business growth

If you’re trying to expand your business, missing critical elements can derail your efforts to grow. Entrepreneurs need to consider several important things before deciding to grow their small business. Listen to find out if your company is ready and fit to grow.

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Show Notes

In this episode we look at important things entrepreneurs need to consider as they decide to grow their small business to make sure that their company is ready and fit to grow.  Lisa uses her concepts of the 5 P’s, Planning, Practices, Process, People and Profit to explain how missing some of these pieces can derail a company during its growth phase.

Key Points

*Many companies find that what worked when they were smaller are no longer as effective in a larger growing company.

*Many of the growing pains companies face can often derail growth for a business that is not ready and fit to grow.

*Entrepreneurs often underestimate the impact growth can have on their people, operations and even their bank account.

*Having an overly optimistic mindset while valuable in start-up, often mask or downplay problems associated with the growth phase.

*One of the growing pains companies can face is allowing sales growth to destroy their brand and Lisa explains that in the episode.

*No one can be certain that they are ready to grow however entrepreneurs need to recognize that growth will change how they do business in many ways.

*Many entrepreneurs notice a change when their company reaches over 50 employees. These changes are especially noticeable in their operations, communication and need for specialization.

*Lisa uses an example of her experience in a technology company to explain the idea of specialization and more focused roles during growth periods.

*A way business owners can determine areas that need to be in place or improved in their business is to examine their company with a critical eye. This enable them to see the growing pains and work to correct problems as they arise.

*Lisa explains what she looks for in her work with clients to determine where they are falling short and the things that are holding them back from being ready and fit to grow.

Resources and Links

Sign up to take the Healthy Biz Quiz – Take the Healthy Biz Quiz and automatically receive your score along with tips and information that can help you create a business that is healthy and fit to grow. Follow this link to sign up.

You may also want to check out these helpful episodes:

Do You Have A Healthy Business?

How to Scale Your Business-Part 1

How to Scale Your Business – Part 2

 

 

Note: Links in this post may be affiliate links.  Lisa Roberts is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.

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Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

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Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.

Achieving big growth, building a staff and reaching the point where investors are infusing money into your start-up can be exciting. You feel like you’ve hit the big league in the business world. But it also brings with it big responsibility for entrepreneurs.

I began watching the company I’m about to describe after reading some business articles about them over the last few years. I’m not going to reveal the company’s name because this post is more my opinion based on research I’ve done rather than actual first-hand knowledge.

I first caught wind of the company reading Inc. Magazine several years ago. The owner was being recognized for her success in one of their annual awards. Accolades poured in from other places like Forbes and since it was a retailer, a retail industry honor. The company also received a lot of money from outside investors and was getting acquisition interest from established companies. It sounded like this company was humming along, growing successfully and on its way to the big leagues of the business world.

Then about 2 years later another article; the company declared bankruptcy!

I found it remarkable how a high flying private company receiving accolades only a few years earlier obtaining tens of millions in investment capital could fall so quickly.

Since I am not a reporter or a big time business magazine, I don’t have the access or connections to find the true story. However, there was a lot I gleaned from various articles and also from sites like glassdoor.com.

In its demise, it looks like many of the mistakes startups make were at play in this story. Let’s take a look at some of them.

Investors’ Money Moves You Away from Your Brand

The company got money from investors like venture groups. While there is absolutely nothing wrong with raising capital that way, the pressure to deliver increases dramatically. Venture groups invest to get big returns on their money. If an owner isn’t ready for that type of pressure (in my opinion she wasn’t), then it can easily pressure you into making mistakes in your attempts deliver those returns. Later shifts by a new CEO into brick and mortar stores and higher priced brands seemed to take the company further down a bad path and away from its original brand.

Building a Business along with a Brand

Having a great brand is what propelled the company into great growth numbers. It is what attracted outside investors in the first place. Suggestions have been made that the brand became confused as the company moved away from its original niche.   It also appeared that the founder became unhappy with the actual running of the business based on some quotes in one of the articles. She eventually may have come to realize that her passion was elsewhere and she didn’t like running and managing a business at all.

