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A sore point for domestic businesses

One of the biggest challenges in the life of a business is going from small to big. I know that’s a general and subjective way of putting it, but so is the category itself, because everyone in business has a different definition of “small” and “big”. In business development, it is almost a given that business owners start a company because they want to become big. In such cases, most business owners look at the company’s size, or in most cases its revenue or headcount, as a benchmark. At least, this has been almost a basic assumption in recent decades. But the post-2008 Great Recession and now the COVID Crisis have drastically changed this attitude.

Critical headcount

In my experience, there is a kind of megalomania lurking within the majority of business owners. When it comes to the success of the company, they can’t help but bid against each other in an ownership discussion. Of course, from the inside, they can see exactly that there is a problem, or more likely, they just feel it. Unfortunately, they are also determined to do better tax-wise, so the officially reported results start to diverge from reality. So, the situation is given where it is appropriate to talk about revenues with incredible exaggerations, while the real result is best concealed as much as possible, painting a completely unrealistic business picture. And then many people live in this dream world for a very long time. The situation becomes really problematic when the stage is reached where it is absolutely necessary to make the operation more efficient. The first real challenge is finding the right partners to do this because we are talking about developing companies of huge size, which in most cases are accompanied by results close to those of the smallest companies. It is clear that the cost of screening a company with 20 employees and putting it through an organisational development programme is very different from that of a company with 150 employees. And if you want to get a true picture of the company, every single person counts. That is why many large domestic companies fail, even more so when they reach a critical mass of employees.

A sore point

This is where the real challenge begins. If the company starts to regress in its development, the owner has two choices: either admit it themselves and then to their business developer exactly how much is enough in real terms, after which a profoundly serious reorganisation can begin, and there will be pain points. Several colleagues who were previously considered indispensable will not be so this time. Many professionals who were dear to the owner will no longer be so dear. Once-loyal employees will quickly turn away when the charade no longer works. This is a drastic time for the business owner, as many of the things they truly believed in are falling apart before their eyes, and what will one day be built from the ashes is not yet fully recognised. A company with 110 employees was reduced to 54 within a year, while company output increased by 16%. It’s almost miraculous, isn’t it? On the other hand, it no longer seems so when I add that the owner is a creative and communicative man who wanted to be special in the world, which he finally managed to achieve in the corporate world. He did this by surrounding himself with people who nurtured this feeling in him. And it is worth knowing that he did this for 14 long years. After all this time, the Great Recession forced the owner to act. So, he did. Today, the company has 78 employees, the COVID crisis has increased the company’s profits by 32%, and there are only 4 of the current employees who were with the company when it was restructured seven years ago.

A crisis offers many opportunities for the astute businessperson. And if you are really smart, you take advantage of them.