Most small business owners have a difficult time connecting what they have always done to survive versus the “experts” opinion of new ways to compete. Life is different down in the trenches we think, grinding out the day to day tasks needed to pay the bills, make payroll and actually bank enough away to retire someday. 

I have gone through this thinking and initial transition with my own company. It’s the day you know if you don’t change the way you do things that something has got to give. Either the business survives and thrives or you join the legions of others that have tried and failed. 

It’s the storefront of a great local business that you have driven by for years and then one day the windows are papered over and there’s a “for sale” sign on the building. Most people just shrug their shoulders and say, “that’s too bad, I really liked that place.” Small business owners don’t think that way though. They know someone has suffered a terrible set back in their lives and it hurts as they drive by. 

This paper is a compilation of simple but crucial strategies derived from my own experiences as an entrepreneur and business owner for 30 years. Primarily, I will discuss how to discern the best time for initiating change and how to navigate this process without getting stuck or slipping backward. These strategies are intended to help you, the small business owner, manage the challenges associated with transitioning your company to becoming more successful, sustainable and scalable throughout 2018 and beyond. 

Many small business owners have spent most of their adult life imagining, striving for and finally realizing their goal of running a successful business. The thought of pursuing change is not appealing after expending so much emotional time and energy to achieve success. Often, however, owners can’t shake the gut feeling that problems are on the horizon. If left unaddressed, these yet unknown problems might cause their company significant pain. Unfortunately, the threat might be so severe that it could cause the owner to lose the business entirely. 

Most successful businesses have normal life cycles. Initially, your energy is used to build the company. This initial phase requires capital, creativity, energy, hard work, and usually some good luck. For most, the business grows slowly at first then more steadily as your efforts bear fruit. Ultimately, this growth will plateau as the company requires you to dedicate time to other areas and increasingly aggressive competition erodes the business’ foundation. 

So when is the ideal time for change? At what point between inception and decline should a business owner be able to discern that a different direction is the best course of action? This question has driven many former owners, key executives, academics and business gurus to spend years studying and postulating. The answers derived by experts are as varied as the weather and often leaving the reader wondering how to interpret their findings and implement real operational change. 

The easy answer to this question is that owners should consider change when things are beginning to get more difficult. When the business is losing more than winning, it should be clear that there are issues to address. New sales are declining and existing customers are leaving for competitors. Unfortunately, this is when most small businesses decide to change. Realistically, however, the window of opportunity has likely closed. Now, a new glitzy software system, a new talented employee, a new piece of equipment or other change will not reverse the damage done. During periods of decline, the business 

is also no longer generating the cash flow necessary to successfully invest for the future. Loss of momentum, employee commitment and the resources to institute change are all gone. 

It is best to start seeking new opportunities before your original business peaks. When you still have momentum you should be generating the cash flow and energy needed to pursue new ideas and business models. That is also when you will encounter push back from others in the organization as well as perhaps yourself. “Why change when things are going so well?” Interestingly that is exactly when you should consider change. Recognizing that what you have started will not continue its run forever and that investigating change in the midst of this success is critical. 

I’m not suggesting you “go for broke” and exhaust your resources on a 180 degree turn. But rather use your good business judgment to alter course to new and possibly significant growth opportunities of success while your base business is still churning along. 

Your existing business can provide almost unlimited avenues for discovering new ideas. Customer complaints are an excellent place to start. If your team is willing to listen humbly, customers can provide excellent suggestions for change or new product and service offerings. One small innovation or tweak could solve customer challenges, build loyalty and capture market share. 

Bringing “fresh eyes” to an organization can also help. Newer or younger employees often see things that are missed by you or others within the business. I always encourage new hires to tell us when they see opportunities to do things differently or ways to offer new products or services. I might emphasize this point by saying, “please tell us now before we brainwash you on the Axios HR way of doing things!” Sometimes I am not sure they believe me, but it is very encouraging when someone approaches me with an idea after their training. 

So remember, it took a lot for you to enter the business world and compete. It will take that same toughness to continue your company’s evolution. But I have extreme faith that if you do, the rewards for your team will be outstanding. 

The Bermuda Triangle of small business

The aforementioned challenge about determining the right time to change is one that all businesses face. For some, this challenge arrives early in the organization’s life due to incredible growth and scale. Others might not face this issue until the owner/management is faced with either a market shift or a life change. The problem I am referring to is called the Bermuda Triangle of a company’s lifecycle. 

As most know, the infamous Bermuda Triangle is a location off Florida’s Atlantic coast where many ships and planes have mysteriously disappeared. For businesses, the Bermuda Triangle is a point in time when, in order for the organization to survive, it must change or face possible extinction and disappear. Many businesses get lost in the transition from informal to formal processes. 

Market-driven changes 

Describing changes as “market-driven” can have several different meanings. Technological innovation or disruption frequently drive market change. As technology improves efficiency, business owners realize that they need to automate manual processes and outdated methods. Similarly, a new competitor in the same market can cause significant disruption by using a new technology first or leveraging massive buying power to force price competition. 

At some point, all small business owners will consider transitioning their management, with one of three possible outcomes: 

Regardless of their decision, the owner should realize that in order to fulfill their goal they cannot continue to operate the same way. 

Informal to formal systems 

In this paper, I will refer to the “old way” of doing things as informal systems. These are systems that have been used for years without much improvement or critical examination. Basic examples of informal systems include: 

The list of informal processes used by small business owners is nearly endless. Even if the business appears to currently be operating fine with these informal systems, remember that resisting change will eventually cost money, people, and possibly the business itself. 

Formal systems are the methods, tools and processes that lower the firm’s overall cost of doing business and help attract new blood to the organization. The list below provides examples of transitioning from informal to formal systems using each weakness we previously highlighted: 

Most owners know in their gut that change is needed. Competitors are squeezing the organization with lower prices, faster response times, and more sophisticated sales and marketing techniques. Young employees entering the organization want structure and are frustrated by the lack of formalized processes. Once they discover the business is mired down, they usually choose to leave rather than fight the battle or wait for the old guard to move on. 

Because change can be difficult for people and organizations, owners sometimes use outside sources to provide an objective, unbiased outside view. These change agents are usually businesses that specialize in certain non- strategic tasks, providing the necessary assistance, training and ongoing support needed to transition to formal processes. Consultants that have specific expertise can also provide advice and guidance – often doing projects for the owner to help alleviate stress and assure timely deployment. 

Regardless of how the change occurs, businesses that transition from old systems to new systems will see their organization’s competitiveness improve dramatically. In addition, they will become a place where new generations of employees and management are attracted because it is clear that the company has a bright future. 

Change is scary sometimes but obviously nothing is worse than total failure. So, in order for you to change “the way we do things around here,” we have to “Change the way we do things around there!” 

- Dan Barcheski
 Chairman of Axios HR