The Small Business Growth Trap

There is a clear line. If your company crosses it before it has institutionalized a winning business development process and culture, it may never be able to recover. Most businesses drive right off the cliff because they are more concerned with keeping the car going than where they are steering.

The problem starts when companies are in their startup mode. Everyone is wearing multiple hats and figuring out things as they do them. They don’t have the capacity do something extra like formalize their business development processes.

I talked with one company that went from 40 people, to 80 people, and next year will be at 300 people. Another company I worked with went from 20 people, to 40, and then 200. This kind of growth is not unusual. Once a company is established and proven, they start to land larger contracts. Instead of growing neatly and incrementally, they grow in massive spurts.

However, what really matters is not their total head count it’s how many people in how many locations are supporting business development. What triggers the trap is when they go from just 2-3 people in one location involved in business development to 5-10 people at multiple locations involved in business development. Instead of making it up as they go along, they now need coordination and a workflow that supports developing an information advantage.

The Small Busines Growth Trap is fully sprung when they open other locations. That is the point at which they lose control without ever realizing it. While impressed with their growth, they are about to spoil their future. If they don’t already have an integrated approach to business development, what they end up with is different groups with different priorities, agendas, and approaches.

What they grow into is a group of dispersed staff. Each new person brings different skills, capability, and experience. In the absence of any other direction, each person does things the best way they know how. Since most are quite good (that’s why they got hired), the company continues to grow. But even just a year later, as the company evolves, precedents are set and their corporate culture for business development becomes based on groups who have developed their own ways of doing things. They become a collection of business development groups instead of one integrated company.

The Small Business Growth Trap becomes harder and harder to escape as time passes on. Ultimately it limits the potential of the company because their business development and proposal functions are not coordinated. Each territory does things their own way, and it’s impossible to get everyone on the same page. Some groups do a good job and some groups don’t. The company marches on, never realizing how much bigger and better it could have been. Until that fateful year of expansion, the trap can be avoided. But once you are in it, you get sucked in like quicksand.

Once the trap has sprung:

• Changing business development procedures will be disruptive and could impact the company’s continued growth.
• Processes that are not fully documented cannot spread ("I know how to do it" is not sufficient for others to follow).
• It costs far more in time and training to implement a standard process.
• The business units or operating groups are now large enough to be small companies of their own, with sufficient power and control to resist a process roll-out.
• Anything less than a top-level mandate to implement a standard process will probably fail.

This is the Small Business Growth Trap. The key to avoiding it is going beyond having a way of doing things and having enough of a process so others can follow it when no one else is there to tell them what to do. While training helps individuals perform better, it will not give you a process. Training can be part of implementation, but only if it’s tailored to your particular process needs.

A big part of winning bids as a company is knowing what information people need and how to get it to them so that it results in a winning proposal. For people to do this, they have to know what is expected of them. That is what you want from a business development process. Here are some simple tricks we’ve discovered that will help you avoid the Small Business Growth Trap:

