2. NOT LETTING GO
Besides failing to develop consist business processes, another reason entrepreneurs so frequently stall out after reaching their first few million is that many fail to recognize that it's time to hire highly talented people to oversee those processes. Once those managers (such as a sales vice president or financial controller) are in place, the company founder has to take on the role of "management coach" and step back from day-to-day management.
"The way you get from $2 million to $10 million is to let go. If you don't let go you'll never get to the next level," said Papadopoulos. Navantis, with nearly $40 million in annual sales, is now well into what Helow calls the third or "growth" stage of companies (between $20 million and $100 million and 100 to 500 employees) when the business grows without the founder/CEO's involvement in day-to-day operations.
As Navantis grew, for example, the solution provider hired a sales executive and people to manage the company's financial and accounting processes, and manage its staff schedules and service delivery.
Brothers Alex and Edward Solomon also realized the importance of delegating responsibilities after founding New York-based solution provider Net@Work in 1997 in the middle of the Y2K and dot-com IT spending booms. With the two splitting management duties, the company was quickly able to get grow to about $5 million in sales -- further than most -- by 1999.
"Even then it was too much to do it all ourselves," Alex said. One warning sign: They began hearing from employees and clients that their multitasking was taking a toll on communications and responsiveness. Early on, in 2000, they hired a marketing executive, a professional services director and a finance controller to help grow the business.
Today the company is approaching $30 million in sales and the Solomons are focused on strategic initiatives such as acquisitions and the Net@Work Partner Alliance Program. A little more than a year ago the company promoted its professional services director to be "chief people officer" responsible not just for employees, but for the company's entrepreneurial culture. "That's something that's critical to our well-being," Edward said, noting the importance of nurturing talent within the company to help maintain growth.
Papadopoulos suggests entrepreneurs make a list of what they are good at -- and passionate about -- and hire people to do those things they're not good at. "You have to take a really good look at yourself. The biggest mistake you can make is to think you know everything. No one is good at everything."
If an entrepreneur is finding it difficult to let go of some tasks, Helow suggests hiring a chief operating officer to run the business, allowing the entrepreneur/CEO "to go off and create the future."
NEXT: Not Hiring The Right People