Using Investment Money to Build the Business

In this case, the founder went from nothing to suddenly being recognized by business publications and then getting big money investments. That can be a shock to anyone who has never been in that position. Over a period of only 2 or 3 years over $50 million was injected into the business. When you get that kind of money it is easy to allow yourself to make decisions with it that may not be best for the business. My research showed that some decisions were made to spend money on nice to haves instead of have to haves. A swanky upscale office, nice toys and perks to name a few.

Inexperience in the Industry

One of the investments made from the infusion of capital was renting a large warehouse in another state. While I think I understand why they located it where they did for shipping logistics reasons, industry opinions in one article stated that this was an expensive way to go. It suggested that outsourcing the logistics function would have been a better strategy and more economical.

In addition, it takes a lot of effort to manage a location and its people from several states away. Based on my reading, the location wasn’t managed well and the people who worked there were very disconnected from the main office. They became frustrated and mistrusting of management.

Inexperience in Business

The founder had no experience running a business and actually bragged of never really having a real job. Based on my research, she hired people she liked and those that agreed with her. Employees with experience in the industry told of being excluded and shot down when they made suggestions for improvements. There were also many stories of favoritism and mistreatment. It all appeared to create a very toxic environment where turnover was high, people felt almost abused and quality people left quickly.

Other examples surfaced in the research as well. One example was that even though the company grew sales, they weren’t making a profit. Lawsuits based on infringement and wrongful termination also created big drain for the company from a time and money standpoint. And finally, what seemed like an inexperienced and immature HR department only made matters worse.

Learning from this Company

I find it sad that a business that was so successful could turn in just a few short years. However, I like to think that there are lessons that can be learned in any situation.

Understand What You’re Getting Into

As I stated earlier, taking outside investment isn’t a bad thing, but you need to go into it with eyes wide open. Even if that investment is from people close to you, they don’t ever want it to go to waste. If you’re accepting money from larger investors make sure you fully understand what the expectations are and be up front about your own desires and needs for your business. There are greater demands on you and the business when taking outside investment; be ready for them.

Fiscal Responsibility

Obtaining capital investments can feel invigorating since you are suddenly flush with cash but you need to spend money well because it won’t last forever. Investors have an expectation and a time frame in mind when they make an investment and want it to payoff. At some point you have to deliver and making good use of the money to further the business is the first step. Avoid spending money “like a drunken sailor” and spend it responsibly to further grow your business.

Be Humble About What You Don’t Know

I think I was the most frustrated reading what employees said about the environment and how management ran the company and treated its employees. Now I understand that sometimes sites like Glassdoor can contain comments from disgruntled employees but it was pretty overwhelming. Based on the volume of negative comments, my feeling is that there is an element of truth to it.

Being an entrepreneur isn’t easy and I’ll never say it is. However, at some point entrepreneurs need to acknowledge that they don’t know all there is to know about running a business. They eventually need subject matter experts on their team. Bring in people that complement you but also challenge you. More importantly, you need to a team that will tell you the truth and it may not always be what you want to hear.

Big League Business, Big Responsibility

As entrepreneurs we all make mistakes. Mistakes though can become more costly and can affect more than just you. Once you involve others – investors, employees and vendors – there is much more at stake with the decisions you make. Hopefully, we can all learn from some of the mistakes this company made and use the knowledge to help us grow a healthy successful business.

Cash flow is the lifeblood for many businesses. Managing cash and forecasting cash needs is important for managing your company’s growth.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want. And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

Cash flow is the lifeblood for many businesses. This is especially true for both start-ups and growing companies.  Often a growth company has to spend money before making money.  So, being able to manage cash and cash flow becomes much more important in order to sustain and manage growth.  Today’s we’ll look  at how a cash flow  forecast can help you manage cash and also plan your cash needs as you grow your business.

Key Points

*Cash flow is a challenge for growing businesses because of the lag between company spending and receiving cash from customers.

