Growing Your Business While Avoiding Founder's TrapPosted 4/14/2004
By Larry Edwards, CMC
Whether it's a plant, person or business, everything goes through a life cycle - evolving from birth through multiple life stages and, eventually, death. Various behaviors occur at each life stage, manifesting themselves in certain struggles or challenges, which must be overcome in order to progress to the next stage.
Repair shops, like other businesses, go through this evolutionary life cycle, which is comprised of eight stages: Idea, Child, Exploratory, Adolescent, Prime, Stability, Bureaucracy and - finally - Death. In each stage, the shop must receive the right nourishment to overcome its challenges. The lack of nourishment may even cause it to die an early death.
A business will only continue to grow when it has clear objectives and goals and remains customer driven, but this can be a challenge in times of economic uncertainty. With the auto industry's current state of flux, repair shops everywhere are looking internally and tightening their belts to keep their business afloat. While belt-tightening is important, it's critical that these measures don't stifle the growth of the shop and inhibit its evolution. To be successful over the long haul, shops must continually move from one life stage to the next or face the real possibility of dying prematurely.
Nurturing the Idea
The first step in the evolutionary cycle is the Idea stage. Every business starts with an idea in someone's mind - whether it be a child of a shop owner who is excited about bringing the family store to the next level or an employee who looks at his boss and thinks, "I know I can do better," and goes off on his own. Many businesses die in the idea phase, usually from a lack of commitment to the vision or a lack of funding.
Watching the Child Grow
If both these components are available, the business progresses to the Child stage. This is the fun stage of the life cycle. After all, there is much to celebrate - a goal has been achieved and a business has been born. The child stage is a period of great learning and it tends to be focused on satisfying customer's needs in an effort to grow market share. The managers of a repair shop in the child stage may know how many cars they repaired and how much market share they've gained, but they often are so busy selling services they don't know how much money they've made.
Exploring the World
In much the way that a child grows, businesses progress quite quickly to the next stage, called Exploratory. In this stage, the new shop begins to focus on cash flow and how to thrive as a consistent performer. Here, the business is trying to find itself and tremendous power struggles often occur as a result. The founder turns his or her attention to finding new methods of doing business or improving the current business strategies.
During this exploratory phase, management from any number of departments may assume power and begin influencing the organization. The founder must be extraordinarily careful when giving power to his managers to ensure that no one department or individual has more power than is required to manage his area of influence. The key is balancing the power among a trusted group of employees, versus placing a single focus on one area, such as sales or production or accounting. Owners must keep track of the power shifts within their store and make the appropriate changes to rebalance the group or the business is likely to falter.
The world is its oyster as the shop reaches the Adolescent stage. The idea has blossomed and all that hard work is consistently producing fruit. This is often the phase when the founder starts believing he has the magic touch and can be successful at any venture he decides to take on.
With substantial capital available, shop owners often embark on other endeavors, such as investing in restaurants, additional shops, used car lots, rental agencies or real estate. If these new businesses are not successful, the owner can quickly lose much of the money he worked so hard to earn. Or, if the new businesses are a success, then the shop can suffer from neglect.
Any power shift that began in the Exploratory stage is likely to increase. Often manager infighting ensues and walls are built around departments to insulate them from other departments. Even if a shop owner is pursuing outside interests, he needs to make an effort to regularly communicate his vision and his objectives for achieving that vision to his employees. This will help prevent managers from establishing their own agendas that may or may not be in line with the founder's goals.
In Your Prime
As shops begin reaching the Prime stage, the focus becomes more internal and less customer-based. Managers and employees are thinking about their own survival rather than on answering the phones or smiling at customers. The shop is likely to experience a higher rate of turnover and greater employee turmoil. As these changes happen, the founder is forced to put aside outside pursuits started in the Adolescent stage and focus on bringing stability back to the store, either by themselves or by hiring a professional manager. In this stage, owners would do best by putting their emphasis on their human resources - getting the employees to believe in the company vision again. Employees should be reminded regularly that the shop wouldn't exist without its customers and that they must work to satisfy their customers' needs in order to succeed.
Appearances Are Deceiving
If the turmoil of the Prime stage continues, it eventually leads to the Stability stage, where the business moves from a focus of satisfying customers to an emphasis on internal rules, policies and procedures. In this stage, people are hired because they fit the rules, not because they have proven they can actually do the job.
On the surface, it appears that the business is stable. Budgets are established to ensure consistent profits and employees seem to be on track. Yet it is at this point where the shop is aging the fastest. Because everything is status quo, the focus is not on growing the business. Soon, sales begin to drop and the organization becomes focused on maintaining the customers they've got. For many dealers, this can be the beginning of the end, but even at this late stage the aging process can be slowed or even halted by placing the focus back on satisfying customers' needs. Over the long term, businesses succeed when they are able to grow their customer base at a rate faster than they are losing current customers.
If this shift doesn't occur, the stable shop evolves into a Bureaucracy. In this stage, the focus is completely internal, to the point where the customer is viewed as an inconvenience. Managers are successful when they can interpret the rules better than other managers can. They avoid decisions by having meetings to discuss the rules. For big decisions, special committees are formed so managers do not have to accept responsibility. Eventually, every employee erects a wall around him or her and no one works as a team. Customers become dissatisfied in their experiences and they stop coming, which leads to the slow death of the shop.
The key to long-term success is to continually evolve the business. Start by always treating the customer as if the shop were in the Child stage. Regularly explore new and better ways to serve the customers. Regardless of other owner pursuits, avoid the adolescent mistake of not focusing on the business of repairing and servicing cars. While establishing rules is important, do not let them overshadow customer needs or stifle creativity. Work toward achieving prime while avoiding stability. When goals are reached, new goals should be immediately set, so the shop is always reaching for new heights.
By continually evaluating which stage of growth the shop is in, owners will have a level of awareness that is pivotal to the store's success. Once there is awareness, it is simply a matter of moving the business forward or backward to the stage that is appropriate to ensure continued growth.
Following are five simple rules you can follow to ensure growth and continuing success in your business.
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