You're a small firm? Don't rush to be big.

Something that always gives me pause is when I hear entrepreneurs and their managers refer to their small business as “the company”, or even worse, “the corporation.”

I was talking with an entrepreneur who has two partners and no employees.  Their business seemed to be kind of “stuck.”  They were not getting some important, and yet basic things done to market their business and take better care of their customers.  He kept saying things like “the corporation needs to do this” and “the corporation should do that.”  They were spending most of their time trying to determine who should have what title and how to create a well-defined structure.

I finally said, “Wait a minute!  There are just three of you!  Sit down, make a list of what needs to get done, and divide up the work.  You are ‘the corporation’ so get busy!”

In fairness, the entrepreneur and his partners have big dreams and have a business model that could become a big business someday.  But they will never reach their dreams if they don’t start running their small business the way it needs to be run.

A key advantage that small businesses have is that they are not big businesses.

Small businesses can be nimble and can react quickly to customer needs and changes in the market.  Small businesses can continue to be entrepreneurial and seek opportunity.

As the business grows you will need to add some structure, increase the clarity of people’s roles, and put in some processes and procedures.  But all of this should be done judiciously and slowly.

Small businesses that try to act “big” too quickly run the risk of losing their entrepreneurial culture.  I can tell you from my own experience that once you lose the entrepreneurial spirit in a business, it is very difficult, if not impossible to get it back.

So how do you start to build an organization while still keeping an entrepreneurial culture?

When you delegate, make sure that you don’t just delegate tasks.  You need to delegate the responsibility and the authority to manage the tasks.  Give your employees the ability to make improvements and to react quickly to the market.  Everyone needs to have a sense of “ownership” of what they do.

When you start to create organizational structure for your business, don’t just create positions and reporting relationships to deal with immediate problems and challenges.  Be intentional about the kind of structure you are building and how it will impact your ability to remain entrepreneurial as a business.  Too much bureaucracy can kill innovation very quickly.

When you start to create processes and procedures ask yourself one question:  Is it critical?  While standardized processes and procedures are important to support a growing business, if overdone they can actually inhibit your ability to grow.

When you own a small business don’t be in such a rush act like a “big” business.  Your smallness is part of your competitive advantage.  Find the balance between building an organization and maintaining your entrepreneurial culture.