April 14, 2023
Ownership may feel chaotic at times, but small business timelines are somewhat predictable. When your small business hits a plateau and you start to wonder if success is further away than you thought, it’s important to keep things in perspective. It will help you to know the 3 common business hurdles and plateaus owners face along the way and when they typically occur.
3 Plateaus Every Small Business Hits Along the Way
These are reminders that with perseverance and a dedication to getting through tough times, your business won’t fail. Here are 3 plateaus every small business hits along the way:
Plateau 1: Your 5th employee
Hiring your first employee was a memorable experience, and by the time you’ve got 5 employees, you really feel like you’re on your way. That’s why it’s so disheartening to hit the first plateau of small business around this time.
What causes this plateau?
Before we get into the reason most small businesses hit their first plateau around the time they’ve hired their 5th employee, let’s talk about the reason you originally got into business. Was it based on a proven equity model, or was it to establish a company that manages to make money while you do something you love? There’s a big difference between the two.
If you started the business to do something you love, you’re heavily involved in the business. You alone hold the vision and idea of what your company should be. The problem with that mindset is that you are one person with limited time and resources. If you are personally involved in the delivery of service and day-to-day operations of every aspect of your business, you simply won’t have enough time to manage the big picture.
When you don’t take time to plan the big picture, you become entrenched in simply keeping up with what you’ve already got–5 employees and a full work load. In fact, around the time you hit this plateau, you may not even want to hire more employees or bring about real growth because you just feel tired and a bit overworked.
This plateau is over once you decide to concentrate your involvement to one department and take on a more supervisory role that allows you time to manage the direction of the company.
Plateau 2: Your 3rd year of business
By the third year of business, you’re smooth sailing. Everyone has settled into their routines and roles. Growth is slow but steady. And then you might start to notice that the wind is no longer in your sails, leaving you stranded on the water.
What causes the third year plateau?
Usually, a small business owner comes into the role with expertise in one specific area of business. It might be marketing, finance, or web development. In any case, the skill has served the owner well so far.
But by year 3, there’s been a lot of strain on that skill. It’s been heavily relied on for 3 calendar years and at this point, it starts to feel a bit forced. It’s more challenging than ever to continue to generate great marketing campaigns when you’re working on landing big partnerships and shopping for new company locations. Things get out of balance, and the business owner finds him or herself limited because of their involvement and different roles in the company.
In order to move past this plateau, you have to accept that your time can be spent on higher-level tasks that are more productive overall for your company. This means finding people to entrust with the roles you’ve held so far, whether that’s marketer, blogger, accountant, etc.
Plateau 3: Your 25th employee
Once you’ve reached your 25th employee, there’s no doubt about it: You’re doing something right. But suddenly, you’ll notice that the efforts and strategies that were working so well for your business before are now falling short of your growth goals. Every chart and metric you analyze shows a plateau or downward trend, and at this point in the game, that can seem like a sure sign of impending failure. It’s not! This is the 25 employee plateau, and there’s a reason it’s happening now.
What causes this plateau?
As a business owner, you might consider yourself a jack of all trades. You have to be in order to successfully oversee every aspect of your company! However, you’re also aware that your skill set is limited and that you don’t have expert-level knowledge of every facet of your business. That realization is probably what led you to hire managers and spread out the top-level responsibility, and therein lies the reason for plateau number 2.
By the time you’ve got 25 employees, you’ve hired managers to keep the structure of your business solid. Chances are, you hired your managers from the pool of employees already working for your business. And even though you might have chosen the best performing, most qualified employees in the bunch, if they didn’t come in with management experience, the learning curve is inevitable.
Just like you slow down in a car when you’re going around a curve, the same is true in business. Teaching employees to move into their new supervisory roles (especially when managing employees that were once same-level coworkers) takes time, and learning to manage and maintain lines of communication in the company with the new tiers of management can be a challenge.
That’s the reason small businesses hit a growth plateau around their 25th employee; they hire managers to share the ever-increasing load of managing more employee– and the time getting everyone acclimated to those changes forces the company to slow down and get its bearings before moving on.
Knowing what lies ahead for your company will help you to face the challenges head on. Use this knowledge to foresee the plateaus in your own business and tackle them like a pro.
