How do you define success? For a business owner, if five years have passed and you’re still seeing the light of day, that is success. You’ve likely turned revenue into profit, have proven a product-market fit and the people involved are happy. Reaching that milestone is huge, given that according to one statistic 65% of businesses don’t make it past this five-year point.
There are several make-or-break points in the trajectory of a business, but why is this five-year mark such a critical point? What happens at this time that causes the majority of businesses to fail?
I work with people navigating change. When I hear a client hit a wall or say, “I can’t,” I’m actually relieved. It means they met their edge. They’re at an inflection point, standing at the line between failure or success. There is a choice to be made: stop here or start again?
My own journey to success involved a lot of starting again, or learning. Somehow, my years studying meditation and Buddhism; pursuing entrepreneurship; graduating Harvard; writing; founding nonprofits, schools and youth arts programs; being a stage and film actor; and running boards coalesced. Today, I am an impact investor, consultant and educator. I teach the tools I know and use to leaders navigating change so they can become more effective. Hundreds of clients and students have used the unique approaches I gathered over 25 years, and many lives have been transformed — not least my own.
I’ve been fortunate to work with top minds in media, education, leadership and business. My mentors are game changers who work globally. I stand on the shoulders of these giants because they gave me a ladder, but it was I who climbed it. One benefit of being hungry to learn is that you change, and as you change, you grow. Growth is the catalyst for transformation. Four decades into life now, I enjoy an authentic, abundant and grateful existence, and overcame various personal obstacles to get here. I share this not because I have it all figured out, but because I know how to learn. I focus on being a learner to keep creating an inspiring life, and help others achieve the same.
For business owners, there is a new future unfolding at the five-year mark. It is called “scaling and growth.” Not enough attention is paid to this level of change, which is why I think so few businesses achieve it. The skills required to lay a new track to reach unfamiliar goals are a different set from what got you here. Bootstrapping your business until now was more about managing processes and products, not people — but you’re entering a whole new world now. You must engage people in a way that will make a difference to them. Experiment with communicating in ways you don’t yet know how to do. Accept concepts about yourself and others you’ve not yet proven. To pull this off, you need to possess three things: courage, independent thinking and a willingness to learn.
Scaling means hiring more people, and these people turn into teams. In a best-case scenario, the leader knows how to build a team and form a culture of communication — one that is healthy and possesses fair, clear and high expectations. This is where productivity increases, profit builds and customers are fulfilled. Most significantly, employees are engaged so you retain and develop them. Win! Thank goodness for good leadership.
But in many cases, business owners are operating beyond their scope of knowledge. They sometimes lack the skills necessary for working with people. They guess. They assume. They know the answer before asking the right question, so they unintentionally make mistakes. If there is no system in place to provide checks and balances, this leads to the wrong kind of impact. That impact lands squarely on the heads of employees. Tension builds and, if left unaddressed, things can go off the rails.
According to one study, 84% of U.S. workers say poorly trained managers create “a lot of unnecessary work and stress.” Some leaders blame employees for this unrest and replace them with new workers. This game can go on only so long until the elephant in the room is difficult to ignore anymore. It’s generally clear to everyone at work that the problem is leadership — except to the one in charge. In a failing company, they’re the last one to work out that they need help — if they ever do. The force they place on employees to comply, and change is strong enough to conceal their own failures. Some never come out of this, but some do — and they transform into real leaders. These ones reach my doorstep for one reason alone: For them it was grow, or die on the vine.
Going about “business as usual” when things are going poorly in the office can literally cost you your business. Unhealthy culture cost businesses $223 billion in 2019 in employee turnover. Sadly, 1 in 4 American workers dread going to work and seek greener pastures in another company. LinkedIn Learning found that 94% of employees would stay longer at a company if they focused on learning and development. The most critical five skills they say management needs are:
- Communicating effectively (41%),
- Developing and training the team (38%),
- Managing time and delegating (37%),
- Cultivating a positive and inclusive team culture (35%), and
- Managing team performance (35%).
Have you ever seen behind the curtain in the work of leadership development? It is extremely interesting. The first thing is, leadership development work is personal. Learning isn’t an outside job; it happens here at home with what is really going on. Second, learning requires a willingness to take a break from being an expert and, controversially, from the winning position.
People who achieved wealth, power and success carry expertise. Experts don’t always make great learners. If an expert cares more about knowing than learning, for example, they’re cooked. Some may be less open to introspection and vulnerability, because perhaps their path to success wasn’t necessarily paved with either. Less experienced people often possess more curiosity than knowledge, so they learn better. By learning efficiently, they achieve success at a young age. We see this all the time. To be fair, there is less at stake for them so they’re naturally open. Also, they’re rich in time and energy, our two greatest resources. It’s a special expert who can put stakes aside to devote time and energy to sustain reinvention. Many people never get there. Except when they do.
Most of us don’t really want to see what’s under the hood, but I am passionate about spending time in there. It is not for everybody. Seeing limitations or knowledge gaps in ourselves is confronting: we might feel weak and view them as failures. To show up to do it again the next day takes strength, confidence and a sense of purpose. Our core beliefs, habits and thoughts run everything, and, unless they’re running an efficient program, you experience conflicts and require an upgrade. Developing a new program takes great commitment and focus; in this way, the same courage and independent thinking that won a business owner an initial success is paying off anew. This is incredibly powerful and exciting to be part of.
From another perspective, working in service of a bigger, better vision for your business can be extremely motivating. Aspiration toward one thing is certainly more fun than shying in pain away from another, but either way the work of leadership development is the same. One recent report found that 77% of leaders who developed themselves with a quality consultant reported progress in their well-being:
- 80% reported progress in self-confidence,
- 73% reported better relationships,
- 72% reported progress in communication abilities,
- 71% reported progress in interpersonal skills, and
- 70% reported progress in productivity at work.
By developing yourself, you’re not doing work, you’re actually working with your life. For those who stay with it, your skills translate to greater capacity. These increased capacities become ways of being, which directly impacts your team. Your positive impact causes them to give you better results.
One survey of Fortune 1000 companies showed that those who developed their leaders realized a significant ROI. Tangible benefits include:
- increased productivity,
- higher levels of overall employee performance,
- reduced costs,
- growth in revenue and sales,
- higher employee retention, and
- higher engagement of employees.
Another survey shows that for every $1.00 spent on quality coaching, they realized $7.90 in returns. Among the intangible returns were increased confidence of those being coached, improved communication, stronger employees and peer-to-peer, and key stakeholder relationships.
Businesses still going by year 10, 20, 50 have special stories to tell. Though market dynamics never stop evolving and customer preferences move and change, these leaders grew with them. Whenever they arrived at an inflection point, chances are they responded by skillfully navigating these changes. In one study, 77% of respondents said coaching paid for itself, and more than half said the value of the results far exceeded the cost. Another stated that 96% of those who had gone through leadership development said they would “go through the process again.”
We all want our success stories to have more chapters. We want our stories to get better as they go. We want the best of times to be yet to come. If we live to tell the tale of how we made it this far, surely we’d say we learned a lot along the way — and that the effort paid off.
Joanna Horton McPherson is a writer, speaker, educator and executive coach.
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