Achieving Critical Mass in a Small Business

The critical mass growth challenge for growing middle market companies is at around $20-$50million in revenues or 50 people. This is generally when the business needs good professional management, a Board of Directors, processes, structure and technology to continue. The business is beginning to mature and staff may be starting to operate beyond their competency, not being supported by technology and highly stressed.

Keep in mind stresses do occur in small business before this, at around $1m when you realise you need more staff, $2m+ when you realise you need an HR manager, accountant etc. to properly manage the business and that the business is no longer an informal hobby, but starting to run on it's own with processes and procedures, plans and strategies.

The challenge for business owners in these growing middle market companies is recognizing these changes and pressures when they arise. Working out when and what to invest in, building a project structure and mentality to begin dealing with these issues and letting go, so others can manage. The last one is most often the hardest.

Characteristics to watch for:

Typically, these businesses have the following characteristics, that you may be familiar with if you work in a growing business:

• Growing presence (services, geographic and people) and brand
• Good margins and profitability from core products or services; 
• Expansion of core product or service to new markets
• Focus on building the management team, organisational layers are getting added
• Recognized need for more formal processes and management structures
• Recognized need for better technology and systems
• Proliferation of special projects to support the growth
• Culture changing due to the new structures, organisational layers and systems
• Customer service suffering as the organisation becomes inwardly focussed on growth
• Loyal employees, who have been with the organization a long time needing to make way for more experienced managers
• Outgrowing their advisors
• Founders having difficulty in letting go of certain things.

Building a business is hard. Building a middle market business with limited resources is harder. Being aware of the challenges that face middle market growing companies can help manage the growth process and prepare the owner for whats coming, with positive results.

Get more help by understanding growth business characteristics some more.