*Growth takes investing money and due to the ups and downs of growth as well as limited outside investments, managing cash becomes very important.

*There are several signs that a business isn’t managing cash effectively such as cash crunches, inability to make payments, overreliance on debt as well as stress for the entrepreneur.

*Cash flow forecasts help entrepreneurs place a focus on cash both planning and managing it.

*There are tools available in most accounting programs that can help you do a cash flow forecast or they can be set up in an Excel spreadsheet.  See resources below for a cash flow forecast example in Excel.

*Lisa explains how a cash flow forecast works functionally and explains various types of cash inflows and outflows for typical businesses.

*She discusses the different issues to pay particular detail attention to in cash control such as the timing of collection on account and larges purchases like equipment and other large purchases.

*Once the cash flow forecast is prepared. Lisa discusses the types of things that you should be looking out on your forecast so that you can take some action.

*Lisa provides some tips surrounding the billing, payment, inventory and fixed asset cycle that may help improve your cash flow.

Resources and Links

Note: Links in this post may be affiliate links.  Lisa Roberts is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.

Simple Cash Flow Worksheet – to get the worksheet sign up to received my newsletter, Prescription for Success.  You’ll get an email to confirm your subscription and then you will get the page to download the worksheet. Use this link to sign up.

Terms Used in this Episode

Cash Flow – The amount of cash coming in and going out of your business.
Cash Flow Forecast – A tool to estimate the amount of cash at the end of various periods based on estimates of cash expected to flow in and out during the period.
Cash Inflows – Cash that is brought into your business from various sources such as sales, loan proceeds and investments in the company.
Cash Outflows – Cash that is paid out of your business for various purposes such as payments to vendors and employees, repayments of loans and payout of dividends.
Cash reserves – Cash accumulated and held in your business to meet some future need or investment in the business.
Payment Discounts/Pay Early Discounts – A discount offered by a company in order to encourage customers to pay earlier than the normal credit term.
Account collections – The activity of collecting payment of funds on invoices owed to a company by the due date.

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Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

The phrase scaling a business is one of the latest catch phrases that describe growing a business in a profitable way. In Part 2 of this 2-part series, we cover the process and profit factors important for growing your business.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want. And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

The phrase scaling a business is one of the latest catch phrases that describe growing a business in a profitable way.  Planning and managing growth involves many important factors.  In Part 1 of a 2 part episode, Lisa talked about some of the people factors related to scaling your business successfully.   In Part 2, Lisa covers the process and profit factors that are important for scaling and growing your business.

Key Points

*When scaling your business, spending will be greater than sales as you invest in the growth of your business.

*Investments in infrastructure like information technology, accounting systems, CRM and other things will be needed to support more people and production.

*Spending, cash and financing need to be planned and managed effectively to avoid cash crunches.

*Processes that worked when you were a smaller business may not be as effective in a larger more complex business.

*Process that is not well-defined and systematized with break under the added pressure of more employees, more customers and more volume.

*Entrepreneurs need to carefully estimate the impact of increases in their business and how he affect the amount of time, equipment and people needed to support the additional business and how profits may be affected.

*Weak functions and processes will magnify problems in your growing business.

*Having a plan and budget to help manage your spending and cash during your growth will help avoid the common problems companies experience when trying to scale.

*Entrepreneurs also need to plan cash and financing so that the funds are available to finance their plan for growth.

*Be prepared to slow down or throttle your growth if things are not going according to plan.

*If outside financing is needed to support your growth, determine potential sources for that cash.

*Lisa touches on the impacts of getting financing through debt or equity types of financing.

*Identify those key processes in your business that will need to be improved to a larger scaled business.

*Businesses also need to estimate the impact on the business systems and include that in their plan to scale and grow.

