The Business cannot outgrow its Leader.

Every growing business eventually reaches a ceiling. Most owners blame the economy. They blame competitors. They blame their employees. But the next ceiling is usually leadership.

Every growing business encounters challenges. Most owners believe that the challenges are unique to them, their economy, their industry, or their trade. However, after working with dozens of owners, across several industries and trades, I’ve noticed something, individual businesses or owners simply are not that unique. As a business grows, many of the hurdles it encounters are similar regardless of individual situation, industry or trade. The great news about this similarity is that since the challenges are similar, proven principles apply across situations, industry, and trades. Once we identify the hurdle, we look to others who have overcome the challenge and apply what they did to our situation and if that doesn’t resolve it for us – we just tweak it a bit and move on.

Consider the career path of an owner. I once worked with Paul, a plumber, who discovered he liked what he accomplished as a plumber. The more Paul did plumbing, the better he performed. He quickly moved from apprentice to journeyman – a recognized expert in his craft. Paul was always a hard worker who focused on being the best plumber in his city and soon became many clients’ preferred plumber.

It was at this point in his career that Paul decided to go into business for himself and opened up his own shop. Once the word got out, Paul’s phone rang daily with clients and referrals filling his schedule. But something happened; Paul’s Plumbing required more than just great plumbing; there were invoices to send out, vendors and taxes to pay, and bookkeeping. These were positions were beyond Paul’s familiarity as a plumber. His business had moved up a level and demanded Paul do the same. So Paul hired another plumber to keep up with the demand of his business, a bookkeeper to send out the invoices, pay the bills and an accountant to do the taxes. And once again, Paul got to do what he loved, occasionally a bit of actual plumbing.

As Paul’s Plumbing grew, it demanded more skill from Paul. He hired a few more plumbers and found himself tied to the estimating desk, meeting with vendors,  managing inventory, and staff of ten. Once again, business growth stalled. Paul was working harder than ever, but the business wasn’t growing. Paul was putting in more hours but taking home less money and less satisfaction of a job well done. Running his own shop just wasn’t what he thought it would be.

I have seen this in all types of trades, industries, and professions. Yes, even in companies I have owned along my journey. It’s the same scenario: A typical owner was once an employee who discovered something they liked to do. They became an apprentice, they studied their craft and eventually became competent, then good at it. They became so good at their craft, they got promoted and got even better at it. So good and confident in their craft, they decided to hang out their own shingle and start their own business.

As their business grows, they soon discover there is more to running a business than providing the service to the customer – much more than they ever realized. They may overcome the first bottleneck but as the business grows, they will certainly find themselves in the next bottleneck. What we learn along the way is that most business growth is like a set of stairs with the bottleneck as the next riser. Each stage of business is actually a different profession demanding  new skills for the owner to lift business up to the next growth step.

While I’ve yet to meet a business owner who wanted to become the bottleneck, I’ve met only a handful who haven’t become the bottleneck of their firm. Every successful owner learns an interesting truth.

“The skills that built business to the current level are not enough to grow the business to the next level.”

New business owners also learn … Businesses don’t promote owners. Companies do.

Every business plateau isn’t the end of the staircase. It’s simply the landing before the next step. Each step asks us to become a better version of ourselves. Every step requires becoming someone new: technician, owner, employer, manager, leader, executive, investor. None of these roles is more important than any other. They simply require different knowledge, habits, and ways of thinking. The very skills that made you successful as the best plumber in town are often not the same skills that make you the best leader of a growing plumbing company.

When Paul found himself saying “I’m working harder than ever,” and “I just can’t seem to find good people,” he didn’t recognize these as warning signs; he just buckled down and did more. But when he realized that “Everything depends on me,” he recognized the problem. When Paul was an apprentice plumber, he had noticed that people often got promoted to a level just beyond their competence. To avoid that from happening, Paul always took extra classes, and training, dedicating himself to becoming a lifelong learner. This had served him well as a plumber. Who had ever thought that the same principle would apply to a business owner. Now it was clear: every growing business grows and asks something new from the owner. At different stages, owners must learn delegation, communication, financial management, recruiting, systems, strategic thinking, leadership, and eventually succession.

There is actually a name for this. In 1969, Laurence Peter introduced the Peter Principle. Employees typically rise to the level just beyond their competence. Great Technicians promoted to good managers, promoted to ineffective VPs of Operations. Employees recognized for current accomplishments until they reach a level where they plateau – not exceptional at their position – more directly stated, beyond their competence.

It’s interesting, in growing businesses, the same progression applies to business owners. Each growth step requires the owner new skills and leadership. If the owner doesn’t step up, business not only results in a plateau but often lead the firm into chaos, not just for the business but for the employees as well.

It was at this point that Paul knew it was time for another’s perspective. Paul knew he wanted someone with an owner mindset; but he didn’t want a partner. He didn’t want some consultant with a solution; he didn’t have the time to figure business out for himself and didn’t want to take the financial risk a mistake would cost. He needed someone who would help him grow into the person he needed to become to grow his company.

It was at this point Paul heard me say that

“The Business cannot outgrow its Leader! As the Leader Grows so the Business Grows!”

To Paul it was a Brilliant Flash of the Obvious. Just like his high-school wrestling coach brought the best out of Paul and turned his wrestling struggles to winning seasons. He could have a coach help him put his plateaued business back onto the growth path he desired – a business that really works for him. Because when a business works for the owner, it works for everyone around them too; their family, employees, clients, and customers as well.

  Yes, even business owners are affected by the Peter Principle.

  – Accept it – Every owner eventually becomes the bottleneck.

    – Recognize it – Learn the warning signs.

  – Grow Beyond it – Develop the association and skills your next stage requires.

Dedicate yourself to becoming a life-long learner of the task at hand and knowledgable of each of those in your business. And if you don’t want to risk the time and cost of making all the mistakes yourself you just might want to stand on someone else’s shoulders and learn from their experience, perhaps even a coach.

Dwight Weigelt

ActionCOACH Certified Business Coach | CPA retired