can be very flexible, capable of catering to creative individuals. In contrast, a larger organization demands and rewards conformity because of its managers' needs to track and control the business.
``All of a sudden people are saying, `It's no fun to work here anymore,' or `They don't care about me,' '' Bloch says. The ``fun,'' or delightfully informal atmosphere of a small company, has fled, chased away by memos, forms, and layers and layers of management.
In small companies, it's very easy to have everything understood orally. But when more people need to be informed, spoken information becomes distorted as it passes from person to person, much as in a child's game of ``telephone.''
The consequent need for written policies is tough on the entrepreneur and tough on the employees, says Bloch.
That's when the personnel handbook replaces the question ``Hey boss, can I have Friday off?'' and job descriptions replace the quick conversation that says, ``You will do the marketing and sales, and Dave will manufacture the widgets.''
No longer can you saunter down to the shop to tell good old Joe, ``Grind an eighth of inch off this side.'' Instead you have to submit a work order in triplicate and wait two or three days.
``After you get past about three [employees], the major problem is communication,'' agrees Jack Loechner, president of the Associates Group, a Westport, Conn., firm that develops new products for household appliance manufacturers.
Another problem fast-growing companies have is developing accounting and information systems to let managers keep track of what's happening, says Johnston. Moreover, once the system is developed, the manager becomes more and more dependent on information filtered through his lieutenants and loses touch with the rest of his people. You can end up losing your good people to other smaller businesses, Bloch says.
He advises introducing with caution any changes that are likely to disturb the small-company atmosphere, so as to preserve the qualities that make it so attractive to work there.
``The key word here is sensitivity,'' Bloch says. Don't wait till the new manager arrives Monday morning to let employees know he or she is coming. Get them together beforehand and tell them what will happen and why.
Try not to write up manuals and set up procedures until they are actually needed. For example, don't draw up a schedule for using the conference room until everyone is trying to use it at once and the need for a written schedule becomes obvious, he advises.
A fast-growing company can also exceed its own ability to generate cash internally, warns Johnston. Orders coming in so fast that a small business barely has the cash to cover the cost of materials can cause negative cash flow. Then if its owners want to continue at the same rate of growth, they have to raise money by borrowing or by giving up some of their equity (ownership).
Growth, especially fast growth, can be a problem for many entrepreneurs. But strategies to cope with that growth can at least partly preserve the fun of running your own business. And the fun -- that's why you started it in the first place, isn't it?
Thirteenth in a series. Next: How you can use trade shows to bring in business.