Going Small!

Several years ago, I decided to finally follow my desire to pursue a more entrepreneurial career path. Until that point in time, I had spent my whole career starting new businesses or fixing broken ones for large corporations. I started and ran businesses when I was a kid, but once my career started tracking, I took the corporate route. Although probably more stimulating than lots of corporate gigs, starting and repairing businesses for big companies didn’t really qualify as something truly entrepreneurial; it was time to take the plunge downstream. I went from a strategic role in a $1B corporation to running a roughly $5M business with an interesting solution and large potential. Although I may have gone a bit too far downstream, and despite the daunting challenges I walked into, I wouldn’t trade the experience for any other. I’ve earned my entrepreneurial stripes.  I’ve been there and done that.  I’m proud I can check that box now…at least partially. Working for a small business is like skydiving or being in combat or having a baby, because until you actually do it, you have no idea what it is really like. Here’s a list of some of my main take aways from that experience.

Know Who You Are Working With

It doesn’t matter how well you think you know the players. How long you’ve been working with the target company is irrelevant. There are risks associated with any career path change let alone going from a large company to a small one.

Spend proper money and have serious, big-league background checks performed on the founder and the key players in the business. Web research isn’t enough.  References from people you know aren’t enough. Go all the way, hire a reputable firm, and do it right.

No Task Is Too Small

It is a highly invigorating to have the deep and broad impact that comes from working in a smaller organization. Working in, or contributing to, all of the various disciplines of the business like sales, marketing, finance, strategy, operations, planning, etc. is exhilarating. Staying focused on critical, key objectives can be a challenge when being pulled in so many directions, but natural laws like needing to keep the lights on and make payroll tend to keep one on track.

However, things come up that would just never happen in a larger organization. I could give a multitude of examples, but one story from my experience will help make this point.  We were a week away from our lead sales person attending a major industry trade show. We outsourced the task of rewriting our brochures to a familiar third party to reflect our new product and messaging. They missed the deadline. In order to get the materials printed and mailed on time, I just sat down and rewrote them myself. I’m not a marketing communications professional. I didn’t relish the task. In order to get this done on time, I had to do something I wasn’t particularly good at and that I didn’t necessarily enjoy.

Sometimes in a small business, you figuratively don the jump suit, grab the broom, and sweep the floor. You work on the front lines to learn the business. You make customer service calls. You learn to demo the products yourself. By definition, you have to become a front line sales rep again. You sign in the UPS boxes when the receptionist steps away. You clean the cubicle that has become a supplies purgatory for old staplers, broken keyboards, strewn printouts, and pictures from someone’s vacation that no one can identify. You just do what needs to be done.

Without superfluous alternative resources at hand, your street fighter instincts surface, and you become more resourceful and just figure things out. It should be the norm at a large business, too. However, large corporations spoil us with their vast support resources, and that can soften us over time.

Know Who’s Really Running The Place

If the founder isn’t really involved in the day-to-day details any more, and if you just got there and have a lot to learn, who is doing the real work? Who knows the customers best? Who understands the business processes? Who are the leading subject matter experts in the customers’ and industry’s eyes? It sure as heck isn’t you!

Even in a very small business, not everyone is created equally. Identify the key players. Some will surprise you; they aren’t always obvious. Get to know them. Learn from them. Know what help they need. Clear obstacles from their paths. Make sure the people doing the heavy lifting know that you know what they know…and that you appreciate it.

Culture Must Evolve

Even GE changes its values as it evolves. A small business doesn’t have the luxury of clinging to its culture like a toddler clings to his woobie. Keep the values that are still relevant relative to your key objectives. Flush the values that don’t apply anymore. But, before you start tossing old, tired values, understand their history and why they were once relevant. Involve key players in revisiting the company’s values or you could create unnaturally high levels of resistance.

History Matters

You can’t understand a business without understanding its history. Being a change agent is cool; but you have to know the history of a place before you attempt to take a machete to its values. You might still want to replace something that is precious to a few old timers. Just be sure you know why a value was once important before making the call to get rid of it.  Otherwise, you might accidentally remove a vital organ when you perform the extraction. That wouldn’t be cool.

