Business expert and thought-leader Jim Alampi talks about barriers to growth and strategies to overcome them.
There have been many articles written about the predictable stages of growth for companies. The most fateful challenges business owners face are the barriers that arise as they try to move their company through these stages. That’s when companies stumble, and sometimes fail. What if you could identify and prepare for these barriers well before your company had to encounter them? What if you could build a foundation for your company that would enable it to be resilient in the face of these barriers?
[EasyDNNnewsToken:Left Justify Embed 300 x 250]I sat down with business expert and thought-leader Jim Alampi to talk about barriers to growth and strategies to overcome them. As founder and Managing Director of Alampi & Associates LLC, Jim Alampi has devoted more than thirteen years to coaching CEOs, executive teams and Boards of Directors in the areas of strategy, leadership, execution and business improvement. He’s provided advisory services to or spoken before almost 10,000 CEOs and senior executives regarding the lessons he learned as a senior executive at three publicly held companies and as the founder of three start-up companies. He is also the author of the recently released book Great to Excellent.
Here is the first discussion in Cleaning Business Today’s four-part September series “Barriers to Growth: A Conversation with Jim Alampi.”
TOM: Thanks for taking this time to talk with us. Jim, you contend that most businesses fail to grow because they can’t get beyond the natural barriers that every company faces at predictable stages in profitable growth. What are these natural barriers?
JIM: They typically fall into three predictable categories. The number one reason companies get stuck is lack of leadership skills. Number two is a lack of infrastructure required to build the business as it grows and becomes more complex – office space, warehousing, manufacturing, and probably the most important, technology systems. Small companies typically don’t have the expertise to install and support integrated systems. Three is business focus – that is, the fundamental sales, operational and financial aspects that companies need to focus on. Again, the requirements and expertise for this change as a company becomes larger and more complex as the company grows. I wouldn’t be so arrogant to say that there isn’t maybe a fourth or fifth category, but in my thirteen years working with companies, I haven’t found a company yet that got stuck for something that didn’t fall into one or more of the very predictable categories I’ve just mentioned.
TOM: Your experience covers a broad scope of industries. As you know our industry, residential cleaning, is typically low capital and high labor. Are there any differences you might be able to speak to between various types of industries and how your growth model is applied?
JIM: The leadership barrier seems to transcend all industries. When we work with a company, there are really only three levers we seem to be able to affect and help make a difference in execution. Number one is the team and the makeup of the team, which sort of goes hand in hand with leadership. If you don’t have the right team, the right people, and those people don’t know how to lead, it almost doesn’t matter what comes next. Highly people-intensive businesses like residential cleaning require leadership skills, so the makeup of a company’s team is probably the top priority.
I would guess that in your business there’s not a lot of capital-intensive infrastructure. There’s some equipment to support the business and certainly some disposable supplies, but you’re not talking about manufacturing plants and heavy equipment. However, you probably would at some point need technology systems to better support a growing business. The more people a company has out on the job cleaning, the more complex the model becomes. How do you keep track of your people? How do you measure and monitor them? How do you keep notes specific to all your company’s clients? I’m sure residential cleaning companies hit a technology barrier occasionally, probably not as frequently as a manufacturer or distributor would, but they still hit this barrier.
Finally, the business focus is important. For startups, it’s all about revenue and clients. But at some point, the business grows and the owner starts thinking about keeping track of cash flow and balancing it with the revenue cycle. That’s when a leader wants to start getting picky about the quality of the business. The CEO needs to start looking at the contribution margin at the customer level, for example. As the company grows and become more complex, owners have got to think about new skills. I think this applies to the cleaning industry just like any other industry.
TOM: Yes, I would agree. A lot of businesses in our industry started out with an individual who had a desire or talent for cleaning. They started the business without a real strategic plan. You talk about barriers to growth and how it is virtually impossible to skip a step in the phases of growth. Could you explain what this means?
