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When you first enter into business, you are in the first phase: start up mode. Once through that, you move into the second, a growth phase, and then maybe into a rapid growth phase, and then a more mature phase.

typical phases in the evolution of a businessFor the owner or the CEO, each of these phases has its own requirements, and the skills needed for the startup phase may not easily translate to other phases.

There are always exceptions, but as a general rule, a business fails because the CEO or the owner cannot carry the business between these phases. In moving from one phase to another, it is often the owner who cannot transition between phases and as a result becomes a detriment to the business and can even jeopardize the success of the business.

To meet these challenges and change yourself from a potential problem to a strong vital leader you need to know how to recognize these phase transitions. The technical term for these transitions is infection points or junctures where the needs of your business drive it in a new direction. Let me give you an example, in the startup phase you are generally worried about revenue, cash flow and how to pay the bills. The skills required are those that keep expenses low and ensure that bills get paid.

In the next phases, you have enough revenue to cover your fixed expenses, and you are not worried about where the money is coming from on a month-to-month basis. Now, however, you need more staff. The skills you need are now more on human asset management. You hire staff, and then you begin to have staffing problems. Once you’ve acquired the skills to handle that, you can then start to build the business momentum and take on more work. However, with more clients, you begin to run into customer support problems. Once you solve these, your business really takes off, which means more staff, and managers to manage the staff. You can see that as you move from phase to phase, your skills as a CEO are continually evolving. What you do has changed completely, and maybe you are not so good now at what you do.

In addition, when you start your business, you are probably doing most of the work. In the next phase you are doing some of the work, but are beginning to hire other people to assume some of the workload. In the next stage, you have stepped away from the grunt work, but now you need to be a motivator to make sure that everybody stays on the same track. You must be the one with the vision and inspire others to support your vision

The range of skills necessary to transition a business through the various stages is daunting at the very least. How often have you heard, that an owner is a detail kind of person, or a people person, or a creative type. As a business owner, you learn the strengths and skills of your staff and you employ them as effectively as possible to maximize their efficiency. You don’t expect an employee who is a stickler for details to suddenly be able to ignore them. Yet, this is exactly what is expected of a business owner or CEO. The odds of a business owner being able to lead a business through all the phases is approximately thirty percent which means that about 70% of the time, according to the research studies, businesses will fail.

How often have you heard of companies that replace the CEO with a new person and suddenly the business sky-rockets? Within six to twelve months it is a completely different company. What happened is that the new CEO suits the new business phase in a way the old CEO could not, although he might have been excellent in the previous phases.

This can often be seen in the turn-around industry. The first thing that you generally do with an ailing company is replace the existing management team, the concept being that the team that got the business into trouble, is unlikely to be the same team that can get the business out.

“Murray Priestley has 25 years of commercial and asset management experience having served in board, CEO and senior executive positions with a number of global public and private companies.”