The Three O's

Opportunities

Organization

Outsourcing

 

Many entrepreneurs are good at taking an idea and personally developing a process and an organization to make it operational and grow it.

But many have issues when they get to a certain size. They need to develop their skills and the skills of their organization to meet more demanding requirements at each level.

These skills fall into the ability to envision opportunities, develop the organization to handle those opportunities, and appropriately outsource the right functions in order to concentrate on the functions that are most relevant to producing value for customers. When the entrepreneur masters the skills necessary to reach the next level, they can effectively and profitably grow the organization.

• Level 1: When The Entrepreneur Manages Directly
  Some entrepreneurs are very creative and can communicate effectively when people report directly to them. They are comfortable handling most of the really important decisions and are not presented with the dilemma of how to let go of some of these decisions.

• Level 2: When Department Managers Are Needed
  The second level is when the organization requires departmental managers as opposed to managing people directly. Some entrepreneurs can manage managers, others can't. They can't let go enough, can't teach managers what they know, or let their type "A" personality traits alienate, discredit or squelch managers.

• Level 3: When Middle Managers Are Needed
  The problems are basically the same, but since there are more links in the communication chain, and more people that do similar jobs, the company needs more process development and documentation skills to ensure uniform output and to train new employees quickly. The company also needs to develop teamwork and team process skills which allow the organization to develop solutions to problems from the ground up as opposed to needing management to identify every problem or opportunity and initiate every solution.

• Level 4: When You Need to Grow or Will Miss Opportunities
  At this level, companies may be competing with large national or regional organizations. The opportunities get larger and the stakes are higher. The small firm is at a disadvantage because they lack the ability to get the capital required to compete on this stage. If they do not grow, they may develop a cost disadvantage when larger competitors develop economy of scale.

  • Ability to Envision Opportunities. If the entrepreneur develops the capacity to make it through level 1 and level 2, they may lack the skills to envision more creative growth opportunities to create and sustain double-digit annual growth.

  • Ability to Develop A Strategic Growth Plan. They may also lack the skills to develop a formal business plan, communicate the key factors for success to their team, and mobilize the team to develop implementation plans and execute them.

  • Ability to Attract Capital. Finally, if their plan doesn't generate enough cash to fuel growth plans (and few do) they may lack the ability to secure sources of capital to fuel the growth required. They may not know how to approach banks, Angel Investors, Private Equity Firms or Investment Bankers to take a company public when the company reaches the critical mass required to accomplish that.

  • Ability to be Strategically Productive. The CEO and his immediate staff need to focus on developing the company's growth strategy and driving implementation. But they may get bogged down with functions that are not core value adding functions like payroll, benefits, certain aspects of IT, logistics, security or maintenance.
    
    Or, they may not be able to afford the level of insight required from a full time CFO or CIO. In these cases, they may need to outsource these functions and achieve better results for the dollars expended. The situation is different for each company, as each company must determine which functions are truly strategic, or necessary to do yourself in order to create value for customers and sustain creation of that value.