The main problem is that in the beginning, most brand new businesses focus on sales and because they want growth, they put their energy and money in revenue producing areas like new product, new plants, new markets and more branches. Little or no money is put on infrastructure or organizational framework hence there is no system to provide the management with the information and data it needs to run the ongoing day to day operations of the company and to make decisions about current and future strategies for the business.
This is natural because the entrepreneurs want the business idea to work.
How then does an entrepreneurial start up make the successful transition to a rapidly expanding medium size company.
To achieve this greatness, entrepreneurial company must address the following 5 problems that come from within, namely:
- The ineffective deployment of human resources. In the early days of a start up, it is not essential to define job requirements or set up performance evaluations. You then find, that as the company grows the entrepreneur naturally starts giving the employees who have been with him from the beginning more responsibilities far beyond their level of experience and sometimes beyond their level of ability. The danger with this is that without developing a well qualified management team, the company becomes unable to respond fast enough to new opportunities and misses warning signs of trouble. Secondly, without job descriptions worked out in advance and an adequate salary requirement, expanding companies can very easily hire wrong people. Another thing that happens with expanding companies is that they tend to stick with the management structure they know rather than making necessary changes and adjustments as the company grows. You as an entrepreneur thus have to take note of the above tendencies in your expanding business to avoid disaster.