Resources and Links

Questions to Answer before Scaling Your Business – Tip Sheet   Sign up to my list and get the tip sheet here

Download Link to How to Scale Your Business Part 1 of this 2-part series

Link to article and related video about the company Lisa mentioned in the episode – “Meatball Shop’s Daniel Holzman: ‘It Was Moving Faster Than We Could Keep Up With'” – check that out here

Would you like to work with Lisa to get advice about your plan to scale your business?  You can sign up for a Quick Care Session. Find out about that here

Sign Up to Get Updates

Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

If you’re planning to scale your business, people will play an important role in determining your success.  Find out who those people are in this episode.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want. And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

The phrase scaling a business is one of the latest catch phrases that describe growing a business in a profitable way.  Planning and managing growth involves many important factors.  Today, Lisa will talk about some of the people or human factors related to scaling your business successfully.   In Part 2, which we will cover in the next episode, Lisa will cover process and profit factors that you need to consider when scaling your business.

Key Points

*People are an important part of successfully scaling your business and those people include your employees, customers, suppliers and also you the entrepreneur.

*Some employees that are good in a start-up company may not be as effective in a growth company.  Entrepreneurs need to recognize that change can cause confusion and concern as well as the need for new skills and talent.

*Your scaling and change can also impact customers.  Entrepreneurs need to keep his/her best customers in the process and ensure needs and requirements for them are met.

*As your business scales, so too must your suppliers grow and therefore they need to be part of your planning.

*Your suppliers need to be able to grow with you effectively planning their own growth while maintaining the quality of the products and services that you rely on in your own growth.

*Leadership and leaders are very important to successful scaling and growth.

*Leading a scaling company involves having clear plans, defining what success looks like and creating the culture of success.

*Identifying those key people, roles and responsibilities that are an important part of your employee planning, strategy, communication and employee development.

*Customer focus, key customer identification and relationship management are key factors to successfully transition into a scaling mode.

*Key vendors and suppliers need to be part of the scaling plan as your growth becomes their growth. Suppliers are important part of your planning and need to understand their role in your growth strategy.

*Entrepreneurs’ quest to scale involves the ability for him/her to dig deep in the leadership skills through delegating, empowering employees, creating a great team, communicating and being honest and realistic about goals and progress toward them.

*In the episode we also discuss the idea of being self-aware and gaining objective feedback when you may be unable to get it inside the company and how an outside objective third party can provide help managing the growth process.

*Communication is key factor for all of the important people involved in the success of effectively scaling your business.

**Make sure to look out for Part 2 of How to Scale Your Business where Lisa talks about the impacts related to Process and Profit which will be released in the next episode.

Resources and Links

Do you need that neutral third party to check in with, get honest feedback or get advice to help you manage growth, feel free contact Lisa for Quick Care consultation session.  Contact her here to request a session.

Sign Up to Get Updates

Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Lisa Roberts is a business operations specialist who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

This episode will explain how a budget can help you plan your spending, avoid surprises, track your performance and why it is so important in a growing business.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want. And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

Healthy Business, Healthy Profits is focused on the challenges of managing a healthy profitable business.  One tool that helps entrepreneurs do that is using a budget to plan and manage their spending in order to achieve their goals and strategies for the upcoming year.  In this episode, we will talk about 2 of our 5 P’s – Planning and Profit.  The episode focuses on how a budget can help you plan your spending, avoid surprises, track your performance and why it is so important in a growing business.

 

 

Key Points

*Rapidly growing companies are going through much change and a budget helps them manage that, consider different scenarios and provide a guide for spending throughout the year.

*Companies can run into problems like spending not aligned with strategy, bad spending decisions and misaligned expenses against revenue.

*Lisa shares a few examples from her own experience of how having a budget and monitoring a budget helped a company shift when things did not go as originally planned.

*We discuss the types of different budgets and when companies should start using and formalizing their budget.

*We cover tips for entrepreneurs as they first start to develop a new budget for their business and when department heads need to become part of the budget process.

*Lisa provides some factors that are important for creating a good working budget as well as some things to avoid.

*We’ll hear Lisa’s opinion about whether compensation should be tied to achieving the budget numbers for the management team.

*Once an entrepreneur has a good budget and process, we share tips on using and monitoring the budget in order to help manage your business.

