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The Small Business Cycle

2008 | Jun 25 in Business Development , Leadership

By Erin Duckhorn,

At each stage of business development, you'll face unique challenges. As a start-up, you might be struggling with time management issues because, let's face it, you're probably still doing most of the work yourself. You might be at the stage when you realize that you need help managing all of the business you're generating.

At E-Myth, we relate the Small Business Cycle to the stages of human development -- something we all understand.

The first stage we call infancy. This is the start-up phase of your business when you act as a Technician doing all the work of the business yourself. In this phase, you willingly devote everything to your business regardless of the toll it takes on you personally. As your initial hard work pays off and your business begins to build some momentum, you realize that you might not be able to do it all on your own. You decide it's time to get help; and that's when you enter the next stage in the small business cycle: adolescence.

In the adolescent stage of your business, you begin to experience growth. You hire employees to take over some of the tasks that used to overwhelm you. But soon you find that things aren't getting done the way you want them to be done. Your employees lack the motivation and drive that you put into the business. At this point, many business owners will push employees out of the way and insert themselves right back into the role of the Technician believing that no one will do the job as well as they can.

We've worked with a lot of clients in both the infancy and adolescence stages of development. Our goal is to help our clients get to the third stage of the Small Business Cycle: maturity. At this stage, the business owner has what we refer to as "The Entrepreneurial Perspective." They approach their business with a clearly defined vision, with accountability standards and direction that drives the business to success.

A free way to learn more: The E-Myth Experience

If you want to learn more about the Small Business Cycle and the role you play in your business, consider attending the free E-Myth Experience. These regularly scheduled, one-hour phone sessions are led by an E-Myth Business Coach and provide an excellent introduction to key E-Myth concepts that can help you gain The Entrepreneurial Perspective.

What's your story?

What stage of business are you in? What unique challenges are you facing as you try to move to the next stage of the Small Business Cycle? Post a comment and tell us about it.

Comments

  1. .Ben H. says:

    My business is in the adolescence stage although it has been running for 20 years before I bought it. I'm entirely overwhelmed with being the technician, the employees I have are good but lack experience. My biggest trouble is how to bring them up to speed in the quickest amount of time.

    Submitted Jun 25, 2008 8:40 PM

  2. .Andrei P. says:

    Hi Ben, 
    And that's the whole point - you nailed it.  The stage of development refers not to time, but to the work that is being done, who's doing it, and with what result.  You can, in effect, be a 20 year old start-up if you're the chief cook and bottle washer doing everything in the business.  Your business can stay in adolescence for 20 years as described as you may have hired some employees, but you have little or no documented systems, you abdicate rather than delegate accountability, you are throwing people at problems, rather than building a turnkey system that is scalable and doesn't require the owner for the business to work.  Ideally, one needs to approach their business as something that could be replicated 100 to 1000 times.  Even if you never do that step, if you can look at it as a prototype - or a replicable system with a set of processes all designed to produce an intentional consistent result, you're on your way to moving from adolescence to maturity.  A mature business is one you can sell.  It is a business that holds a place in the market, doing what it does in a unique proprietary way;  it is a business that is systems dependent, not people dependent.

    What I'd focus on is building the systems you need that would allow those new employees to be successful.  Then build the recruiting system so that the people you bring on have the ability to successfully execute on what you need to have happen, and you have a training program in place so they can learn the WAY you want the work to be done, plus have a method for continually developing their ability to add value to the company.   It takes some time, but if you are able to do the work of the business successfully - then someone else should be able to as wekk.  The challenge is figuring out what actually you're doing, so you can teach someone else.

    Best,


    Andrei Podell

    Submitted Jun 26, 2008 2:28 PM

  3. .mia d. says:

    I own a graphic design business which started out with 4 creatives. we were doing all technician work as the business relies on our design skills. on the 2nd year of running, we gained a lot of projects and saw the need to hire more creatives. that stage, i understand is adolescence. unfortunately we didn't grown anymore from there. many of us became burned out with stress and deadlines and dampened our creative spirits. we've struggled for another 4 years and now many have already resigned and I am at a crossroads of whether I should continue or close shop. 

    B. 

    Submitted Jun 26, 2008 4:58 PM

  4. .Rod D. says:

    Hello,

    Well, my little business was started from nothing but an idea that had been dismissed for a few years as just being that, an idea!

    When I suddenly found myself without work (with and push from my wife) I started out slowly, taking on small amounts of work and developing a range of tools, one at a time. I now have a 'base' range.

