Your Growth in 2015: Seedling, Sapling and Mighty Oak

Now the recession seems to be behind us, I am sure many of you have ambitious plans for growth in 2015. If so, this is now the time to start expanding your network of mentors.

I often say that the primary success factor for any entrepreneur is their ability to find and retain good mentors; people who are happy to give them the advice they need, for free.

Success is not about the merits of your idea. I’ve never ever heard a completely unfeasible elevator pitch, though some of the pitches did assume that the elevator got stuck for a couple of hours!

Business is all about execution, about doing simple things well. Hence, the need for people who can give you good quality free input on the merits of your ideas, and even introductions to potential first customers. After that, it’s down to you to make your business work and to move through a number of simple and well-understood growth phases.

I still use the model that Chris West and I developed in The Beermat Entrepreneur. A large number of people (about 50% of the population) have an aspiration to start a business, perhaps initially in parallel with their regular employment.

I now call these people Apprentice Entrepreneurs, characterised as being ‘pre-revenue’. As soon as someone gives you money for your products and services, you become a Seedling, typically working from home at first.

Nowadays, there is no reason to have a formal office. If you are successfully and profitably running your home-based business, you can be a Seedling for as long as you like.

You may never even have to write a formal business plan; you just make sure you have cash left at the end of each month. You are essentially a ‘one-person band’, though you can have any number of self-employed sub-contractors working for you at any particular time.

But as you grow, you may decide there is a genuine need to have a formal office. You might want to move your enterprise out of your home to keep work and family separate. You might now have full-time staff and other colleagues who need to communicate on a daily basis. You might need to appear more substantial and professional to key customers.

There are now many excellent options for cheap office space, including ‘hot desks’ and serviced offices, all on very flexible terms. But if you do take the big step of having a ‘proper’ office address, you certainly need to have your finances under control.

The only reason companies go broke is because they run out of cash, so it is important to have proper financial management systems in place and someone who is on top of your cash-flow on a daily basis. This can be a part-time accountant or even a virtual finance director, even if they are only formally engaged for one or two days a month.

Once you are established in your office you have now become a Sapling, and have the basis of a sustainable long-term business. As your revenues and profits increase, you can then take on extra staff, and you really get the feeling you now have a ‘proper’ business.

I always enjoy visiting Sapling companies; there really is ‘buzz’ about the organisation. But as they approach 25 people, I always advise them to take a pause, and then decide exactly where they want to go in the future.

There is a very strong argument for keeping a company below 30 people, a ‘boutique business’. All your members of staff, as well as your key customers are your personal friends. Communication works well, often with everyone meeting in a restaurant on a Friday night. You can increase your prices and your customers don’t mind, due to the excellent products and services that you provide.

You can run a ‘boutique’ Sapling business for as long as you like and be extremely profitable. Eventually, you can pass your business down to your family or staff. Your retirement will be very comfortable.

But you may be ambitious to grow your company past 30 people, to make some serious money or to make a difference to the world. If this is you, then I have some simple advice: hire ‘grown-ups’.

Ambitious entrepreneurs who stumble unknowingly past 30 people suddenly find that life is no longer as much fun as it used to be. Employees say that nobody tells them anything any more, while at the same time complaining about the large numbers of internal e-mails. Your pointing out that if they read all the e-mails, they would know what was going on only seems to make things worse.

Employees feel disconnected from the entrepreneur. The entrepreneur feels besieged with a new set of people-related problems, such as the need to let under-performing staff go, who then re-appear at industrial tribunals. There never seems to be enough hours in the day.

The company is now making the transition into a Mighty Oak, which happens a great deal earlier than people suspect, around 30 people. To grow past this stage requires not only formal systems (such a lock on the stationery cupboard and time-sheets) but people experienced enough to implement those systems effectively and fairly: ‘grown ups’.

This is often the hardest growth phase for any entrepreneur. They have to take a long, hard look at their own strengths and weaknesses and then hire people better than themselves in key positions.

The right ‘grown-ups’ are definitely out there, usually working for large companies where they feel are unlikely to make a real difference. Your company, with its proven business model and ambitions for growth, is the entrepreneurial opportunity they have been looking for. You just need to find them, and once they are in place, let them get on with it, without ‘meddling’.

This is probably the most valuable mentoring that I provide, helping entrepreneurs through this very difficult and often emotional time. So if you are planning to go through this Sapling to Mighty Oak phase in 2015, please get in touch.

In the meantime, have a great Christmas and I wish you a very entrepreneurial 2015!

Mike Southon can be contacted at mike@mikesouthon.com

Mike Southon

About Mike Southon

Mike Southon is a serially successful entrepreneur, best-selling business author, mentor and one of the world’s top business speakers on entrepreneurship, intrapreneurship and sales.

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