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Growing your business past yourself print Print

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If your business has stayed at more or less the same level over the past few years, this guide will help. It looks at the progression from sole owner operator to director, outlines the advantages of growing your business and offers some tips on developing your business past yourself.

The owner operator progression

In the logical scheme of things, the progression for a small business operator might be like this:

  • The founder starts as an owner operator (often a sole trader) then progresses on to:
  • Owner manager employing other(s) then to:
  • Owner director(s) of a more formal company structure.

However, not all business people can (or want to) move from one level to the next. And the reality is that there is a huge difference between a business person and an entrepreneur. You can check the profile of a business person versus an entrepreneur on at the end of this guide to assess where you stand on the comparison chart. You might find that you are mostly a business person at heart, but you do share some of the qualities of an entrepreneur.


Why businesses don't grow

There are a number of linked reasons why business owners don't grow their businesses For example:

Comfort zone

The prime reason why most businesses don't grow beyond the owner is that the owners have decided they are happy with things the way they are and want to remain in their comfort zone.

Lack of skills

A second limiting factor is lack of experience or managerial skills to grow the business or take the employment step. The owners are very capable at what they do, but don't want the added administrative complications of a larger business.

Fear of the unknown

The owner has developed a steady business. Even though it may be relatively modest, the owner sleeps well and does not wish to add layers of stress and anxiety through possibly increased debt and complexity.

Security and retaining control

Many owners realise the potential of their business is limited, but at least they have full control of proceedings and feel secure in their running of the business.

As a result of these factors, the reality is that many businesses:

  • Will never grow past the owner.
  • The owner has no wish to delegate.
  • The owner runs the business for lifestyle.

Typical examples of these 'lifestyle businesses' are trades people such as plumbers and electricians, consultants, florists, small retail stores, motels, repair people, and small lifestyle block farming units.


Consequences of not growing

However, choosing not to grow your business does have consequences. These include:

Boredom and lack of personal growth

If you keep on doing the same thing day after day, you are likely to build your skills to a certain level and then plateau. Once you've stopped learning or growing in the job, you will have to fight the boredom factor.

Stress and burnout (the 'busy fool')

Boredom is a stress factor in itself, but in fact many businesses fail because the owners simply burn out through trying to do everything themselves. Business advisors call this the 'busy fool' condition: the owner working harder and harder for less and less. This leads to a feeling of entrapment, a lack of interest in the business and a desire to sell out or get rid of it. The classic analysis of this syndrome can be found in Michael Gerber's classic: 'The E-Myth: Why Most Small Businesses Fail and What to Do About It'.

Ceiling cap on income

Most sole operator businesses that sell time (such as the trades or consultancy type businesses) have a natural ceiling growth imposed by the number of working hours in the day. In competitive industries there may be little scope for increasing the hourly rate.

Vulnerability to sickness

A one-person business or even a business assisted by a lifestyle partner, but essentially dependent on the specific skills of the owner, is very vulnerable to sickness or accidents. For example, a plumber falls off a ladder and can no longer work. While ACC and income protection insurance may provide some relief, in many cases the reality can be a serious drop in income for the family.

Vulnerability to time

We are all getting older, and some trades in particular (such as the building trade) are known as the preserve of the fit and young because they demand comparatively high levels of strength and endurance. Similarly, a sheep shearer lasts only as long as their back holds out. The question you must ask yourself is: how much longer can you realistically do what you're currently doing?

Vulnerability to market changes

A 'one person band' lacks the diversity of skills and creative ideas that can be generated in a larger business and is therefore more prone to sudden downturns in the market. In addition, the smaller the business, the less 'fat' there is likely to be stored away for a rainy day.

No legacy - nothing to sell

If you are forced to retire through age or circumstance, there may be little or nothing for you to sell. Many sole-operator businesses simply settle their bills and close the doors.

Advantages of growing

Leveraging your knowledge and skills

The longer you're in business, the more knowledge and skills you develop. By employing others, you can leverage off this acquired experience and expand your income, since you're no longer limited to the hours in the day you can actually work. You direct the work rather than doing all of it yourself. See our articles Taking on your first employee and The importance of delegating. Your work becomes less physical and more mental: you're able to work on your business, not in it. This new freedom often enables business owners to develop more creative futures for their businesses and take the businesses to a higher level. See the ANZ Biz Hub article Thinking strategically about your business.

Cover for sickness, age or disability

Building your business also provides employee cover for emergencies. Daily operations can continue if you are sick, or suffer an accident that keeps you away from work, or only able to work partially for a while.

Retaining your interest

Personal growth is another good reason for growing your business. The challenges you face will dispel boredom and possibly give you a new interest plus additional business skills that could stand you in good stead.

Something to sell

Creating a growing business that can stand independently of you creates a saleable asset in the process for when you decide to retire.

Succession legacy

A good reason to grow into the company structure and employ others is that you have something to pass on - either to your children or perhaps to staff. For example, staff may be far more motivated if you let them know that you intend exiting in x years and they can buy the business from you at that stage. There is also the satisfaction of knowing that something you founded will survive beyond you. See the ANZ Biz Hub article Succession planning made simple.


Steps to growth

Gain a sense of what needs to be done

Take a few days off from 'total immersion' in your business and use the advantage of a fresh location to gain some perspective on the business. Use a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) to identify possible blocks to growing the business and the factors that cause you the most stress. In particular, analyse your business skills and identify the areas you need to develop or strengthen.

Make sure you have a competitive advantage

A business without a genuine competitive advantage or unique selling proposition (USP) is likely to remain a lifestyle business. To grow you must develop a competitive point of difference to similar businesses. For example, if you are a trades person, this could be a money-back guarantee that you will turn up on time, every time, or perhaps you've developed more efficient ways than the industry average of getting the job done.


Complete a business plan

The next step is to complete a business plan outlining your intended growth and making sure that you have the finance and resources lined up to cope with the expansion.


Systemise the business

The key to being able to work ON your business (developing its potential) rather than IN it (stuck on the hourly rate treadmill and trying to do all the paperwork) is to develop efficient, simple business systems that others can easily follow. This will enable you to quickly train new people and will impress buyers.

Get marketing help

Read the many ANZ Biz Hub articles that offer tips on new marketing initiatives, particularly How to write a marketing plan.

Take the 'leap of faith'

Taking on your first employee is often something of a 'leap of faith' since there is often not quite enough work to justify the act.

Combat isolation

It is all too easy to lose perspective on your business by letting yourself become isolated from other businesses. Make a point of developing your business networks and attending network meetings. See the ANZ Biz Hub article The importance of being connected.



An excellent read is Michael Gerber's classic book: 'The E-Myth: Why Most Small Businesses Fail and What to Do About It'.

Useful Solution Guides include:


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