    I have 2 sides of my business, the workshop & the tools I manufacture (all specialist work and I'm the only manufacture of these tools in Australia ) As I'm based at home & I can't take the work on I need to (yes, I'm already in trouble the the local council) I need the work to fund a move some where, But I need some where to work from to take on the work. A real catch 22 (Council think's I should just build a new workshop in the industrial estate! Big $$) I also struggle with stock levels with my tools as I'm now selling more than I can keep up with. A lot of this is also cash flow related as it seems to be taking a long time to make the money to ire-nvest in making the stock (of course their is plenty of other out goings like equipment etc) But I'm nearlly there with my stock levels.

    No matter how hard I try, I'm increasingly finding it more & more of a pipe dream to set up and run my business as a 'real business' with it's own location, opperating efectively & efficiently. All this needs money, of which I just don't have. How am I supposed to fund not only a propper workshop (to take on the work & staff) but also fund not only existing stock levels, but introduce more tools that I need to, to grow the range & to keep customers interested.(people are crying out for me to either manufacture these specialist tools or import)

    I am totally self funded to date (which even amaizes my bank manager)

    I know the work is out there, as I'm continually turning it down for fear of being shut down totally by the council and complaining neighbours (most of which have been supportive!) I am currently running a fine line between being able to pay the bills, advertise and get out to the market place, which includes lots of travel ($$)

    The question is :

     How does one move forward when the main problem seems to be just lack of money ??  

    Submitted Jun 26, 2008 5:12 PM

  5. .Sally C. says:

    Sally C. says:

    I have a retail/service business that just celebrated it's 21st year and I have clear vision of what it will look like in the future. I am in the process of writing all of the systems in our operations manual and training my wonderful staff, but I am also being the technician while I continue to find two more full time staff members. I believe I am changing from an adolescent into an entrepreneur.

    Submitted Jun 26, 2008 5:28 PM

  6. .Andrew E. says:

    Hi there,

    I am just starting out on this crazy journey and was lucky enough to have read the books before getting started. I'm trying to develop the systems and processes I need as I build the business up. It's hard work - that's for sure - but hopefully I can move through the first two stages relatively quickly.

    Andrew

    Submitted Jun 26, 2008 7:18 PM

  7. .Vi W. says:

    As an 11 year business owner, I believe that maturing is a constant state for any business that is growing. I can't say that my business has matured, but it grows more systematic all the time.

    The systems I have read about here really do make it possible to step from being a technician in the business to being the entrepreneur and really running the business.

    Vi Wickam
    On-Site Computer Solutions
    http://www.424help.com

    Submitted Jun 26, 2008 9:11 PM

  8. .Bryan C. says:

    I have a small business that I started on the side 3 years ago, but when I was suddenly out of a job, I went full time. This was a little over a year ago. What I did was took two of my passions and wrapped them up into a business: Linguistics and internet technology. Which means as we have two main products: Localization (translation) and Search Engine Optimization/Marketing. In many ways the two areas are very different but coupled together they can be very useful. However, the Localization side is growing much faster than the other.

    As I started the business, like many others, as a "technician", the hardest thing for me is to turn the corner from working as a freelancer to getting jobs as a company. At the moment I receive most of my work at the freelance level. I do have a number of people that are ready and willing to work for me as freelancers, and most of them are people I have know for a while and I trust them. The problem is until I can sell the jobs at the right pricing level I'm a bit afraid to give away that extra money.

    I have also started building systems for how to do the work which I can pass on to someone else. I guess really my biggest issue is a classic combination of time and money. To take the time to work on strategy and selling, I need to make sure that there is a sustainable cash flow coming in.  But, at the moment I'm then stuck in the catch 22 of working as a technician to keep the money coming in, which means I have less time to concentrate on selling at the level I need to.

    Bryan Coe
    Blackbird e-Solutions

    Submitted Jun 27, 2008 9:11 AM

  9. .Paul K. says:

    Wow, I'm glad to hear that our company is not alone.  We are one year into a venture that is a combination of two 10 year old health related professional practices that we combined and added additional health related services and retail to.

    Our first year has been subsidized by the income of the two original businesses which means that both my partner and I are working as technicians to keep the operation going, while we're also working on building the systems that will enable consistency of service in the additional services and to have other technicians relieve my partner and I to just be business owners and focus on building the business.

    We've added staff right from the get go in order to service the additional components of our business model.  What we're struggling with is getting the original clientel of the original two practices to receive the same services from the new employees we've added, because these original clientel are so loyal to both me and my partner individually,   My hope is in building the systems to ensure consistency of service that with time that will be resolved.

    Bottom line:  we're just starting into the adolescence stage.

    Paul Kulpinski
    Mountain Waves Healing Arts

    Submitted Jun 28, 2008 12:24 PM

  10. .Jim C. says:

    I have a small business that I bought 4 years ago. The guy I bought it from is long gone. We sell and produce graphics and lettering for the sides of trucks and other vehicles.

