Jim Huston runs J.R. Huston Consulting, a green industry consulting firm.
Did you ever notice that many of the people who have large (more than $5 million in annual revenue) green industry companies came from large companies? These entrepreneurs think big. It’s in their DNA. Have you also noticed how difficult it is for small companies to grow to become big companies? It’s not that these entrepreneurs perpetually think small – some do. Rather, it’s because they don’t have a road map to get them to where they want to go.
As a result, they can’t wrap their heads around the structure, the personnel requirements and the systems that need to be in place for sustained and profitable growth. This is why benchmarks regarding the five levels of growth are so important. These benchmarks provide a road map of sorts for those entrepreneurs attempting to figure out how to get to the next level.
Stages of growth.
At less than $5 million in annual sales, there are five stages or steps of growth. Three of these steps take place at less than $1 million in annual sales. At each stage, an entrepreneur has to reinvent himself or herself. This may seem like a simple task, but it’s not.
At each stage, an entrepreneur has to put in place the right team and systems to ensure that sufficient work is sold and produced profitably. The systems part is the easy one. Where most entrepreneurs fail is building and sustaining the right team.
The D.A.D. principle.
Think of it this way. To get to the first step ($300,000 in sales), you as an entrepreneur have to work in the field, in the office, sell the work, etc. You’re doing everything as you direct two to three installation or five to six maintenance crew members. To get to the second level ($600,000 in sales), you need to hire a couple of really good crew leaders who require minimal supervision. It’s these individuals who will replace you in the field. You also need some part-time help in the office. These people allow you to sell more work and supervise it to ensure that it is being produced correctly.
To get to the third level, essentially the $1-million mark, you need to add more crew leaders who require minimal supervision and probably a full-time office person to handle phone calls, do the accounting, etc. It’s at the third level that an entrepreneur has to hire not just crew leaders but also managers. This is often where the problems start.
An entrepreneur who hires and directs crew leaders and laborers has performed both of these jobs. At this level, the tasks to perform by the crews and that the entrepreneur needs to supervise are very tangible.
It’s all about planting trees and shrubs, installing patios, mowing lawns, edging beds, fixing irrigation systems, etc. To direct installation and maintenance crews, a supervisor (the entrepreneur) has to be very clear and concise with his or her instructions. There’s not a lot of “wiggle” room as far as getting the job done right goes.
Supervising managers, however, is an entirely different exercise than supervising crew leaders. Managers need parameters (general guidelines) within which to work. It’s their job to figure out how to get the work done on time, on budget and at the required quality level. The task of a manager is much more intangible than that of a crew leader.
When managing managers, an entrepreneur has to learn how to delegate and disappear (D.A.D.). It’s called the D.A.D. principle. If an entrepreneur is a control freak, he or she will:
- Drive away good managers who refuse to be treated like glorified gophers.
- Surround himself or herself with sycophants (yes-men).
To grow your company to $1 million and beyond, an entrepreneur has to build systems and a team comprised of crew leaders and managers who require minimal supervision. Managing managers requires a very different skill set than that required to manage crew leaders. This is where most entrepreneurs get into trouble. They attempt to micro-manage managers instead of providing them with general parameters that contain measurable goals with deadlines.
If they learn how to employ the D.A.D. principle, an entrepreneur can grow to just about any size he or she wants to. If they do not learn the D.A.D. principle, the company they build will be nothing more than an adult daycare facility. Instead of building a high-performance team that requires minimal supervision, you create a team that needs a babysitter.
Next month we’ll discuss steps four and five.