1. Focus on roles instead of positions or people. Don’t build your process or culture around your superstars. In the early stages, it’s common for one person to do it all. Then when someone else is hired, they split things up according to their strengths. If you keep doing this, everything will be defined by individuals, and the Small Business Growth Trap will consume you when you end up with more than one group, each doing it their own way. You’ll also be vulnerable to turnover. Instead, you should focus on what needs to be done and define the roles that need to be played. If one person plays all the roles at the beginning, that’s fine (assuming they can keep up with it all). But as more people are added, they should fill roles and not just split up duties according to individual desires. What needs to be done to win is independent of who is doing the work. Defining the roles, even if people wear multiple hats, goes a long way towards setting expectations regarding who should do what.
2. Focus on information instead of steps. Don’t build a process based on a flow chart. It will break in practice and people will ignore it or “fill in the blanks,” resulting in people doing things differently. Instead, focus on what information you need to prepare a winning proposal, and trace it back to the beginning. You can actually define your entire process as a series of questions. As each new person becomes involved, they’ll need answers in order to take things further. You can refine the questions and answers over time, so it’s easy to implement. Checklists are better than steps because things don’t always happen in sequence. If you set them up to provide guidance to the people creating as well as the reviewers, they’ll also help keep everyone on the same page.
3. Focus on three phases. There are three main points in time when you need everyone on the same page regarding what information is needed to win, what to do with it, and who is responsible for what. The first is the pre-RFP phase. Then there is the transition from pre-RFP into the proposal. Then the proposal phase. Too much structure at the beginning is a burden. But a little bit of structure is a big help.
4. Put it in writing. If you can’t send it to someone you’ve never met at another location and have them be able to follow it, then you don’t have a process. You just have a way of doing things. You don’t need a set of process documentation that addresses every little thing. But you do need just enough to keep everyone on the same page. If you do things at the level described here, your entire process could be described in 10 pages. Maybe five to start with. Use those key pages to keep everyone on the same page. Require those pages to be updated with every process change. To avoid the Small Business Growth Trap, you need one document so short it can almost be memorized, that defines how your company wins. It should explain who gathers what information and who does what to it to result in a winning proposal.
5. Avoid orphans. Be careful about what people have to do to follow the process. Avoid creating plans, reports, and forms that have a single use and are then ignored. The way you store and present information should make it easy for the other participants to make use of it. That means instead of a report or presentation, provide what will be needed for the next step in the process.
6. Keep it scalable. If you focus on finding and assessing information that relates to what it will take to win, then it should be applicable to all proposals. People change. Deadlines change. RFPs force change. But what you need to do to win remains the same. If you focus on that and define roles functionally, then you have something that adapts to circumstances while still establishing the standards and expectations you need to set across your company as it grows if you are going to keep everyone on the same page, have a fully and continuously integrated effort to win new business, and achieve your company's full potential.
7. Recognize why it’s important. It’s not about increasing the company’s revenue, although I’m sure the owners who employ you appreciate that. It’s important because it’s how your company creates new jobs, opportunities to promote its employees, and the finances to permit salary increases. With each contract, your company locks in its prices and revenue, usually for years at a time. Without new contracts, those finances will usually not expand. In fact, they may shrink due to inflation and cost creep. Business development is not a necessary evil, it’s the only way to reward the people who make up the company. Each new bid is also an opportunity to redefine the future of the company, what it will become, and how it does things. So doing it well by perfecting how you work like a team is important enough for everyone to put some effort into.
8. Cheat. Buy it off the shelf and then customize it instead of creating everything from scratch. A subscription to PropLIBRARY gives you a scalable and fully documented process library that you can put to work immediately. It puts you in the position of being able to say “this is how we do things” before people starting coming up with their own ways, and without having to take the time to create it yourself. It will make life easier and increase your win rate now. But more importantly it can also enable your company to avoid the Small Business Growth Trap. But only if you act before you grow to the point where the trap is sprung. If you are already past that point, it can be a rallying point to bring together the groups, factions, and territories, to literally get everyone back on the same page.

If you are still a small business, the future success of your business is riding on whether you can avoid the Growth Trap. If you do not avoid it, you will find it increasingly difficult to implement the best practices for pursuing and winning business. You may never be able to get everyone on the same page and will struggle with getting people to follow any process you try to implement. You will never reach your full potential.

We’ve seen this play out many times at many companies. The more decentralized a company is, the harder it becomes. But even in a highly centralized authoritarian company, people will find reasons to make exceptions or opportunities to interpret how to implement the new mandates. Proposal specialists often complain that “people won’t follow the process.” What they usually don’t realize is that the company fell into the Small Business Growth Trap, maybe years ago.

If the trap is already sprung, you need three things to overcome it:

1. An executive mandate. One with teeth and stamina from the highest level. You don’t need permission from the top, you need participation at the top.
2. Speed. You need to announce that “this is how we’re doing things now” and not “we’re going to standardize as soon as it’s ready.” You can have stakeholder participation in the tailoring and application of the process. But if you don’t go straight into implementation, you’ll get diluted through delays and passive/aggressive implementation resistance.
3. The ability to change the company’s culture. Some executives have it. Some don’t. Without it, you can’t become a company with business development fully integrated into its soul.

You can see why it’s so much easier to build it in from the beginning and avoid the trap altogether.