    We have had some growth but we seem to be stuck at level and can't figure out how to move ahead. There are two of us and neither one has what I would call a sales personality. We have been through 3 different salesmen. None of them have been able to produce enough sales to make it worth our while.

    We are going to keep at it but sometimes it is difficult to see any light at the end of the tunnel.

    Jim

    Submitted Jul 1, 2008 7:11 AM

  11. .Gretchen K. says:

    In response to Rod's question:

    In your case, it's not just a lack of money. It sounds like you're trying to do it all – manufacture, maintain stock, distribute, sell, find a new location, purchase raw materials, invoicing, collecting – the list goes on and on. To take it to the next level, you'll need to turn over some of those functions to someone else. For example, if you found some partners to help you with distribution and got firm orders for a significant amount of stock to be delivered within X number of days/months, you could take those orders to the bank as part of your business plan and get whatever financing you need to build or lease a manufacturing facility. This would provide the capital you need, and more importantly it would free up your time to focus on what you do best – making the tools. You could also hire or outsource functions like invoicing and collections to free up the time you need to grow the business.

    It's folly to think you can do this with nothing but your own money. You'll need outside help from a bank and/or outside investors. Either one will want to know four things about you and your business:

    Who are you? What is your background and experience?

    What do you need the money for? Be specific!

    How much do you need? Again, be very specific here.

    What is your plan to pay it back? How much cash will you have to generate each month to make the payments?

    If your banker is any good at what he does, he should be able to assist you in answering these questions or at least be clear on what the bank needs in order to lend you the money.

    And don't let the town council bully you into building a new workshop if you don't want to do it. They have their own agenda – they want the new building, they want the jobs, and they want all of the tax revenue that the building and jobs will generate. They may not care very much if you can afford it or not. You need a facility and a plan that makes YOU the profit you want to make. Hope this helps.

    E-Myth Worldwide

    Submitted Jul 1, 2008 11:15 AM

  12. .nkasi O. says:

    I've been in business with my husband for eight years now, I think We're at the adolescent stage now, though I feel kind of stuck, no progress is being made. Some years ago we decided to outsource  some of our operations but it didn't seem to work. The workers never seem to get jobs finished on time. The workers in- house seem to lack motivation, the jobs come out in error with a long list of horrors. Though I'm lucky to have read the e-myth revisited, so I'm trying to set up systems. Its proving hard, there is so much to address. I hope we get there.

    Thanks,

    Nkasi Ogakwu

    Dining & More 

    Submitted Jul 3, 2008 9:52 AM

  13. .Erin Duckhorn says:

    In response to Jim C:

    There's no quick and easy answers here, but there are some things you can investigate. First, how clearly have you and your partner defined your overall goals? Where do you want to be next year? In 2 years? In 5 years? Write down those goals as clearly and specifically as you can. If you don't know where you want to go, you can't find your way out of the woods and you can't clearly communicate what you want from your salesperson or anyone else.

    Next, do some research into your market. How much demand is there for your services within a reasonable distance of your business? What percentage of that demand are you satisfying? What do your customers most want from your business that they can't get anywhere else? You may never get all of the information you want to answer these questions, but you can always find out more by surveying them. Ask them directly: How would you describe your ideal vendor?

    This research will help you to determine whether or not there is enough potential to expand. If there is enough potential, you can start modifying the ways in which you produce and deliver your services to better meet the needs of your customers. If there is not enough potential, you may need to find other products or services to sell. Or you may decide that it's time to walk away. Either option is better than continuing with no changes - you'll only grow more and more frustrated as the months and years go by if you keep going on as before.

    Submitted Jul 3, 2008 11:45 AM

  14. .Gretchen K. says:

    In response to Nkasi Ogakwu:

    You are certainly not alone when it comes to feeling frustrated with errors in work and unmotivated employees.  The question of how to motivate a team is a popular one. The answer can only be found by asking yourself,  "what is missing in my business (in my system) that is allowing this to happen?" Notice I pointed you in the direction of systems rather than people. Look at your Management systems such as Hiring Systems, Training Systems and Compensation Systems. Do you have positions defined in your organization? Does each employee understand their role in context to the overall result of the company? Have you defined what the overall result of the company is? Do you see where this is headed?  Rather than trying to motivate, try working on your leadership and management systems. It's easy to get stuck and hard at times to find the best way out. Go back and look at your foundational thinking and systems first. You may find that after 8 years - this is the best year yet. By the way, congratulations on your 8 years..that is a tremendous accomplishment.