Needless Bureaucracy Kills

I’m a big Jack Welsh fan together with the rest of humankind. If killing bureaucracy was a viable GE goal under Welch, it is certainly worth consideration for a small business. If bureaucracy and formality can hurt a big business, they can obliterate a small one. Process that helps a business scale is good. Bureaucracy for bureaucracy’s sake, and it happens WAY more than companies admit, is really, really bad. Kill it wherever you can. Encourage your employees to help. Your anti-process, no rules types…and they thrive in small businesses…will often confuse useful process for needless bureaucracy. Cut them a little slack while you teach them the difference. The good ones will come around. Also, let them bring their arguments against structure forward, because when they’re right, you’ll want to listen to them and knock needless formality out of their way.

Every Penny Counts

Managing the money isn’t rocket science.  Nor is knowing that every single cent needs to be applied carefully, with respect, with forethought, while putting the key objectives of the business first. Sales leaders don’t go to an expensive dinner after a trade show without a client or active, high-value prospect. The founder doesn’t put lifestyle ahead of the business. You park in the remote lot at the airport. You stay in inexpensive motels. You book airfare way in advance. You skimp. You save. Manage supplies thoughtfully. You can’t beat more revenue out of the sales team, or drive the development team to exhaustion, only to squander limited cash in some silly way. You owe it to the team to be brutally frugal while increasing revenues.

Funding / Exiting

Companies should always at least investigate what their funding and exit options are. Making your business an attractive investment or acquisition target for another business might just require a minor tweak in strategy. How would you know if you never consider it. It doesn’t mean you have to sell or take on more investors. However, options are nice to have. Surveying investment and exit options helps a business operate more strategically, learn more about its industry and competition, network with influential and knowledgeable players in their space, and invoke some transparency in its operations. Preparing to present your business to interested parties is like an open kitchen in a restaurant. It better be clean.

If you do opt to conduct some sort of investment road show, understand the basics. As a small business, the CEO and only one other employee should attend these discussions. Usually, the other employee is the CFO or CTO. The CEO can’t delegate this to other players. Be able to convey the business quickly and concisely. Death by PowerPoint is a bad idea here. If you are seeking investment, know exactly how much money you need, precisely what you intend to do with it, and what result the investment will have on growth. Don’t project beyond 3 years. Don’t forecast ridiculous achievements. Compare basic metrics of your business to 3 to 5 similar businesses to give interested parties useful reference points and to show them you’ve done your homework. Practice on lower value targets first. Seek feedback on how to improve your pitch.

Innovation

Smaller, more entrepreneurial companies innovate quite well…because they have to. They are resourceful, because resourcefulness keeps them alive. If you like to carry out someone else’s orders, stay where you are. If you relish making critical decisions every day that impact the vitality of the business, go work in a smaller business.

Attitude

As with poor performers, one employee with a bad attitude can take down an entire small business. Act quickly and decisively to fire poor performers and people with attitude problems. Criticality is needed. I like hiring critical people; they balance my extreme positivity. Know the difference between someone who is critical and someone who is negative. One way to tell the difference is determining if someone energizes those around them. If they do, they probably don’t have an attitude problem. Differing points of view are valuable and needed to make key decisions. Encourage a good debate before making big decisions. All of that said, fire negative people before they ruin your business. (Here is a great article by Jay Goltz from the New York Times that supports my point: http://goo.gl/W50v)

What strikes me about this summary list is that my main take aways apply to big businesses, too. Larger companies should go to great lengths to cultivate and keep more entrepreneurship in their ranks. A more entrepreneurial approach will make them more successful, more innovative, more efficient, and more fun.

What experiences have you had “going small?” What did you learn? Please share your comments below.

“Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.”  

Howard H. Stevenson

 

“Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services.”  

Joseph Schumpeter

 

“An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource.”  

Peter Drucker