It’s not unusual to find some of your closest friends among the people you work with. Consider the many hours spent together (both in and out of the office), as well as the many common interests, including of course a shared commitment to growing the business.
But things get a bit more complicated when you’re the one in charge and your good friends happen to be people who work for you.
In many small businesses and especially young startups, “Most relationships tend to get pretty close,” says Prerna Gupta, a contributor to Young Entrepreneur. The long days, the emotional roller coaster of getting a business up and running can make things cozy with employees — “possibly much cozier than normal professional relationships.” The line between friend and co-worker (or boss) tends to blur when you seem to be always grabbing lunch or having a beer after work.
But, Gupta says, “It is essential to not let that friendship get in the way of your business success.” She offers four tips for maintaining an essential professional distance.
Disagreements are inevitable in situations where people are stressed out and working in close quarters. Her advice? “Build relationships that are strong enough to withstand them.”
In the world of small business, there’s no place for holding a grudge. If an employee’s remark gets on your nerves, Gupta says, “Talk to them about it and then brush it off.” There’s nothing to be gained by letting a minor difference of opinion damage a productive and otherwise amicable relationship.
The people who work for you and whom you’ve befriended deserve your respect. They are there because “either you, or someone else with decision-making power, believe they are the best people for the job.”
With all the hours they put in—not to mention how much their unique talents contribute to the success of your business—shouldn’t you show your appreciation every chance you get?
Friendships sometimes cloud your perspective and affect the way you see your employees. For the sake of the business, it’s imperative to stay objective about each person’s work performance.
Don’t hesitate to provide feedback when necessary. And, Gupta says, if you come to the unfortunate conclusion that an individual is no longer the right match for the job, “have the courage to do the right thing for your stakeholders and… let her go.”
Tough advice, but completely appropriate and professional. Friendship can’t get in the way of the success of your business.
How do you balance friendship with leadership?
Sometimes a small business has to be careful what it wishes for. Say you’ve finally snagged a big customer with a huge contract. Great news, right? Not necessarily.
According to Les McKeown, president and CEO of Predictable Success, “Most small companies that land mega-contracts with massive companies end up badly damaged and have their growth stunted over the long term as a result.”
In this article, McKeown describes how this happens:
One client generates more than 20 percent of revenue. In McKeown’s view, “unhealthy things” begin to take place when one client reaches 20 percent or more of total revenues. No one client or customer should be allowed to “dominate the top line.”
Meetings are all about one customer. A red flag is raised when you realize nearly every meeting you hold focuses on the needs of that one client. These meetings turn into “little more than a punch-list of their outstanding production or delivery issues.”
Your employees are getting burned out. A single big customer can easily come to dominate the small business that’s serving it. When this occurs, the atmosphere grows tense because this is the one client you can’t afford to lose.
As McKeown notes, “Your employees lose the ability to work at their own pace, and are increasingly yanked from pillar to post.”
Deadlines go haywire, internal priorities are constantly shifted and superseded and workers are stretched to the limit. “Net result? You have an exhausted, unhappy, and increasingly disengaged workforce.”
Creative employees go unfulfilled. Sometime after the initial honeymoon period is over, a big client begins “turning up the volume when they think they’re not getting what they want.”
This tends to frustrate the most creative employees in your business, because their ideas and suggestions get drowned out in the frantic rush to meet the client’s constant demands. Without creative input, you run the risk of further failing to satisfy the client’s needs.
You lose focus on your target market. With all your efforts geared toward the one big client, you lack time and energy to stay on top of your target audience’s needs and challenges. When this happens, your competitors are only too eager to rush into the vacuum.
New client acquisition gets low priority. Along with a lack of focus on the target market, your small business simply lacks the resources to do what’s most important to long-term success. As McKeown says, “It dawns on you you’ve developed an in-built dependence on the contract that can’t easily be given up.”
The effort it takes to meet your big customer's needs become so “all-consuming” that new client acquisition efforts get placed on the back-burner.
No small business can afford to put all its eggs in one basket. Watch for these warning signs and keep working to expand your client base.
What do you do to avoid the big customer trap?
If you've been sitting around wondering how to build up your business, it's time to roll up your sleeves. Because it's as true in business as it is in life: Waiting around for things to improve in your business won’t get the job done. For something good to happen, you have to make it happen.
So says Steve Tobak, a Silicon Valley-based strategy consultant, in an article appearing on Foxbusiness.com.
“Successful business owners make their own luck by constantly seeking to improve their situation,” he says. They understand that “day-to-day inertia, the status quo, is the enemy of business.”
To prove his point, Tobak cites the humble origins of several famous companies, such as McDonald’s (“started as a hot dog stand called The Airdrome”) and Kraft (“sold cheese door to door”). The hugely successful entrepreneurs behind these billion-dollar ventures made things happen. And not all of their tactics were Sisyphean. Some are so achievable they can safely be called "easy."
Here are ways for you to build up your business as well. (more…)
