About 10 years ago, Doug Tatum wrote a book about a phenomenon he'd observed building a consulting firm that helped businesses with their finances. Tatum had seen one after another of his successful clients hit a wall where nothing seemed to work any more. The challenges were almost always the same. As Tatum likes to say, the businesses were doing just fine, and 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.” It sounds like a nice problem to have, but it can lead to some exceedingly difficult decisions.
For example, these growing businesses would reach a point where their owners could no longer get a loan using their personal assets as collateral. They were too big for that now -- but often they were too small to obtain a traditional small-business loan from a bank (because the amount was too small to be profitable for the bank). Often that meant they had a wonderful opportunity before them but lacked the financing to pursue it.
Or the owners would find that the smart, loyal employees who had helped them get the company off the ground and start growing were not necessarily the right employees to get them to that elusive next level. As a startup, the cash-strapped owners had probably given out titles in lieu of raises -- VP of Sales! -- but all of a sudden, they needed a real VP of Sales, someone who had experience managing a sales team. So what happens to the VP of Sales who'd been there through thick and thin?
The book Tatum wrote is called "No Man's Land: Where Growing Companies Fail," and it's filled with case study-like examples of companies trying to fight their way through this transition. Recently, Tatum was my guest on Mind Your Business, the small-business call-in show that airs live on Thursdays at 1 ET on Sirius XM 111, and we took calls from struggling owners and discussed all sorts of coping strategies for businesses trying to survive no man's land. We also discussed how to decide whether a business should even try to get bigger. Clearly, not every business should. As Tatum told Bo Burlingham years ago when the book was published, "What's really stupid is to force a business built around an entrepreneur, or around a human-scale concept, into a transition that will make it economically unviable. If you can't come up with a scenario under which the company becomes profitable again, you'd have to be crazy to go forward."
You can listen to the whole conversation here. On Mind Your Business, we don’t tell anyone how to run their business; we kick around ideas and strategies and consider options. Our next guest will be Lou Mosca, who runs American Management Services, a consulting firm that helps small-business owners, and who is a contributor here at Forbes. If you've got a question about your business and would like to hear Mosca's take on it, give us a call at 1-844-942-7866 when the show airs Thursday at 1 ET on Sirius XM 111.
