The Level I Company: "Entrepreneurial Startup"

Part 2 in a series of 4Below are the characteristics and warning signs of a Level I Company, the Entrepreneurial Startup. This is the first of three defined company stages as part of The Business Growth Cycle. CHARACTERISTICS:

• The founders are usually actively involved in running the company.
• The primary emphasis is on producing products or services and selling them.
• Management, systems and planning receive minimal emphasis.
• Communication is informal.
• Employees work long hours and are paid modest salaries.
• Management reacts more to customer needs than to employee needs.
• The founders are either technically oriented or market builders and are usually not skilled managers.
• The company culture - the non-negotiable values and how to treat customers and each other - is generally understood and does not require a lot of reinforcement.
• The growth is greater than inflation but usually slow to moderate.

As a company matures, it often experiences subtle but very troubling growing pains. Compounding the situation, management, in its haste to maintain growth, often fixes its gaze outward on the environment and toward the future, hoping that more precise market projections and higher sales will provide the organization with the impetus it needs to go to the next level of performance. All the while, the company may overlook the repairs it needs to implement in order to mature and stabilize.LEVEL I: Top Warning Signs of Success™If these problems are present in a company, they will eventually cause "train wrecks" that slow dow or stop the company's ability to scale. It is the role of the leader(s) to predict and resolve these problems before they show up in the results.

• When there are two or more founders or partners in the business, it is not clear who is in charge and where accountability lies.
• Conflicts between founders or partners often arise and remain unresolved.
• New employees are less motivated by dedication and more motivated by money and status.
• Budgeting and cash control are often insufficient.
• There are often working capital shortages due to minimal cash planning and/or misuse of cash.
• Financial reporting is often slow and inaccurate and use of key performance data is not sufficient to predict problems and develop necessary coping strategies.
• Entrepreneurial founders are often tempted to diversify into unrelated products, services or businesses.

GROWING PAINS: Leadership and SystemsNext: view Level II: Rapid GrowthKEY QUESTION:What do you think defines a sucessful startup? If you had to narrow it down to 2 core problems/issues that consistently hold companies back from going to the next level what would they be?