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Making the Jump from Small to Large

(May 2007) posted on Sat May 12, 2007

Growing your business requires attention to production processes, accounting systems, and management

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By Marty McGhie

One of the most enjoyable aspects of business is the process of growing a company from a small to a mid-sized shop and, eventually, to a large business.

Managing long-term growth is always exciting, but it can also prove very challenging. To help you overcome some of these hurdles, I want to analyze three areas of a growing business that require your constant attention: production processes, accounting systems, and management teams.

Formalizing your production processes
As a smaller company, you may be running one shift, using one or two shop supervisors or production managers, and managing a handful of production personnel. It may be realistic to grow this structure to even a $3- or $4-million company by adding equipment and a few more personnel as you incrementally grow. At this level, defined production processes may not be necessary because everyone on the floor can see and manage each job.

But as sales grow, your workflow continues to increase, eventually creating strains on production. There will come a point in time when you realize the need for defined production processes. Usually, the signs are quite painful: missed deadlines, quality-control issues, excess overtime, and so on. All of these will result in higher material and labor costs and, of course, lower net income.

To manage these problems, you must formalize the production processes and hold your personnel accountable to them. One idea to consider is developing company standard operating procedures (SOPs).

Over the years, as our company grew-particularly as we added additional shifts to our production day-we noticed an increasing demand for SOPs in the workplace. The advantage of using this type of approach is that you formalize a particular procedure, have everyone agree on it, document it, and train everyone on it. Then, as new technicians come aboard, they are trained by someone using the SOP, thus providing a consistent approach to the way this particular procedure should be done, no matter who is performing the task and regardless the shift during which the work is produced.

As your business continues to grow, this approach with your production (as well as other) systems will become increasingly valuable. It's also important to note that even though my own company has been working on these processes for years, we continue to adopt, implement, and tweak our SOPs on a regular basis.