Small Business Growth in the 21st Century

An Interview with Steven S. Little

"The best growth leaders know that they are only as good as the people they hire, train and retain."

Steven S. Little is a much sought-after speaker, consultant and writer on the subject of business growth and the future of opportunity. As a  Senior Consultant for Inc. Magazine since 1998, he speaks to over 10,000 owners and managers of growing businesses each year.  He also works with some of the world's leading companies, including UPS, Sprint, and Bank of America.  Mr. Little is a graduate of Miami University and has studied at The Institute for Management Development in Lausanne, Switzerland. He recently spoke to the Journal about his upcoming book, The 7 Irrefutable Rules of Small Business Growth .

It's quite gutsy to put the words "irrefutable rules" in the title of a business book isn't it?

Yes, and some reviewers will probably have a heyday with that. I did note in the introduction that these rules aren't irrefutable because I say so. They are irrefutable because every fast-growth company seems to agree that these things are important. These are not rules because they're scientifically proven. Instead, it's because I can't find any credible individuals inclined to disagree with them.

It sounds easy to maintain a strong sense of purpose, to have a written plan, or to hire and retain the best and brightest people. In reality it's very hard work. Many small business owners know what really needs to be done in order to grow, but they're looking for shortcuts and 17-point checklists that will provide instant success. I don't provide anything like that. Instead, I'm trying to remind owners that if they are really serious about growth, they need to regularly consider those areas in which successful growth companies concentrate their efforts. 

You devote the first chapter to a realistic view of the small business landscape, how things are not as rosy as many would have us believe. Why is that important?

I simply wanted to puncture the myths and point out that turning an idea into a thriving company is no easy task. In the US we have this mythology about venture capital-funded entrepreneurs who make tons of money and have all kinds of freedom. We also celebrate the creative, feisty small business owners who are able to outsmart the slow and lumbering big business giants. Life isn't like the movies, however, and growing a small business doesn't always have a Hollywood ending.  When done properly though, it can be a really inspiring documentary.

We've also had it drilled into our heads over and over again that "small business creates all the new jobs in America" or "small business is the engine of economic growth." Unfortunately, it's just not the complete truth. Small business  loses almost as many jobs as it creates and big business keeps gaining a little bit larger and larger percent of the American workforce each year. Over half of Americans work for organizations employing more than 500 people. Wal-Mart alone employs approximately 1.5 million people. That's roughly equal to the entire populations of Wyoming, Vermont, and Washington D.C. combined.

For smaller companies that really do want to grow, however, there is some real good news as well. The government now successfully assists small business owners like never before and banks are now battling each other for the small business market. The competitive playing field is far more level these days, due in large part to the power of cheaper technology.  It wasn´t too long ago that big businesses were the only ones who could afford powerful technology. Those days are clearly over.

You lay out the case that business owners need to have a strong written plan in order to thrive, but you also claim formal strategic planning isn't the best way to achieve this for most small businesses. What's wrong with "strategic planning?"

When I'm speaking to groups of small business owners, the quickest way to make their eyes glaze over is to start talking about strategic plans. To owners of private companies with less than 100 employees, the term "strategic plan" smacks of big business, bureaucracy, and lofty tomes that sit in a thick binder and collect dust on a shelf. However, in 2003 PriceWaterhouseCoopers interviewed over 400 CEOs of fast-growth small companies and found that nearly two-thirds have some form of growth planning in place. Other studies have found similar results: a written growth plan is the most common success element.  I'm not saying it's the most important; I am saying it's the best predictor of whether an organization will achieve sustained growth.

In my experience, it's the big business semantics and procedures that become the obstacle. For a growing small business, the plan needs to be short (15 pages max), easily understood, and free of jargon. If a small business spends two days deciding whether the company "leverages" or "maximizes" its core competencies, the leaders will have a revolt on their hands. The format is not important, but the substance is. I have "ten R's" of growth planning that I think everyone should keep in mind as well. I won't run through them all here, but it is important to make sure the plan is representative, results-oriented, and regularly updated. 

One of your rules is to "thoroughly understand the marketplace." Is this an area where you find many entrepreneurs getting into trouble?

On the whole, small businesses are lousy at seeing the macro view. They become so myopically focused on internal operations that they don't take the time to regularly consider the important fundamental shifts taking place in the general marketplace. (In many cases, this is the opposite of big business, where they see the big picture, but the left hand does not always know what the right hand is doing internally.)

Entrepreneurs need to immerse themselves in what is happening in their industry, what is happening to the industries connected to their industry, and which potential companies have the ability to get a piece of their market. I even recommend studying the changes happening in markets that have nothing to do with yours.  The macro forces of change in our world today are creating similar issues and opportunities for all us. Small business owners also need time to step back and consider whether their company or industry are still doing things in a way that makes sense. "That's the way we've always done it" is the mantra of stagnantation.

When most business books turn to the subject of technology, they spend a lot of time on where we are now and what the future holds. You spend much of your technology chapter discussing history. What can business owners learn by looking back?

The importance technology has played in the history of the human condition can not be overstated. It has shaped us since the dawn of agriculture. The only thing that is different now is the rapid rate at which technology builds on itself and continues to expand at an exponential rate. I think we get an inflated sense, however, of how hard it is to cope, as if rapid change is some brand-new phenomenon. Everybody likes to talk about how the Internet changed whole industries, but what about refrigeration or the automobile? Going back further, there was a 20-year period at the end of the 18th century where inventors introduced the bifocal lens, the steamboat, lithography, the cotton gin, the hydraulic press, and a dozen other groundbreaking technologies. What I wanted to do is show how the really important changes throughout history were the ones that redefined entire industries. The way companies recognized those disruptive technologies and reacted to them is often what separated the successes from the failures.

Companies that combine a strong sense of purpose with that macro view I was talking about earlier will better understand which technological changes create an opportunity or a threat. The best growth companies more quickly identify which technologies really matter and  then ride those "waves of creative destruction" wherever they lead.

In your book, you point out that "people" influence all of your other rules. Every leader should inherently know this, so why do so many small business owners have a staffing problem?

It's like a healthy diet and exercise: everyone knows these things are important, but most people don't eat right or work out enough. As I look back over my three experiences running fast-growth companies, it is now very apparent to me that I should have spent even more time on people than I did. And I spent more time on people than most of my contemporaries.

Small business owners have been telling me for years they can't find enough good people. This has always been especially true of growth companies. And it makes sense. It's difficult to see during recessions, but a shortage of skilled and semi-skilled workers has been a fact of life in the US economy for quite a while now. And it's going to get worse.

Unfortunately, many small business owners don't create systems that attract the best and the brightest. Instead of constantly recruiting and spending most of their time developing a strong team, they view hiring and training as unpleasant chores to get off their checklist. The best growth leaders know that they are only as good as the people they hire, train and retain. They make their people the core focus, and increased customer retention becomes the result.

Many readers of The Journal of Business Strategy are current MBA students. What advice would you give to the aspiring entrepreneurs among them?

Spend less time positioning yourself for your first job after getting the degree and more time exploring and understanding what really matters to you. Also, take the time to travel while you're young. There is nothing more important if you hope to be truly educated!

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To purchase a copy of The 7 Irrefutable Rules of Small Business Growth, click here. For bulk orders shipped to your business, visit 800-CEO-READ. 

Links:

Steven Little's Web Site

The 7 Irrefutable Rules of Small Business Growth

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