Putting a Name to Pain: Managing Through the Flood Zone

Follow one owner’s journey through the 'Flood Zone' of business expansion. See the shift needed from working harder to working smarter, emphasizing strategic growth and the implementation of sophisticated processes.

A Story of Business Growth

Hard to tell when the reality hit for Clyde. His company had just made it through a very tough two years, had celebrated their 5th year in business in 2008 and the challenges he had lived through were still painful, making him at times wish he had never started his company. 

Clyde started his business 5 years ago. He was passionate about his idea and knew, without a shadow of a doubt, that he’d be able to turn it into a business. In conversations with Clyde, it became clear that he was struggling to let go in order to let the company grow. His world centered on meeting directly with customers, marketing his product and making the sale. These activities continued to energize him. 

What was taking its toll was the day to day managing of his 37 employees and the challenge of staying ahead of problems. The more problems Clyde encountered, the more frustrated he became with his employees, the processes and the entire concept of having to ‘manage’ how work got done. 

With 37 employees, Clyde was noticing it was harder and harder to keep up with the amount of work. Even though the recession was taking its toll on hundreds of thousands of business owners all over the world, Clyde’s business wasn’t slowing down. In fact over the last 18 months he had added 6 employees, had seen an increase in revenues and was looking to add several new clients in the next 30 days. 

Why This Thinking Pattern Matters 

His problem wasn’t a slowdown in workload. His problem was managing the complexity of his operation. With 37 employees, the demand on his time to simply manage the people, the processes and the profitability left him very little time to roll up his sleeves and deliver his product and he was beginning to resent his employees and question rather or not he should keep the business going. 

While revenues were up, profitability was eroding. Clyde ignored this issue for several months. His thinking was it was only a short term problem and if he just took over more of the day to day sales and service issues, he could turn things around. 

The first signs of trouble came when long term employees, people who had been with Clyde from the beginning, started to leave.  

Even with the downturn in the economy making it hard to find new jobs, Clyde lost two very good employees because they just couldn’t deal with the control issues Clyde displayed on every single project that went through the company. 

Clyde’s MO was to work harder, not smarter and he had that same expectation of his employees. While the workload increased, processes didn’t.  

After 5 years the company operated pretty much like it had in the first two years of existence. Clyde’s rational was that what worked back then should continue to work today. In fact, most of what Clyde based his success on was his pride in ‘doing more with less’, a value he had had drilled into him as a kid growing up with parents who emulated that philosophy every day. 

While Clyde’s employees were overwhelmed with trying to keep up with the workload, their suggestions for an accounting system that would track project hours and help them manage resource allocation fell on deaf ears. It wasn’t unusual for employees to put in 10 hour days and many worked 6 days a week. Clyde was there working right along with them. A concept he talked about proudly. 

Putting a Name to the Pain 

Clyde was experiencing a Flood Zone. A transition zone that happens when a company moves from Stage 3, with 20 – 34 employees, to Stage 4, with 35 – 57 employees. A Flood Zone is the transition zone that requires bearing up to an increase in the quantity of activity. 

By understanding that the activity level on projects was increasing, that the number of clients serviced was increasing, that the number of employees was increasing – Clyde could have better prepared himself and his company to manage through the Flood Zone. 

How to Fix It 

When Clyde was a Stage 3 company with 20 – 34 employees, by understanding that hiring the next group of new employees would shift him into another stage of growth and force him through a Flood Zone, Clyde could have: 

1. Begun the process of communicating the new challenges that a Stage 4 company brings and get ahead of those challenges before they hit; 
2. Looked back on some of the challenges they didn’t get taken care of as a Stage 3 company and address those issues immediately; 
3. Recognized that the company was experiencing a Flood Zone – helped his employees understand that the company’s growth brought an increase in activity that everyone would be experiencing and they needed to talk about those changes in order to be prepared for them; 
4. Started putting in place sophisticated processes that would address that new activity level, help the company sustain profitability by working smarter not harder – a two-fold benefit that would have kept employees engaged and energized, not driven them out due to frustration and burnout. 

The 7 Stages of Growth is a business model that is all about helping CEOs PREDICT how growth will impact them and provide them with a PRESCRIPTIVE approach to managing that growth. You don’t have to make it up as you go as Clyde was doing. There are people who have ‘been there, done that’ and as CEOs it’s our responsibility to bring the best systems, ideas and concepts to our business.  

Next Steps

Clyde’s situation is not unlike many CEOs who believe they can simply work harder and create a successful company.  

From my own experience and from watching and reading about CEOs who take the approach of getting outside help, engaging their employees in helping them grow their business and asking for advice in areas they are not as familiar with, I’ll bet on the CEO who reaches out and asks for help at critical points in their company’s growth.