top of page
  • Kristiina Lumeste

Why business owners fail to scale?

Well, that’s the million-dollar question, that I get asked more often than I’d like to answer.

It’s a cliché to say that founders flounder, but unfortunately, that’s usually the case. I believe most business owners can learn to scale if they are willing to take a step back and admit to themselves that their old ways no longer work.

Over the past couple years, I’ve worked closely with over couple of hundred entrepreneurs and seen them struggle to adapt as their companies grow beyond a handful of employees or they enter a new market or launch a new product.

In the process, I’ve observed that the habits and skills that make entrepreneurs successful can undermine their ability to lead larger team culminating in rapid growth. The problem, in other words, is not so much one of leadership personality as of approach.

If you think about it, there are 6 main reasons that work for entrepreneur and small business owners but become Achilles’ heels for those same individuals when they try to scale:

  • Loyalty – the loyal small group of friends or colleagues that are there at the start of the business. In entrepreneurial mode, you need to lead like you’re in charge of a combat unit on the wrong side of enemy lines, where it’s all for one and one for all. But blind loyalty can become a liability in scaling your business, changing directions, or stepping into a new niche.

  • One-man operation - believing you can do everything yourself. Small business owners are a scrappy bunch, and tend to view themselves as Jacks (or Jills) of all trades. But entrepreneurs, like all people, have strengths and weaknesses, not to mention a finite number of hours in each day. Delegation is your friend. Whether that means hiring your first employees or investing in software that cuts down on busywork, your business will only start making money once you offload some of your responsibilities onto other qualified shoulders.

  • Single-mindedness - is an important attribute in a visionary who wants to unleash a revolutionary product or service on the world. Yet this quality can harden into tunnel vision if the leader can’t become more expansive as the company grows.

  • Lack of strategy - anyone who has ever overseen a successful (business/product) launch knows – methodical execution and strategical planning leads to a desired outcome. It is critical for all businesses to have a strategy. Many small businesses fail because of fundamental shortcomings in their business planning.

  • Refusal to pivot - that’s right, old-fashioned stubbornness comes in at the top 5 reasons why small businesses tend to fail. It’s easy for entrepreneurs and small business owners to become obsessed with their initial business idea or product, even when all evidence points to it not being a success going forward. Maybe after being couple of years in business the shininess has worn off and you are failing to attract new customers, maybe your clients are purchasing now online and fewer locals are walking through your doors?

Now what??

Do you become a statistic and resign to failure or do you take time to figure out where you need to adapt? Maybe you pivot to appeal to a new niche, hire industry professionals, stock different type of merchandise or incorporate an email funnel or automate your social media posts.

  • Lack of data – as they say data is new air, we are now past the gold and oil era. Your small business is competing with cash-rich whales like big 4 banks, construction companies, Woolworths or self-made influencers who have multi-million dollar brands backing them. What do all those whales have at their disposal? Data. Tons of data. Though your market is much smaller, you still compete for the same audience and the same purchase actions.

Leaders who scale, overcome these reasons by dint of self-discipline, listening to and seeking input from others, and being willing to shift their outlook. They deal honestly with problems and quickly weed out non-performers. They see past distractions and establish strategic priorities. They make concerted, sometimes uncomfortable efforts to do what doesn’t come naturally to them for the team’s sake.

Business growth and expansion take as much careful and strategic planning as managing day-to-day operations. Even well-established and successful groups conduct careful research and have a sound strategy in place.

And they learn to work with and communicate to diverse employees, customers, and external constituencies. Most important, they make the company’s continuing health and welfare their top concern.

22 views0 comments

Recent Posts

See All


bottom of page