JIM: It’s sort of like a pyramid divided into a couple of different layers. Each level that you hit as you get larger and more complex builds upon the skills, knowledge and experience that were acquired when you hit the previous phase of growth. In thirteen years, I’ve literally never seen a company jump two barriers in one step. I think this is probably a good thing. There is only so much information that leaders and companies can assimilate. Hitting each one of those barriers, having to hit it intelligently and figure out what to do differently to get over the next barrier requires a real learning process. That process is as important as getting over the barrier. It’s probably a good thing that I’ve never seen a company jump two barriers because it really does require building blocks and doing things one step at a time.
TOM: Let’s focus on systems and structure for a moment. You talk about a progression. In other words, most residential cleaning companies start out with very basic office systems – perhaps a computer, some processing and spreadsheet software, and a phone. But if a company is growing, more can be required quickly. Could you address technology systems and explain how they can contribute to either business growth or failure?
JIM: As companies grow, they’re going to potentially need more office space or storage space or whatever. What bites most entrepreneurs the hardest is technology systems. It’s typical of a small business that at some point their CPA comes in and chastises everyone about all the hand-written Post It notes, Excel spreadsheets and boxes of receipts they’ve got instead of a chart of accounts and an accounting package. For many entrepreneurs, the first system they install is some sort of simplified Peachtree or QuickBooks to do their accounting. Then, as they get larger, they start adding other technology systems like a purchasing system for replenishing supplies. They might add a customer relationship management or CRM system for keeping track of their customers and prospects. There ends up being this proliferation of parallel systems, all from different vendors and none of which talk to each other.
One day, the entrepreneur finds they have ten different systems, each doing something important but pretty narrowly. They find that they have the same data in multiple systems, yet there’s no easy way to get a real-time picture of the whole company without cutting and pasting and pulling things in from all these different systems. That’s totally normal. We see this all the time. What usually happens next is your friendly IT salesman walks in and says he has a solution for you. He tells you that you need a system from one vendor to manage your entire company from A to Z – one of those ERP or Enterprise Resource Planning systems. When I’m speaking, one of the questions I always ask the audience is, “How many of you actually have hit that phase where you needed to install an ERP system?” A whole bunch of hands will go up. The second question I ask is, “How many of you finished ahead of schedule and under budget?” Nobody in thirteen years has ever raised a hand.
So how does a company do something that is potentially very high cost and high risk without somebody on board who has done this multiple times before? The average residential cleaning company could not afford to have onboard an experienced CIO who has done multiple system integrations. That’s a real barrier.
You can get through the first couple of stages of growth without these types of integrated systems, but at some point you’re going to hit that wall where it is going to be difficult to grow to that next level without a system that runs across your whole business.
TOM: Jim, in your book Great to Excellent, you’ve taken a lot of the concepts that we’ve talked about today and worked them into an integrated process that helps companies move from vision to execution as they confront natural and predictable barriers to growth. Now that we’ve had a chance to discuss these barriers as they relate to the cleaning industry, I look forward to our upcoming conversations in which we’ll focus on the tools and solutions that are part of your integrated process. As their companies grow, the owners of residential cleaning companies will certainly confront these natural barriers. We’re looking forward to sharing your strategies for success with them.
Follow Cleaning Business Today’s continuing conversation with Jim Alampi in three upcoming interviews that will be released weekly on cleaningbusinesstoday.com throughout the month of September. In our next conversation, which will be published on September 10th, we’ll discuss how leadership strategies can help companies overcome natural barriers to growth. Our second conversation with Jim Alampi will focus on how to prepare for the changing infrastructure needs your company will face as it grows. This article will be published on cleaningbusinesstoday.com on September 17th. Finally, we’ll talk with Alampi about the importance of understanding the cleaning industry’s market dynamics. You’ll learn about identifying and tracking “smart numbers” in order to be prepared for the future. This conversation will be available on September 24th on cleaningbusinesstoday.com .
