23 October 2009

Getting more of what you want - Part 1

Most of my clients are small to mid-sized businesses when I meet them. Many of them have already achieved a significant level of success. These firms have proven themselves and grown -- many of them have grown rapidly -- and frequently they are on the precipice of making the leap from entrepreneurial to enterprise.

Generally, what makes an entrepreneur successful is something of a sixth sense that communicates to them an almost instinctive connection between opportunities (or revenues) and truly variable costs (TVC).

Entrepreneurs thrive and grow on this instinct and worry about the "cost accounting details" later. However, two things begin to change as their organization begins to grow:
  1. The entrepreneurial individuals in the firm -- the founder and his or her closest associates -- may become less connected to each opportunity the firm may encounter and similarly disconnected from a sense of the TVC involved.

  2. The more disconnected these, now, executives become from the details surrounding opportunities and TVCs, the more they begin to rely on standard "cost accounting methods" to guide their organization's decision-making.
Interestingly, the more "sophisticated" the decision-making process becomes in their organization, the more profits and profitability growth may tend to decline. The entrepreneurs find it increasingly difficult to make that leap from entrepreneural to enterprise capabilities.

What's keeping entrepreneurs and firms in this position from getting more of what they want? What's stopping them from making more money tomorrow than they are making today?

[To be continued...]

Contact me.

No comments: