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Size Matters

Growing your business comes down to basic multiplication--just make sure you add in the human factor.
April 1, 2008
URL: http://www.entrepreneur.com/article/191432

One of the biggest dilemmas you will face after you get your business up and running is the decision to either grow or stay small. Obviously, most entrepreneurs opt to keep their businesses small because it's much easier to control and manage a small business. And that's because growth requires people. As my rich dad often said, "Business would be easy if not for people." If you choose to grow your business, being able to lead and manage people is one of the most important skills you can possess.

As the number of people grows, the number of relationships grows--and grows exponentially once you have four people in the business. For example, a one-person business has zero relationships; add a second person, and the relationship dynamic kicks in. Add another person: three people and three relationships. But look what happens with the fourth person: four people and six relationships. Visualize each person as a dot, and draw a connecting line between each of the dots. You'll see that with four people, you'll have six connecting lines. Take it a few steps further and do the math: Seven people equals 21 relationships; 100 people means 4,950 relationships!

Many businesses grow by adding employees, then contract because they fail to grow internal communications systems and procedures. Instead of employees working together as a team to serve their customers, the exponential number of relationships causes internal chaos.

One of the problems with exponential growth of relationships is that it requires managers and leaders with exceptional people skills. But many entrepreneurs make the mistake of hiring team members that have great technical skills but lack equally great people, communication and leadership skills.

A few years ago, I brought on a brilliant attorney who was great at practicing law but absolutely horrible when it came to working with people. It was soon obvious to me that this attorney should only be in a windowless, one-person office and kept far away from contact with any other living creature. It took nearly a year to repair the damage this single brilliant technician did in just four months.

Before adding employees, you must honestly answer the following questions:

Then it all comes back to the age-old question: "How do you find great people?"

To answer this, I turn to my good friend Donald Trump, who says, "Set the example and you will be a magnet for the right people." That means doing what you say you will do, holding yourself to the highest standards, working to exceed expectations, learning from your mistakes and then sharing those lessons with others.

Robert Kiyosaki(richdad.com), author of the Rich Dad series of books, is an investor, entrepreneur and educator whose perspectives have changed the way people think about money and investing.