Winston-Salem Business Magazine - October 2007 - (Page 10) BUSINESS Front 60 SECOND BUSINESS STRATEGY NO MAN’S LAND How To Survive Growing Your Business Somewhere between small and big is a place where many companies get lost. Your organization can’t keep pace with demand. Banks won’t lend to you. Welcome to “No Man’s Land.” or many CEOs running a successful company can be a thrill, but there is a point at which it becomes no fun at all. Doug Tatum has a name for this phenomenon; he’s written a book about it: No Man’s Land: What to Do When Your Company Is Too Big to Be Small but Too Small to Be Big. “We experienced “No Man’s Land” after a year or two of having started our firm. Our business plan was to provide rapidly growing companies with financial expertise. We were all finance guys—me, my brother John, and the cadre of partners we’d put together. Every week, we’d have a meeting and talk about what our clients were doing. Pretty soon a pattern emerged. We saw that below one level of sales, you were sort of in a safety zone. Above another level, you were more or less out of the woods. But the transition from one level to the other was just incredibly painful. I remember saying, “My gosh, it’s like a no man’s land. You can’t survive there. You’ve got to push through to the other side or go back to start.” I began to see that it was a universal phenomenon, regardless of the business.” says Tatum. “When you think about it, a company’s strategy is nothing more than what you tell me, the customer, you’re going to deliver to me. It’s about making certain promises to certain customers. A company enters no man’s land when it begins to experience a disruptive change in its relationship with its customers. Something happens to the value proposition, which is the thing that makes a customer applaud you by paying you a profit over and above your costs. I view profit as the customers’ applause; they’re applauding you for something you’re giving them. My partners and I saw that, at a certain point, the value proposition had to be transferred from the entrepreneur to the rest of the company. It couldn’t just depend on the entrepreneur’s personal expertise. The breaking point came when the company got so large that the entrepreneur could no longer be out there in front of the customers and still managing the operations.” explains Tatum. So it all breaks down. The customers start moving away, and the business stalls. “I don’t believe most entrepreneurs start off with a vision about what’s going to make them successful. Their success comes from their ability to look around the corner and bet on things that the rest of us can’t see. They’re out there making promises to get customers and figuring out where the value is, and they’re also keeping on top of operations, making sure the company is aligned with the customer, and delivering on the promises they’ve made. Each promise is a bet on the future. Then one day you make a bet that all of a sudden leads you into a stadium full of new customers. It drags you into growth and it’s very hard to say no. That’s where things start to go wrong, because you aren’t physically capable of doing it yourself anymore. So it all breaks down. The customers start moving away, and the business stalls. In effect, the customers stop F 10 OCTOBER 2007
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