    All the best,

    E-Myth Worldwide

    Submitted Jul 3, 2008 3:11 PM

  15. .Opal R. says:

    I am thinking of starting my own business in health, but unlike most of  the comments here, my intention is not to be a technician, primarily an entrepeur and manager. My mother is the currently a worker in the field.  Is this bad that I have no experience in the industry (I do have management experience).  I also want to give up my full time job to focus on executing my business plan (which I am now starting to write), but one of my close friends think this is stupid.  he thinks I should juggle the business part time while I maintain my job.  I disagree mainly because my job is very taxing and I often work 12 hour days (most times longer) and I will never get the proper time to launch the business the correct way.  I dont want a mom and pop shop, I want to grow this business to several offices and possible a franchise.  Any opinion, should I stay with my current job and risk not getting the business launched (and possible getting fired from my current job) or should I believe in my concept and make a full go at it?

    Submitted Jul 6, 2008 8:01 PM

  16. .sylvie G. says:

    Hello Opal,

    I think that you should investigate what business ownership will bring you. However, Your first plan of action is not to look at business first but start by identifiying what you are trying to achieve form a business, what will it bring to your life, what do you want your life to look like. Do an internal audit first, than start looking outside and find the business that will give you the ability to have the life style you want, not vice versa.

    I am a Franchise and business coach. If you want to be succesfull you need to establish what it is you want, than finding that business is very easy. I would recommend that you find a business coach to assist you in finding the right business opportunity the one that will bring you to your ultimate goal and specially help you identify what your strenghts are and clarify your vision in a step by step process. Than the next step is to introduce to business models that will meet those goals.

    I would agree with franchising since all of the process and procedure of the business have been tested and proven, all you have to do is a complet due diligeance, you do not need to have expertise in the business you choose, you need to be the Entrpreuneur in your business, you are to work ON your business not IN your business other wise you will be living the Emyth.

    Submitted Jul 10, 2008 9:08 AM

  17. .Ilse D. says:

    I am also just starting out with a new business. I have owned my own businesses before, and swore that I would never do this again. But, I guess I keep having these entrepreneurial fits, and then find myself frozen and wide-eyed in a pile of rubble.

    This new business has taken me by surprise. I was offered an amazing opportunity to design and manufacture a product. At first, I had no idea where this was going to lead, so I kept taking the next step (They want dimensions; I give them dimensions. They want to know what materials; I tell them what I want... step by step). My idea was that I'd start worrying when I had the product in hand.

    So, after almost a year of fussing with the design, I'm finally standing here with product in hand. And I decided to get serious and turn it into a business that works -- to do things differently than I ever have before. Mostly, I need to get a handle on the financial aspect of running a business, which I have usually just hoped would just take care of itself. I know that if this is going to work, I have to square off with money.

    I made an appointment with my local SBA, and my counselor is stellar. He is very excited about the business, and highly recommended The E-Myth to me, which I devoured, and now feel like I have a foundation and a direction. The book demystified the process to me, which is liberating. But also gave me a lot of homework, which I am tackling now: the vision for my life; the product (not the commodity, right?)... That's about where I am: Trying to figure out what I'm in the business of selling, beyond the product I have designed.

    Submitted Jul 13, 2008 11:42 PM

  18. .tammy G. says:

    Where do I begin? I read this book a month after I sold my business, well i nreading the book I sold the furnishigs and leasehold improvements. My customer base I still have. I'm an excelletn tech. 18 yrs experience, but a salon owner of 6 years. I guess I got burnt out trying to wear all titles at all times, ultimately need to be a tech to survive, I plan on re-opening sometime soon but noit without a solid system. I'm only one person, and I get anxiety everyone time someonse wants to go in business with me. I don't want to be tied behind my chair, I just want to train, and inspire other stylist to do their best.  I will not do it again without a solid plan for entering and exiting.

    Submitted Jul 14, 2008 10:12 PM

  19. .Brandon M. says:

    My business is a cross between infancy and adolance, I purchased the business 2 years ago, and at the time the business was 33 years old and dying.  Dying because of Digital.  Photographers used to have it easy at the end of the film stage.  Shoot, Send in the film, 2-3 weeks later get a bunch of Proofs to show the client, then crop and send back in to order.  Very little time spent processing, organizing, backing up.  With digital it all changed.  Now instead of send it and forget it, you spend roughly 7-8 mins on every pose, printing only those you want, and then keeping the client happy by getting it done yesterday.....  <h1> Where we are today in the Photography World </h1>  We are back at square one.  I am the product, the technition, the owner, and the Manager,  I started right by having an accountant handle the books, and now have hired a organization to do it better, and help "focus" me.  I also hired an office assistant who does much of the work that needs to be done, but gets forgotten, or ignored.  I have

    Submitted Aug 22, 2008 5:32 AM


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