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Like organizational careers, the growth stages in entrepreneurial women-owned firms take many twists and turns. According to the National Foundation for Women Business Owners, many firms are growing larger, but are still predominantly owner-manager operations.
At startup, owner management can be a very good thing. Founder-led companies, though smaller, are more profitable than firms led by nonentrepreneurial managers because owners have a large span of control and can move swiftly. Motivated to sustain and grow the firm, founders are invested emotionally, financially and intellectually.
But as growth continues, the operational demands of the business may remove the founder from the creative aspects that enabled success in the first place. Founders at this point find their time increasingly taken with administrative and “firefighting” duties.
At first, founders may not recognize the toll on their creativity and drive. They also may not be using strategic planning techniques and thus react slowly to environmental changes. Owner/CEOs often develop a perspective unique to their business and become prone to generalizing from a few observations based on past experiences, which may no longer match market demands or a changing environment.
When is it wise for the founder/owner/CEO to continue controlling everything or concentrate on the creative side and turn operations over to a professional manager?
The importance of making just this kind of decision was addressed in the Small Business Administration E200 pilot program, initiated in 2009 among 200 inner-city small-business owners and executives from 10 cities. The selected participants had established businesses which had grossed at least $400,000 annually over the previous three years. The 100-hour applied curriculum (more like a mini-MBA) was designed to help owners employ multidisciplinary tools to analyze their businesses and develop concrete, multi-tiered five-year growth strategies focused around modules (core strategic planning, financial literacy, marketing, resource management, etc.).
The SBA program recognizes that entrepreneurs may need assistance to successfully lead their organizations through the stages of expansion and maturity. Two women participating in the E200 program illustrate how thresholds can be overcome.
After completing the financial segment of the E200 training program, Kelly Sargent, owner of Brainstorm Marketing Inc. in Des Moines, Iowa, found that she was no longer afraid of the numbers — a stigma previously holding back her success strategies. Sonya Jones, owner of the Sweet Auburn Bread Co., a small downtown bakery she opened in 1997 in Atlanta, felt enabled to “break free of a business-as-usual mindset” to a strategy for growing her business without increasing the square footage.
There are other approaches. According to one study, a decision to employ professional management requires founder action on four fronts: relinquishing control while able to counsel, withdrawal from active management, public commitment to a plan of succession and articulation of a new mission statement.
For a founder, all this involves a change in the delegation of tasks and the withdrawal from many day-to-day activities. Founder-owners dealing with the threshold decision need to answer some key questions.
1. Can I or do I need to make the transition to professional management?
2. What are my goals now?
3. Will some other strategy give me better results?
4. Where can I get good recommendations?
5. Whom do I really trust to talk straight?
Sound advice is important to achieving long-range goals.
Where to get it? Just as networks are critical in the initial foundation of the business, a good support net can be key to arriving at a wise threshold decision. A founder who has actively engaged in building network credits is strategically positioned to know who to trust for vital feedback and cash in on the advice.
Networking can’t be an afterthought, something to be done after more important business matters are tended to. As a Chicago entrepreneur pointed out, “Without the personality, networking, connections and the ability to put the pieces all together, one can’t do well.”
Launching and operating a business requires constant networking. Female entrepreneurs with mature firms attribute sales growth to network activities that enabled them to gain strategic advantages over larger, more established competitors. As Suzan Kotler, a Cincinnati entrepreneur, explains, “You have to put out more than what you expect to get back and it will usually come back to you more than one hundred fold. If you don’t do it that way you usually end up with zip.”
The bottom line is that only an unwise entrepreneur will say, “I can do it all by myself.” The notion of the lone wolf — that a single individual can make it unaided in a rapidly evolving technological environment and an increasingly international economy — is not just a romantic relic, it is a dangerous idea.
Dorothy Perrin Moore, Ph.D., is professor emerita of business and entrepreneurship at The Citadel.
The Job Coaches are experienced volunteers from the Center for Women’s Job Counseling Program. Ask them a question by calling 763-7333 or e-mailing email@example.com. If you would like further assistance, make an appointment; a donation of $20 is requested for appointments.
First appeared in the Moxie section of The Post and Courier Friday, June 18, 2010.