Terms Used in this Episode

Static Budget – a budget that a company creates and does not change during the year.

Flexible budget – a budget that is flexible or changes in the amount of business that is experienced by the company.

Rolling Forecasts – a budget or forecast that accesses the future estimates of business in increments such a quarterly. It typically initially set up for a period of time such as 12 or 18 months and each increment (i.e. each quarter) is reviewed and adjusted reflect new information and future estimates going forward.

Lisa Roberts is a business operations specialist who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

Sign Up to Get Updates

Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

In this episode we look at signs to look for to determine if it’s time to hire and tips on hiring the right way.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want. And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

If you have a company that is growing, you’ve found that you have to make a lot of decisions.  One of those decisions is figuring out when it is time to start hiring more employees. As companies grow, they eventually need to start adding people here and there.  But there can be times where you are growing so rapidly that you need more than just a few people at a time.

Today we are going to talk to Lisa about some signs that will tell you that you need to add more people to your company and some advice on how to add people the right way.

Key Points

*Some of the signs that you may need to hire in your business will be obvious and some will be subtle.  Entrepreneurs need to look for both.

*Obvious signs will surround the types of things you will typically see like rapid sales and business growth, the addition of new customers and the addition of new product or services offerings.

*The more subtle signs will come from employees, workload issues and missed opportunities. Other less obvious signs will lie in the data that you collect inside your company.

*Entrepreneurs need to establish benchmarks to measure results and to react when changes occur that affect the company’s ability to handle the workload.

*It’s also important to listen to and react to issues related to employees such as stress and burnout and establish a culture that enables honest feedback.

*Lisa shares several examples of data points that are indicators that the company’s performance is being affected by a lack of adequate staffing.

*We look as some of the things entrepreneurs need to do to stay on top of these issues and create the feedback mechanisms to identify issues as they arise.

*Lisa gives tips on hiring and ensuring that the company has the key processes in place to hire new employees the right way. She also provides some information for determining that you need new skills or roles inside your company.

Resources and Links

Note: Links in this post may be affiliate links. Lisa Roberts is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.

Link to the Book Winnie mentioned on Amazon.com: Hundred Percenters: Challenges Your Employess to Give It Their All, and They’ll Give You Even More by Mark Murphy

Link to Society of Human Resources article about onboarding is here

Link to episode we referenced  Cost of Solving the Wrong Problem 

Lisa Roberts is a business operations specialist who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here .

Sign Up to Get Updates

Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Do You Have a Healthy Business? – Pilot Episode

Find out what we mean by a healthy business and learn some of the traps entrepreneurs fall into growing their business.

You can listen to the episode by hitting the play button.

To download this episode, right click on the this link and choose Save Target As. Go to the folder where you want to save the recording and click Save or Enter.

You can make it easier to get the episodes, by subscribing to the show on iTunes here. Subscribing to the show will download the episodes automatically on your preferred device so that you can listen to them when you want.   And hey of you like what you hear, please leave a great rating and review while you are there.

SHOW NOTES

What makes a business, a healthy business? In this episode we talk about what it means to have a healthy business, the traps that entrepreneurs fall into as they try to grow a healthy business and the ways you can get out of or avoid those traps.

Key Points

A healthy business fulfills its purpose, provides value for stakeholders and also creates business value. It also is a place where employees can develop and have meaningful work and run by an entrepreneur who is focused on creating sustainable growth.

Some things that keep entrepreneurs from creating a healthy business are the lack of experience with change and change management skills, lack of financial experience to manage expenses, skills needed at start-up vs. growth, the struggle to make the transition from doing and managing to leading and not building a foundation for growth.

Traps entrepreneurs fall into as a business grows are the money rollercoaster, relying on your gut for too long, not letting go and leading, not investing in creating a foundation to grow your business and falling in love with their own business.

Avoiding these traps requires entrepreneurs to have key areas covered and those areas are the 5 P’s – Planning, Practices, Process, People and Profits.

