Why Do Small Businesses Fail to Grow?

This is not an easy question to answer, particularly when our economy is so turbulent. However, contrary to popular belief, the economy is not the biggest factor in the decline of entrepreneurial selling organizations.

It is extremely complicated for most business owners to make the transition from an environment where they are at the heart of everything that goes on within the company to one where there are multiple levels of organizational structure.

Within the home improvement industry, this becomes even more complex as many companies that are looking to grow consist of no more than a few employees, and the principal owner of the business may be responsible for the majority of the “selling” that takes place.

As you are looking to take that next step to grow your business, keep these points in mind:

Hiring the right people and avoiding the wrong ones is the first step you need to take before you can undertake significant growth

As I stated in the last blog posting, “Turnover is the death knell of any small to moderately sized selling organization.” You need to decide what positions are most critical that you hire for first. Do not make the mistake of attempting to grow your business by hiring extra sales personnel, a canvassing crew and a marketing manager all at once.

Once you determine what position(s) you want to start out with, you need to invest the time and resources in hiring the right people. I have yet to meet a manager who was perfect at pinpointing the right person for every job. This is why we recommend the use of tests and behavioral profiles during the process. The test determines whether the individual can do the job that they will be assigned to (i.e. if they have the skill sets). The profile will determine whether the individual’s behavior matches the job. Behavior is neither right nor wrong, it just is, and we have identified specific behavioral types that fit best in certain job roles.

Stop thinking like a salesman

Easier said than done right? In all likelihood, if you are reading this blog entry, then you have been a salesperson (or someone in a selling role) for most of your professional life. The problem is that when you make the transition from a “salesperson” to a business owner you need to change the way you think. It takes a different mindset to manage sales than it does to manage people and you will frequently find yourself struggling to relate to your employees if you do not abandon some of the behavioral traits that made you a sales superstar.

Plan more structure

Some of your employees may like structure, others may hate it, but the truth of the matter is that all of them need it.

Without clearly defined boundaries and goals in place, there is too much freelancing and your employees will have a tendency to abandon reason in the face of personal priorities.

Furthermore, there needs to be organizational checks on this structure or it will be changed and altered within weeks of their training.

System selling

A common question we get when conducting a client observation is: “How many steps do you recommend in your sales system?” My response is that the steps aren’t as important as “sticking to the system”.

Too many people get hung up on a number, when that is not the key in closing a prospect. The key is a scripted sales methodology that you are comfortable with and becomes part of the organizational philosophy.

Structured price (formula – application)

I recently covered this is another blog posting. Too many companies arrive at a price based on what their competition is doing, what will give them a “competitive advantage”, or some other arbitrary number.

The fact is that in order to achieve a healthy profit margin, there is a formula we developed that is foolproof. No matter your product/service, by sticking to the numbers you will assure that you don’t miscalculate your profitability.

Log and track every lead

Yes – it is important to qualify your leads, but it is also a huge mistake to not log and track every single lead that comes into your business (by any form of communication).

Just as important is what you are using to track your leads. Without a strong system in place to manage, organize and follow up with your prospects, you are increasing your administrative time and costs exponentially.

Delegate, delegate, delegate

Staying involved in all facets of the business is critical for all business owners, but just as important is delegation.

As your business grows, so should the number of tasks that you assign to other employees.

What? You say that you don’t have faith in them? Go back to step 1 and get your hiring system up to speed to make sure that you have a team in place that you can count on to do the tasks that you simply don’t have time to do anymore.

Before you lay too much blame on the economy and the government (I’m not saying they aren’t responsible), you need to examine your internal processes, because unless you are sticking to these guidelines you are setting yourself up for failure.

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