This blog is a product of Kevin Lovewell’s journey from Carl Gould’s book Seven Stages of Business Success.

What are the Contributing Forces that Shape a Business’ Destiny?

Firstly and importantly we must look to how each crisis phase shapes managerial characteristics. The skills possessed by the entrepreneur that helped start the business are not the skills that will grow it. As Michael Gerber wrote in his book the E-Myth, in business, we wear three hats; that of the technician, the manager and entrepreneur. But taking both Carl Gould and Gerber’s ideas to another plane, the technician may start the race (phase 1 business) but by the time phase three is reached the skills of the technicians have become much less valuable. Successfully surviving the crisis at three – and then emerging at the other side into phase four, needs the owner to leave the skills of technician behind, to instead learn and apply the skills of the manager.

By the time the owner has driven himself/herself past phase five, the skills of the technician are irrelevant, those of the manager are less valuable – it’s the skills of the entrepreneur that are essential to grow, navigate or survive.

Phase 1 – Start Up

The start-up phase represents the formation of the new business.
The owner (The technician) has an idea. That idea is also wrapped within the owners personal goals. Remember it is the technician in us who starts a business, i.e. the accountant, plumber, hairdresser, architect, tree lopper. Whatever skills possessed personally, represent the only resource that are available, obviously technical skills are at the centre of the start-up phase.

Here is the first mistake contained in the traditional planning process. The owner needs simple plans that set up goals for Direction and Income. Firstly because without cash – the business hits that first barrier really fast. The second is the technician has no skill or capacity to use sophisticated tools outside of his or her particular existing skill set.

Therefore, the simple business plan should concentrate on defining the business and its product or service and getting the first customers. Because the owner is essentially using their “technician” skills, management activity is rejected in favour of the more immediate physical and emotional activity involved in physical labour.

Growth is as a consequence of the creativity of the technician/owner. At this stage the owner is very reactive; building a capability to react to fluctuating and changing demand becomes a real slog; ensuring that the limited funds and resources are spent “right” is essential.

The crisis, when it comes is one of confidence – losing the dream. The promised benefits are dwarfed by uncertainty, long hours of work and modest wages.

Survival and entry to phase two depends upon income from the immediate marketplace reaching adequate levels.

Obviously I have adapted Carl Gould’s underlying directions with knowledge gained in my travels. I still encourage people to read Carl’s book and there are a few others like Alexander Osterwalder’s 2009 book called “Business Model Generation.” Looking forward to your comments and going a bit further in my next blog. ~ Kevin

References:

Some interesting texts the author recommends are:

Gerber, M. (1998) The E-Myth manager: Whey Management Doesn’t work and what to do about it, Harper Business, New York

Gould, C. (2010) the seven stages of small business success, Keynote Publishing, Charleston

Greiner, Larry E., Evolution and revolution as organisations grow (1972) HBR

Reynolds, S. (2010) Why People Fail: The sixteen obstacles to success and how you can overcome them, Penguin Group, Sydney

Tan, J., Fischer, E., Mitchell, R., & Phan, P. (2009) “At the centre of the Action: Innovation and technology strategy and research in the small business setting” Journal of Small Business Management 47(3):233-262

Kevin Lovewell

M: 0401 308 385
E: Click here to contact Kevin Lovewell
Member & Registered Business Valuer
Australian Institute of Business Brokers

Graham Long

M: 0428 649 791
E: Click here to contact Graham Long
Member & Registered Business Valuer
Australian Institute of Business Brokers

Kevin Lovewell

M: 0401 308 385
E: Click here to contact Kevin Lovewell
Member & Registered Business Valuer
Australian Institute of Business Brokers

Graham Long

M: 0428 649 791
E: Click here to contact Graham Long
Member & Registered Business Valuer
Australian Institute of Business Brokers

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