Bloginar Weekly Lesson Four: The Entrepreneurial Moat

Growth is challenging for all businesses, and of course the challenges you face tend to be quite different depending upon the stage your company is at. If you’re a new, emerging company, then you might be struggling on a day-to-day basis with concerns about driving enough cash into the business and paying your vendors (and employees) on time. You’re probably hoping that you get a lucky break that helps take you to the next stage. You’re wearing a multitude of hats and working non-stop to keep all the balls in the air.

However, as you grow and the business becomes more stable (and you get better at recognizing these lucky opportunities), your concerns will likely begin to take another form. You will always be thinking about driving revenue (that never goes away), but you should also be concerned now about how to control and manage the growth that you’re experiencing. Sounds like a “good problem,” right? Sure, it’s better than the alternative, yet significant growth can be just as big a problem as not growing quickly enough or getting off the ground. Why? Because if you don’t or cannot manage your growth, you can face serious cash flow challenges, unhappy customers or a loss of control over your company’s destiny. It is possible to grow too fast and not be able to sustain or manage what you have created, which can lead to serious consequences.

There’s a classic article written about this very topic, published in the Harvard Business Review back in 1983 entitled: The Five Stages of Small Business Growth by Neil Churchill and Virginia Lewis. This is required reading for many of my entrepreneurs because the article, while almost 30 years old, contains lessons that haven’t changed, even as the nature of many companies, the marketplace and various industry sectors have all evolved tremendously in the same time period (e.g., the Internet, social and mobile

The Entrepreneurial Moat
I’ve often referred to these five stages as the Entrepreneurial Moat because there’s an enormous LEAP that has to be made going from the early stages of a business to the later stages of success and take-off. Business owners must become leaders of their organization or step aside to allow the organization to develop its own personality. A disconnect between personal goals and business goals can be a challenge for many entrepreneurs, and many have to choose either to learn the skills of running a very different organization than the one they started, or leave the organization because they simply love the early, startup phase that has fewer people, systems and processes and they can keep their hands in all aspects of the business.

Weekly Lesson Four (Try this…)
Here’s an important self-evaluation to determine the critical challenges that impact you at various stages of growth that you are in.

Rank your agreement with the following statements: 1 is strongly disagree and 5 is strongly agree

Business Stage Challenge Your Score____________
1. The owner delegates most activities 1 2 3 4 5
2. Cash flow is not a constant issue 1 2 3 4 5
3. Aligning business and personal goals is not a challenge 1 2 3 4 5
4. The quality and diversity of the team are critical to success 1 2 3 4 5
5. We have a strategic plan in place and use it regularly 1 2 3 4 5
6. We have systems and controls to measure and manage performance 1 2 3 4 5

Your total maximum score is a 30. If your score is below 15 you are likely at the early stage of your business either in existence or survival. If you score is over 15 then you have likely reached a stage of success where business is taking off. However, if you score low and your business is advanced then you are likely experiencing growth challenges. Below note any concerns you have. The next two lessons focus on important drivers of success at different stages.
1.

2.

3.