A year ago, Bob Moore worked 16 hours a days, seven days a week, just to keep up with the growth of his fledgling half-million dollar architectural woodworking business.
"I worked in the shop by day and did my bidding at night," explains Moore, owner of Cleveland-based Wood Concepts. "That limited me. I was doing everything myself."
Moore had no sales staff, no other managers and employed eight cabinet makers in its woodworking shop. He never had time to develop a strategic business plan and ran his company by the seat of his pants. "We were just going one year at a time," he admits.
Wood Concepts, however, was financially stable and growing through Moore's determination to drum up contract after contract. But he knew that couldn't last. So Moore went looking for help and found it in the form of Beachwood-based business consultant Joel Strom, president of Joel Strom & Associates.
Strom administered a short questionnaire that addressed key components of Moore's business, including how involved Moore was in the daily operations, what tasks he handled regularly, how strong a financial base the company had and the quality of his workforce.
The answers painted a very clear picture of Moore's organization; it showed that the support gap between Wood Concepts' growth and its existing infrastructure was widening (see graph page ). In layman's terms, Wood Concepts was growing faster than Moore and his limited staff could handle.
Strom offered several suggestions to fix the problem, including hiring more personnel and developing a long-range business plan. Moore agreed, and within a year, Wood Concepts' productivity and revenue increased by 30 percent.
Moore's problem-working in his business instead of working on it-is common among small business owners who want to expand their sales but don't have the necessary tools in place. It's a situation that creates a support gap-sales go up, but it becomes difficult to keep up with customers' needs. Eventually, quality slips, and customers become angry enough to take their business elsewhere.
A widening support gap can become a vicious cycle, which can spell the end of once-growing business. It can be fixed, but only if the business owner understands where his or her deficiencies are within the company and addresses them.
That's the goal of Strom's analysis-which he developed over the past few years as a method of business growth management. The results-portrayed graphically as a chart-are designed to make it easier for business owners to see where problems exist.
The test measures five key elements of a business and its owner-emotional readiness, management support, level of staffing, financial fitness and organizational structure. Those are balanced against a company's growth and set onto a vector graph which determines if the company is growing faster than its infrastructure can support. Explains Strom, "By letting sales outgrow the company's infrastructure, you create a growth crisis instead of profitability."
People don't realize how difficult it is for an entrepreneur to let go of his or her business, explains Anne Blum Hach, a business consultant who works with Strom. In Moore's case, he was so focused on being hands on and wanting to succeed that he didn't know how to delegate work to others
"Until the entrepreneur can see him or herself as a CEO and delegate down, they're their own worst enemy," says Hach. "Bob couldn't envision himself as more than a good cabinet maker. He didn't see himself as the CEO."
But Moore had another problem. Because of how he set up Wood Concepts, he was saddled with nearly every task-making cabinets, cutting deals, bidding jobs and developing major accounts. But when he stepped back and saw how the business was run, it was an enlightening experience. It also led to Moore changing his mind set toward Wood Concepts.
With no sales staff, Moore was the only one bringing customers through the door. If he didn't get out there and hustle every day, Wood Concepts would fail. Moore couldn't delegate those sales duties to anyone because there was no one there to delegate to. Says Strom, "He just needed to be able to sit back and put his new plan into effect. That required some help."
So Moore reluctantly hired a sales manager and delegated everything sales-related to him. It wasn't easy for him to let go of those duties, but Moore quickly noticed that with that person bringing in the customers, he could focus on other business issues, such as improving his workshop staff.
Level of staffing
Fifteen years ago, Moore started working with a cabinet maker in Strongsville. When his mentor retired, Moore bought his equipment and pursued an architectural and engineering degree in college. After graduation, Moore decided he didn't want to sit behind a drawing board or computer for the rest of his life; he preferred working with his hands. So in 1988, Wood Concepts was born.
Because Moore did much of the woodwork himself and operated on a small budget, he didn't hire highly trained cabinet makers. For years, that arrangement worked because Moore was always there in the wood shop to oversee production.
But when Moore began making major changes to his company last year, he found it was lacking in the area of staffing-they just couldn't perform to the level his customers required.
In a sweeping move, Moore fired six of his eight cabinet makers and replaced them with three experienced craftsmen. He found that his new five-man workforce was much more productive and efficient than the previous team. "We're doing more volume with less mistakes now," says Moore.
A company's financial well-being is critical, warns Hach, not just for its success but to its long-term survival. While that sounds like a basic business lesson, there's more to it than just the bottom line. "If the F vector is low, it's hard to save the company," explains Hach.
That's because if a company grows quicker than the financial resources it has available to support it, there isn't much time before the money dries up. Explains Strom, "If their finances are skewed, there's a shorter window to improve the company than, say, if the business owner isn't emotionally ready to delegate. In that case, it's more of an organizational thing that needs to be addressed."
As each issue is addressed, they begin to form a more complete organizational structure, says Strom. The personnel's in place. Finances are in order. Management has defined roles. And the business owner has set specific business goals and created a road map of how to take the company where he wants it to go.
"The biggest issue with business owners is awareness," says Strom. "Figuring out if they need to do something."
As Moore addressed each component within Wood Concepts, its chart began to look more and more like a circle. "The concept is perfect alignment," Strom says. "Any business starts off looking like a circle on the chart, but growth is the driver and what skews it."
As growth rises, the other areas either expand outward to support it or stay stagnant. In that case, you can visibly see which areas are lagging behind. To fix those problems, you either need to pull the vectors out to support growth or slow growth to meet the levels of support.
Moore's original chart showed quick growth and a solid financial base. But it was skewed inward because Moore didn't have additional management support in place to help him out. What staff he did have wasn't qualified to handle the precision woodworking jobs Moore was bringing through the door. Because of that, the entire organization was in chaos.
After he employed Strom and Hach's suggestions, Moore was tested again. This time, the additional layers of management and revamped personnel staff gave Moore enough time to work on his business, not just in it. Now, Moore says, he has a better understanding of his business and is charting its future. "We're looking at more opportunities for growth," he says, including several national contracts. "But I'll tell you what, we aren't going to outgrow our current capacities and infrastructure."
Comparing charts before and after
Joel Strom, owner of Joel Strom & Associates, measures the five key elements of a business and its owner:.
- emotional readiness
- management support
- level of staffing
- financial fitness
- organizational structure
Each leg of the graph is measured and balanced against the others to gauge the overall health of a company's growth. Strom says it doesn't matter whether a company is balanced at the outer rim of the chart or somewhere in the middle, as long as the key elements are as close to equal as possible.
Wood Concepts' before chart reflects quick growth and a solid financial base. But it skews inward, primarily because owner Bob Moore wasn't ready to delegate authority. It also shows there was inadequate management or support staff in place. Because of that, the entire organization was in chaos.
Moore's after chart illustrates a "rounder" or more balanced, and therefore, healthier company. He added more qualified craftsmen to his shop, hired a sales manager and overhauled his internal organizational structure.