Small Company Blues-Why Do Some Small Companies Succeed While Others Fail?

So what is the definition of “succeeding”? Because I’m a fan of K.I.S.S. my definition is short and to the point. Success is continued revenue growth. I realize that the definition lacks the Wharton School of Business depth but for the purposes of this post it works and here’s why.

I have worked with more than a few smaller companies and continued growth comes from one of the following: (I am not including growth through acquisition.)

  • The company did hit obstacles but worked through them to continue growing
  • The company flat-out does everything right and they experience no obstacles

Here are several of the common obstacles that healthy companies overcome:

  • Outdated ownership leaves and is replaced by new owners who do a massive facility upgrade
  • The wrong people are in key positions
  • The owner has never delegated so in effect every decision goes through his office
  • Constant turnover of the sales staff and/or ineffective sales process
  • The wrong model for distribution
  • No new product development
  • Ineffective use of technology
  • Non-existent morale coupled with lousy communication from the top down

Every small company that grows does so because the owner listens to other people inside and outside the organization. I admit, that does sound like an over-simplified reason why small companies prosper but it’s true. Here are a few traits that these small company owners have in common:

  • Every employee in the organization understands the owner’s vision and works toward that vision
  • The owner shows no arrogance or aloofness
  • They take calculated risks based on feedback from a variety of sources
  • They communicate effectively with people inside and outside the organization
  • They are in touch with a variety of customers constantly
  • They have a grasp of the various disciplines that make companies successful. This includes reading balance sheets, finances, sales, marketing, customer service, production.
  • Their doors are always open.
  • They are patient
  • They understand their limitations and pursue outside sources for help.

Doesn’t it feel like I’m describing someone with superhuman qualities? I’m not. Some individuals, for whatever reasons, have the potential to “be” all of these things. They seldom know it when they buy or take over ownership of a company but they understand it during their ownership phase.

Owners can learn these attributes but here’s the kicker. Some don’t have the skill to learn them and others don’t have the sense to learn them. And that is why many small companies fail or ride the wave of mediocrity.

Arrogance is the enemy of success.

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2 thoughts on “Small Company Blues-Why Do Some Small Companies Succeed While Others Fail?

  1. The wrong people are in key positions

    ^I definitely agree with you there. I’ve seen many great companies fail because there’s just one person in the wrong position. It doesn’t take much to bring down a company, but having the wrong person in the wrong position can cause a lot of trouble. Good post 😀

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