Review of February Events
February ECN Meeting :“The Challenges of Operational Scaling” (Review by Charles Gervasi) At our Feb 4th meeting of the Entrepreneurs and Consultants Network, Kevin Kaufman spoke to us about the challenges of scaling up a business (his presentation slides are available at this link). Kaufman says it’s important to put structures in place early, before the business is ready to scale up. It’s easier to set out to have a positive company culture than to fix it if an unhealthy one grows over time. Being clear about Vision, Mission, and Core Values is important to keep everyone together. It gives you the clarity to say no to ideas that would distract you from your core business. Kaufman emphasizes the dangers of becoming distracted from the business’s mission.
It’s common for business owners to keep 85% of their net worth in their business. According to Kaufman, 70% of business owners are not prepared to sell even if they think they are. As baby boomers retire, there may be more people selling businesses, causing lower valuations. Kaufman separates “value drivers” of a business into market factors and operational factors. Market factors are related to the business’s primary activities. Operational factors are things like HR, accounting, and all the things needed to keep the business operating. It’s important for the person running a business to be at least somewhat involved in managing operational factors.
Kaufman says he often gets three objects as reasons why this does not apply to a particular business.
We’re unique. – It feels like this, but Kaufman says it’s not true. Your business has commonalities with other businesses. Founders need to interact with other business founders. The issues they face are not unique. We’re too busy – This is a time when businesses need to focus on scaling up. Small businesses usually either feel too busy or that they do not have enough business. Both are reasons for founders to put off business planning.
Church meetings often start with a prayer. Kaufman says the prayer makes it less likely the meeting will turn sour. He once worked at a business that began meetings by stating their six principles before every meeting, as a similar reminder to remember the broader mission of the organization.