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1. LACK OF CONSISTENT BUSINESS PROCESSES
In a presentation at UBM Tech's Best of Breed conference in October, Helow described four phases of growth for young companies, starting with the "prototype" stage where the entrepreneur's idea is tested in the marketplace. Assuming the value proposition and business model are winners, a company can quickly reach its first $2 million or $3 million in sales.
But then comes the "business validation" stage where the objective for a growing company is to develop consistent, repeatable business processes such as sales management and product delivery. While a startup can handle sales opportunities, customer complaints and other situations on a one-off basis, that's no longer possible as sales grow from a few million dollars to $20 million or more and the number of employees expands from around a dozen or 20 to 100 or more.
"That's frequently where [entrepreneurs] get stuck," Helow said in a recent interview, estimating that only 2 percent of entrepreneurs get beyond this hurdle. They may be brilliant in recognizing a market need or developing a ground-breaking product. But they're often incapable of developing business processes that a growing company needs for it to become self-sustaining without the founder being involved in every decision.
"Consistency in your [business] processes is paramount. That light turned on early for me in our development. You have to have a consistent delivery model," said Andy Papadopoulos, managing partner at Navantis, a Toronto-based solution provider founded in 1999.
"It's the rhythm of the business that needs to be established, doing something repeatedly and consistently: What has to happen day to day, week to week, month to month," agreed Dave Sobel, who founded the Fairfax, Va.-based solution provider Evolve Technologies and ran it for 10 years before selling the business early last year.