A lot like rallying through deuce and break-points, the Venatus Jones Business Journey is a familiar one for most companies, irrespective of industry or size.
At the start (left hand) side of the framework, you will see that the diagram begins (as your business did) on Day 1. How did you feel on the first day or week of your new venture? Excited? Yes, of course, or you wouldn’t have got the energy to get started!
So excited is the feeling written in red under the baseline at the beginning of the curve.
After the initial surge of excitement how else did you feel? Perhaps a little bit scared or apprehensive too? These emotions are our primary motivators and impart us with great energy. This causes a period of Frantic energy, where we were dashing around doing the many things that need to be done all at once to start a new business venture.
After a while, it could be months or even a year or two, it becomes evident that the business has the potential to succeed and the feelings of anxiety begin to fade. You begin feeling Confident. You have moved into the 1st Brick Wall.
Brick Walls are transition states in a business. The 1st Brick Wall is the transition between Start Up and Growth, a transition that requires Investment.
The size of your business vision will influence the size of your investment. For many businesses, this investment is expanding into larger, nicer offices, the appointment of key management staff, or a strategic investment in training or equipment. For larger businesses, this may be expanding into another city or establishing franchise systems.
If you don’t invest at this stage, then the business will plateau or decline. You may have heard figures about the number of businesses that close in their early stages – almost all of these do so in this 1st Brick Wall. Not making the right investments means a business will eventually run out of money or energy.
This investment often creates another (shorter) period of franticness and anxiety immediately afterwards until you realise that the investment is going to pay off.
Having made the right investments, your business will begin to receive a return on those investments. Again, this depends on the size of your vision and your investments, but the 1st Brick Wall investments typically create a period of steady incremental growth.
The frantic feeling has gone, and the business becomes consistently profitable. This modest success creates a feeling described by most business owners as Good Times – the feeling is Relaxed: you aren’t overstretched but are making a reasonable living and enjoying the experience.
Businesses stay in Good Times by continuing to reinvest in business growth, creating momentum and further growth in the business.
While that ongoing reinvestment can be managed and forward-planned, eventually, energetically, you will want to reap the rewards of your hard work. After sustained periods of steady growth, suddenly BOOM, success! The business will have achieved its initial vision; you, as the business owner (or employee) will have achieved the outcome you sought when you first started this business.
You go through Payback. Exactly what it looks like can differ depending on your initial vision. Most business owners experience a commercial payback – new cars, a bigger house. Sometimes is can be a cultural reward – industry recognition, a long family holiday. Whatever it looks like, the feeling during payback is Euphoria.
If you have reached this stage or beyond – congratulations!
Unfortunately, the euphoria of payback doesn’t last. You may be temporarily distracted (moving into that new house or touring France) but the business has built its own growth momentum, and payback can trigger a further period of accelerated growth.
This usually requires a shift in the responsibilities and required skills of the business owner. You are now responsible for a big business and the skills and experience that you used to start up and grow the business need to develop as well.
This leads to a feeling of Frustration – you can no longer understand and control every aspect of the business as you did when you were a smaller team and your technical expertise was critically important. If those skills and the strategic priorities that become important are not addressed, the frustration will grow into Stress.
And if the stress continues, you and the business will accelerate, inevitably crashing at speed head first into the 2nd Brick Wall.
While the 1st Brick Wall is a confident feeling, the 2nd Brick Wall is more difficult. Only successful businesses make it this far, but by this stage the business doesn’t feel successful.
The stress has taken its toll and you feel exhausted. Good times are now “the good old days”, and you can’t go back in time!
The 2nd Brick Wall is a feeling of Disillusion – despite the growth and success, many business owners give up at this stage, close their doors or sell the business for a bargain price. They may know that they are throwing away years of work and a successful business, but they don’t know how to get out of the 2nd Brick Wall.
For those that do persevere, or prioritise and reinvest accordingly, the business owners and managers enter a phase of Research in an attempt to move the business forward. Many ideas are tried, the owners and shareholders becomes Re-Energised, and eventually exits the 2nd brick Wall in one of three ways.
3. Advanced Growth (below) 4. Plateau 5. Decline
Sometimes a business will stagnate to the point where Advanced Growth is no longer possible, stabilising in a plateau before eventually declining.
This route is also a common choice among owners, especially professional partnerships, who are nearing retirement. Costs are reduced, only the best clients are retained, the business coasts along towards retirement. It will eventually run out of energy and decline, by which time the business has limited or no value.
Businesses that don’t properly restructure and invest during the 2nd Brick Wall, but persevere, will decline. Key clients, suppliers, and staff will leave, and the business will eventually close.
Again, this can be a legitimate choice for some businesses. Investment for the future is stopped, and the various business assets are split up and sold.
Shirlaws works with businesses that are in or are choosing to head towards Advanced Growth. These businesses have all achieved all five of the Advanced Growth pillars – pillars that have evolved with the business world:
1. Product – Advanced growth always requires extension into new product areas. Part of the work to get through the second brick wall is to strengthen internal systems to productise and innovate on an on-going basis in order to adapt to changing markets and achieve a sustainable business.
2. Channels – Similarly growth tends to slow or stall prior to/during the second brick wall because the marketplace that previously served the business so well has become less attractive (either saturated or new competition). The business needs to develop multiple routes to market ensuring a consistent flow of clients and revenue.
3. Functionality – A functional internal structure ensures the right people are doing the right jobs at the right times. This is most critical at this stage (second brick wall) because enough capacity has to be created in the senior team to spend in strategy activity (Black) to make sure the right choices are made and assets are built to access advanced growth.
4. Capability – As the business identifies new revenue strategies (products and channels) it will need to build new capability. This with functionality is the core management system building block to ensure the business is able to reinvent itself successfully. Often we find it is critical to “fix” the management systems before the business is able to invest productively in revenue and asset systems.
5. Asset systems – When a business has developed an asset system it has gained the ability to leverage core capabilities to the level where they can be packaged into assets that underpin new businesses. This unlocks a transition from running a single P&L business prior to the 2nd brick wall, to running a portfolio of businesses which are extensions of core assets into new markets – the prerequisite for advanced growth and enhanced value.
They have built a business that will now survive and thrive beyond their direct involvement – how does that feel? The description we hear from businesses around the world, is Proud. It’s a humble pride from having moved through the lifecycle, faced the challenges, and lived to tell the tale.
While there are twenty different areas of your business you can address, these five pillars are a great starting point for choosing strategy at any stage.