Why do small businesses continue to remain small

So today, let us understand the fundamental reasons why a majority of businesses stay small forever.

Below are the 4 parameters that are responsible for this problem.

1. Lack of systems in business

This is by far one of the biggest contributors to businesses being small because most small and medium-sized businesses, in most cases, operate ad hoc.

This means there are no processes to run the business, there are no methods to track the execution of the process, and there is no structure of who will execute the process and who will check the execution.

And because of this, most business owners are constantly firefighting for survival in their business.

Having a system basically helps a business owner manage the different departments of their business through systematic processes so that things don’t lead to a firefighting situation.

2. Not building a team

One of the most commonly asked questions that I am asked when I tell business owners to go build a team is what if they learn and leave.

Because in most cases, they did try to hire people and invest some time in improving their capabilities and those people left.
But what they fail to understand is business is not a game for one player. Business success is always a team effort.

The way you approach a business is not by limiting yourself by your past experiences but by learning what you can do differently to achieve a better outcome.

Many business owners don’t hire and build a team because they feel it will increase their expenses. But what they fail to understand is by failing to hire, they will end up doing all the tasks and activities in their business.

They will not be able to produce results in every department because it’s virtually impossible for one human being to manage so many roles.

So, by not hiring, you will make a rather expensive mistake.

Because instead of focusing your energy on increasing the top and bottom lines of your business, you will simply function like an operator managing every small activity.

And in many cases, despite having a team, business owners end up doing everything in their business. Because they don’t know how to effectively delegate the tasks and activities, leading to frustration and demotivation.

So as an entrepreneur, if you really want to scale up your business, you have to consistently focus on building a team and building team capabilities to focus on strategic growth and development.

3. No Management Information System (MIS)

One of the essential factors that make or break a business is a proper Management Information System.

In simple terms, this means preparing reports.

I have countless stories and references of business owners who have developed processes and have team members but still cannot produce results in their businesses.

And the main reason behind this is that they do not have an MIS.

Now MIS may sound intimidating, but the idea is simple. You break down your business into small departments.

Then for each department, you define the parameters you want to track. And then, you prepare a reporting format which your team members will fill and submit.

Once you do this process, the next step is to give ownership of executing and checking these reports.

There’s a golden rule for business success: whatever gets measured, gets managed, and whatever gets managed, starts growing.

So every small and medium-sized business must have a marketing MIS, sales MIS, operations MIS, and financial MIS to ensure a healthy, sustainable and scalable business.

4. Unwillingness to learn

Now, if there is something that hurts small & medium-sized businesses the most, it is the unwillingness of the business owners to acquire new capabilities.

There’s a misconception that people have about business. They think business is a game of numbers.

I disagree. I believe business is a game of capabilities.

Let’s take an example: Say a business owner is struggling in their business. He has no knowledge, no skills on how to market and sell his products and services, no idea how to build systems and processes, or an effective MIS to manage finances in operations. And because of this, the business owner is going down in his business.

Do you think giving more money to this business owner will solve all the problems? Or do you think building his capabilities by learning various principles of marketing, sales, systems, processes, and MIS will help?

I’ll tell you the answer. If you give money to someone who is already making losses due to a lack of capabilities, they will continue making losses.

Hence, I always tell entrepreneurs that if they want to build a business that’s profitable, scalable, and sustainable, the first priority is to consistently learn and acquire new capabilities to become a better business owner.

Only through capabilities will you manage to scale your business to a large one.


So these are 4 fundamental reasons, or rather, mistakes that most business owners make that lead them to be small forever. I hope now that you are aware, it will help you build the business of your dreams.

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