By Ryan Berry

One of the strangest things about growing a business is that the things that helped you get where you are can eventually become the things holding you back.

When a business is small, the owner can be involved in almost everything. You answer the phone, handle the important customers, approve purchases, solve employee problems, check the work, make sales calls and probably take care of a few things nobody else even realizes you’re doing. It isn’t always efficient, but it works.

Then the business grows. Revenue increases. More customers arrive. Employees get added. There are more transactions, more decisions and more things that can go wrong. Yet many businesses continue operating almost exactly the way they did when they were a fraction of the size.

A $250,000 business might be able to operate primarily from information stored inside the owner’s head. A $1 million business probably can’t.

The owner may know exactly how a customer should be handled, how much discount can be offered, which supplier to call when something goes wrong and what needs to happen before an order is complete. As long as the owner is involved, everything works.

The problem appears when 10 other people need that information. Suddenly, employees are constantly asking questions, customers get different answers depending on who they talk to and the owner spends the entire day solving problems.

At first, this can actually feel like successful growth. The phone is ringing. Employees are busy. Revenue is climbing. The owner is working 60 hours a week and constantly needed. But being needed for every decision isn’t necessarily a sign that you’ve built a successful company. It might be a sign that you’ve built a company that can’t function without you.

Growth requires businesses to change how they operate. Eventually, knowledge has to become a process. Responsibilities have to become clear.

Employees need the authority to make certain decisions without asking permission every time. Managers have to manage.

Information needs to be available somewhere besides the owner’s memory. This doesn’t mean creating a 300-page operations manual that nobody will ever read. It means looking at the things your company does repeatedly and asking whether there is a clear way to do them.

Think about how a new customer moves through your business. What happens after someone calls, emails or fills out a form on your website? Who responds? How quickly? Where is their information recorded? Who follows up if they don’t buy immediately?

What happens once they become a customer? Who makes sure the work gets completed? Who checks that the customer is satisfied? Who follows up six months later?

In a small company, the answer to many of those questions might simply be, “The owner takes care of it.” That works until the owner doesn’t have enough hours in the day.

The same thing happens with employees. When you have two or three people, everyone tends to know what’s going on. You can have a conversation in the morning and change direction that afternoon.

Add more people and communication becomes more complicated. One employee doesn’t know what another employee promised. A manager assumes someone else handled something. Two people complete the same task while another task gets forgotten entirely.

The problem isn’t necessarily that you’ve hired bad employees. The company may simply have outgrown an informal way of operating.

This is where many business owners make the mistake of believing they need better people when what they actually need are better systems. Great employees still need clarity.

They need to know what they’re responsible for, what decisions they’re allowed to make, what success looks like and where to find the information necessary to do their jobs. If those things aren’t clear, even talented people will struggle.

There’s also a financial side to this. As businesses grow, mistakes become more expensive. 


Losing track of one $500 invoice in a small company hurts. Losing track of dozens of them can become a serious cash-flow problem. A few missed follow-ups might not matter when you have 20 customers. When you have hundreds, those missed opportunities can represent significant revenue. Small inefficiencies multiply as volume increases.

That’s why growth isn’t simply about getting more customers. You have to build the organization capable of serving them. Sometimes the smartest decision a growing business can make isn’t another advertising campaign or salesperson.

It might be implementing a better customer management system, documenting a key process, training a manager, improving financial reporting or finally delegating something the owner has controlled for years.

There is no magic revenue number where this transition happens. A complicated $500,000 business may need more structure than a very simple $5 million business. The important thing is recognizing when the organization has outgrown the way it currently operates.

Here’s one way to spot it: Pay attention to problems that keep happening. If employees repeatedly ask the same questions, customers repeatedly experience the same issue or the owner repeatedly has to step in and fix the same situation, you probably don’t have a people problem anymore. You have a system problem.

Every stage of business requires something different from its owner. Early on, your job may be doing almost everything necessary to survive. As the company grows, your job increasingly becomes building a business where other people can succeed without you being involved in every detail.

You can’t build tomorrow’s business using only yesterday’s systems.

Question of the Week: What part of your business are you still operating the same way you did when the company was much smaller? ■