Dear Jayme,

My drywall business grew steadily to about $1.3 million and then things got weird. When I tried to keep growing, the business would increase somewhat but then fall back to around the $1.3 million level. This happened a couple of times. The market is out there, but there just seems to be too much for me to handle when the business gets bigger. Am I stuck here forever?



Dear Josh:

First of all, building a profitable $1.3 million business is nothing to sneeze at, so you’re doing something right. Here’s what’s probably happening to limit your growth:

Repeatedly growing and then slipping back is a sign that you’re too personally involved in one or more of your business’s key operations. It means that at some point (around $1.3 million in your case), there begins to be too many balls for you to juggle and/or not enough hours in the day, and things start to fall apart. The business (and you) automatically adjust back down to where you can handle everything and the balls are manageable, but you feel stuck.

Let’s suppose Marcel owns a plumbing supply store that depends on him for one or more key day-to-day functions, and he’s currently working about fifty hours a week. Then he opens a second store across town that also depends on him in the same ways. What’s going to happen? Marcel will pull it off for a while, running between the stores and working more hours, but he’ll be killing himself, and the performance at both stores will suffer. After a few months of this, Marcel will throw in the towel, shut the second store and go back to a one-store operation.

Bottom line: The business is too dependent on you for day-to-day operations, and you’re the reason that the growth can’t happen.

Up to about $1 million, contractors can get by on their trade skills, intelligence and energy. Things can be managed in your head, and you can keep an eye on everything yourself. Beyond $1 million, however, the world changes. The owner must transform from being not only an expert tradesperson to being a true business manager, and this requires a completely different set of skills that most contractors didn’t have a chance to develop.

Leaders and managers need to be skilled at things like delegation, monitoring and control, strategic thinking and planning, systems development, being a role model, human resource techniques, communication, and financial management. You didn’t just pick up your trade expertise by chance, and you won’t develop these management skills without a similar conscious effort and practice.

Once Marcel makes the day-to-day business functions run without him, the limit to growth is gone. The second store (and the third, fourth and fifth) are relatively easy to establish. It doesn’t mean that growth doesn’t require effort, but it means the stone wall, which made growth impossible, is gone.

Once upon a time, you started with just yourself and maybe a partner. Then you hired an employee or two and matured from lone wolf to a real (though probably seat-of-the-pants) business. Now it’s time for another bit of maturation: transforming yourself into a skilled business manager and your business into a true standalone enterprise that isn’t limited by your own time and personal involvement.

 (And yes, many of our clients really do take a month off and let their businesses run themselves. They didn’t believe it at first either).


Construction Business Owner, March 2008