In Part 1 of this 3-part series on growth strategy in GovCon, I discussed the various stages of growth in the GovCon market and the investments and decisions that small business leaders need to make to grow their company. In Part 2, I discussed characteristics of successful business leaders and owners and what executives can do to maximize the potential to grow their company. In this final installment, I will cover obstacles to growth and strategies to consider to overcome those obstacles.
Growing in the GovCon market is not all “champagne wishes and caviar dreams.” There are countless obstacles in federal contracting that stand in the way of small businesses meeting their corporate growth objectives. Some are outside of a company’s control, such as changing federal budgets, restrictive federal regulations, and unpredictable procurement timelines. But the GovCon landscape is littered with small businesses that remain stagnant or shrink thanks to an inability to overcome internal, self-imposed obstacles.
The good news is that the small business owner has control over many of those internal obstacles and can take the actions needed to overcome the challenges to achieve success. But here is the conundrum–it is often the case that the small business owner is the one who creates these internal obstacles themselves, whether directly or indirectly, and many of these owners struggle to acknowledge that the problems even exist.
Here are the most common internal obstacles that stand in the way of small business growth, with some suggestions for how owners can overcome those obstacles.
Failing to step away from basic tasks
This is one of the most common issues we see with small businesses as they grow. When most small business owners start, they are doing everything needed to run the company including the accounting, human resources, business development, finances, and even delivery of the work. As they start to scale their company and hire a leadership team, many owners fail to delegate typical business functions, including reviewing invoices, hiring staff, and reviewing every proposal that is submitted. The big question is why? The truth is many owners simply don’t feel comfortable letting go of some of the tasks that led to their initial success. Some owners allow their ego to overtake them, thinking that no one can do the work as well as they did. This behavior harms the company in two ways: first, it causes employees to feel unvalued and untrusted, leading many to resign. Second, the owner is so buried in the weeds that she/he can’t see the big picture and fails to provide visionary leadership. It’s a vicious cycle that repeats itself until the owner understands their role is to lead, empower, and mentor, rather than micromanage. Successful small business leaders hire the smartest people they can find and get out of their way, trusting their team to lead, to determine the best solutions based on their expertise, and even occasionally fail. It is the owner’s job to mentor and lead and not to do.
Delaying important decisions
Decision-making is both an art and a science. Some decisions are made using logic, based on the data you have. For example, if your accounting staff takes three days to produce invoices using a highly manual process, you may decide to invest in a more advanced accounting software to expedite the process. Other decisions are based on what you feel is the right thing to do. For example, if you have a staff member who is contributing to a toxic work environment, you may decide to let that person go. Small business owners constantly make decisions based on logic and intuition and empower their team to do the same. Successful small business owners are decisive. Sometimes delaying a decision is worse than making a bad decision quickly and and learning from the consequences. The key for any small business owner is to not delay important decisions. Once you have the data to support a decision, or feel strongly about a decision, make it. The longer you delay a decision, the longer you are keeping yourself from realizing potential gains from that decision.
It is natural for any small business owner to be financially conservative. As companies start off, they run very lean, have limited cashflow, and save every dollar they can. As these companies grow, many small business owners retain the strategy of saving first “just in case” they lose a contract or face financial setbacks on existing projects. Failure to invest in the company can create a self-imposed roadblock to growth. For example, small businesses that are built on basic or free tools can only carry a company so far. Similarly, when a team of three is doing the job of five, the risk is high that the staff will burn out and leave. Many owners fail to learn the value of investing in growth even as the company grows quickly. The owner thinks, “If the company got here with our limited resources and tools, we only need minor investments to continue our growth.” Nothing could be further from the truth. Small business owners need to continually look for ways to fuel their growth by investing in the right people, tools, systems, and certifications. They should size their company’s operational infrastructure and growth team for how big they plan the company to be in the future. This is easy to write about but difficult to execute. Of course, every financial investment comes with risk. But no risk is greater than the risk the small business owner took in starting their business with limited financial resources.
Not knowing when to step down from leading the company
Most small business owners have a sense of purpose when they start their company. As they grow their company, their sense of purpose may remain the same or may evolve based on what they’ve accomplished or where they are in their life. At a certain point, truly successful owners realize that they have achieved what they set out to do and decide to focus their time on other interests. At that point, they either transition out of their role and bring in others to run the company or they decide to sell their company. Unfortunately, many small business owners continue to lead the company, despite having achieved their goals and fulfilled their sense of purpose. For these lingering owners, the energy, drive, and passion are not the same, and they become disconnected from the organization. Their actions and decisions become repetitive which leads to a waning culture, and people begin to leave. It is important for small business owners to recognize when it is their time to step down, bring in new leadership, or sell. As a small business owner, you should think about your sense of purpose and whether you have achieved it; if you have lost interest or energy to continue leading the company, it’s time for a change.
This marks the end of my three-part blog series on small business growth, which included the stages of growth of a federal contractor (Part 1 blog), the common characteristics in successful business owners (Part 2 blog), and the obstacles that stand in the way of growth (this Part 3). As I’ve explained throughout this blog series, it takes a lot of learning, trial and error, and effective decision making to create GovCon growth. There are many twists and turns in government contracting, and the small business owner needs to plan ahead to avoid challenges. While there are multiple roadmaps for growth, it remains consistently true that the dedication and trust of the small business owner(s) and their team are key to success.