What really limits the family business to expand?
Small and family businesses benefits from the simplicity of their structure and the dedication of their owners. Furthermore, most often they provide great consumer experience because of the personal attitude. This is why some of them are so successful that they easily start to grow into a medium size company. But why not all of them can do this, what stops the single location family business to turn into city, state or even national brand?
- Small businesses have very flexible and simple structure. The problem is that very often the owner underestimates the importance of a good organization of the process and duties. Although, the company may just have few employees it is crucial everyone to knows exactly what he has to do and when. Every employee should know what he is responsible for. This would enable to easily hire more people when necessary and easily fit them into the existing structure. If it is the opposite hiring more people would result into the diminishing marginal productivity, thus increasing the final cost of the product and eating up our profit.
- The dedication of the owners often is wrongly understood. Very often those people are control freaks. They want to check on everything by themselves thus leaving no room their talented employees to prosper. The final results would be to either not use the full capacity of the employees or making them leave in search of a better chance for career progress. Remember the business will grow with the people you currently have. Everyone’s responsibilities will grow and you should try to trust them, explain them what do you expect and give them clear targets. If they fail do not be angry, always take the blame for the failure of your people. Discuss what is the problem, why they do not match your expectation. There are some people that just reach their limit and cannot grow more, but others will actually help you a lot. They have been long enough with you to know the process, the product, and the people in your company and thus will be loyal and fight for you.
- Small companies often do not want to grow. That is a tricky thing in the business – you either have a good product, optimized process and the correct people and it just happened to grow or it is the opposite and you are shrinking. It is very rare that a business can stay on a single step for a long time, either go down or up.
However, many owners do not want to grow to more locations and so do not see why it is necessary to spend effort to do inventories, optimize the production cost, improve the efficiency and try to get more work.