A passionate collective with dreams to create something out of nothing! – That is how an SME journey begins. The first few years are gut – wrenching where the entrepreneur dons numerous hats: that of a salesman, product expert, admin and HR. This initial “Jack of all trades” phase is tough but satisfying. The reward is a clutch of good customers, extremely loyal employees and strong domain couples with product knowledge. The organization at this stage however is unstructured, degree of specialization is high in terms of product/customer niches yet low in organization procedures. The staff is motivated and happy but in a cocoon, unaware of the outside possibilities. The public profile of the organization is either missing or limited.

Over time the entrepreneur yearns for greater scale of operations and tries to expand into newer areas. Herein, the business owner needs to remember that if he wishes to expand the organization, it is critical to embrace new ways without incurring monumental costs or losing the company's nimbleness. The new ways are acquiring skilled employees, cultivating a stronger public profile and focus more on working capital management and capital allocation. This process of transition is painful and requires a willingness to accept shortcomings and patience to deal with delays. The learning process is essential not only for the entrepreneur but also for his key employees – else everyone is exposed to the risk of failing.

The key aspects that best serve the organization in this transition phase:

• Enhance general business awareness/cultivate senior mentors - Listen to trusted mentors about successful practices that have helped similar sized businesses grow. This advice is best given by businessmen who have been through a similar growth phase not too long ago or by talking to advisers who have worked on similar issues with larger/diverse organizations.
• Embracing new Products/markets - Breaking into larger related products/markets is essential for organizational growth, but getting into new markets increases the complexity of operations and takes time.  This is a tricky graduation phase where it is important not to give up on one's core/traditional products/markets.
• Anticipating skill gaps - Growth has a habit of throwing up skill gaps not just in the frontline customer facing functions but also at the back end. The entrepreneur needs to plug himself into a flexible recruitment agency that could provide him with a steady stream of potential employees as required. Further it is naive to assume that some of the old loyalists may be able to plug in and act as senior management to the new recruits. This may often be possible but sometimes the old guard may be under skilled to meet the new challenges.

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