Terms Used in this episode

Planning
Practices
Process
People
Profit

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Lisa Roberts is a business operations specialist who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

I got a call from a business owner who was at his wits end about some employee problems. The more I listened, the more I could see that his biggest problem was that there were no clear roles and responsibilities and no job descriptions.

Most growing businesses go through a period where they move from very entrepreneurial to a more structured organization. In the beginning, roles and responsibilities are loose and everyone chips in to get the work done.  After a while, as you add new people to handle increased workloads, it will be difficult, if not impossible, to effectively manage everyone without some structure.

For my owner friend, it started with questions from an employee about fair pay.

What are some other signs that indicate you may need to get formal descriptions in place?

 

Five Signs that You Need Job Descriptions

job descriptions and organization chart
Image courtesy of Pixabay
  1. Wage and Salary Questions – Anyone can go online, look at Monster or Salary.com for a certain title and view the compensation range for that title. A job description does not define title as much as it defines the specific job roles, responsibilities, skill set and the value of them.
  2. Titles – Owners need to plan their growth structure as well the titles they use. As I mentioned, salaries may differ greatly by the title you place on a specific job. For example, if you call an employee a manager and they are really performing basic supervisory work, they may be confused about not only salary, but also responsibility and authority.
  3. Lack of Clear Roles and Responsibilities – As your organization grows, not clearly defining roles and responsibilities will most likely allow things to fall through the cracks and leave tasks undone. Recurring incidents of important tasks left undone can also cause disorder, which can lead to frustration and ultimately apathy in the staff.
  4. Employee Frustration – Confusion about employees’ job responsibilities will also lead to frustration and conflict. Employees like to know what’s expected of them so they can understand how performance is measured in order to be successful and satisfied in their job.
  5. Boss / Authority Questions – Job descriptions also help clarify the “reports to “aspect of an employee’s job. Years ago, I personally dealt with this. It was both frustrating and stressful for me, as an employee, to answer to effectively two bosses.

Establishing job descriptions helps clear up confusion about who does what, what a position’s pay is worth in the market and help ease some of the chaos, frustration and dissatisfaction that your employees are feeling. There are other benefits to having good job descriptions at your company.

Four Benefits of Job Descriptions

  1. Employee Performance – Part of measuring employee performance for both the employee and the employer is having a measuring stick. The job description is part of that measuring stick; how the employee performs against the required roles and responsibilities of his or her job.
  2. Growth Path For Employees – Having an understanding of the responsibilities, duties and skills needed for an employee to move up to the next role will help him see a path for career progression. Not understanding what the next level is and how to get there can be frustrating for an employee who wants to develop and grow at your company.
  3. Legal – Many legal issues surround this area and are too detailed to get into here. However, having a clear job description will help you define better, the pay scale, employee classification and may help if there is ever an employee dispute.
  4. Recruiting – A job description will make it easier for you to recruit for that position the next time you have to fill that role or add more positions like it in your company. It will serve as the basis for the job listing so that you can easily advertise and recruit for that position.

Who Has Time?

As a business owner, you’re probably sitting there thinking I don’t have time to write job descriptions for all my employees!

Ask yourself these questions:

  • Are you spending time trying to find someone to do something in your business because it’s nobody’s job?
  • What’s the cost to your business when certain tasks fall through the cracks?
  • Do you have to stop what you’re doing and take time out because an employee is expressing frustration and dissatisfaction about their role in your company?
  • How much time are you losing from that employee who may not be as productive due to that dissatisfaction?
  • Are employees leaving because they feel underpaid because you gave them a big title without the pay – what’s turnover costing you?
  • Have you ever had a dispute with an employee about performance that resulted in large legal fees because of a claim of wrongful termination or violation of wage laws?

A little time now, can save time later

The truth is investing some time in writing job descriptions will create benefits in the long run. As you grow and add more positions, the need to have them will be more and more apparent. They will help you develop clear responsibility and clarity for the jobs in your company. Your employees will be happier knowing what their role is and what is required to achieve good performance.  They may also help save you time and money in the long run.

 

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