In an average month, my organization explores around 50 companies for possible investment. We review everything from organizational structure, culture, and financial performance, to sales systems, competitive position, and leadership style. This gives us an unusual vantage point from which to recognize patterns of success, and failure.
As a general rule, small businesses don’t stay small on purpose. Companies “top out” for good reason(s) and rarely because of the business model. Beyond a certain point, sheer effort no longer works to overcome critical challenges. This is the ceiling of brute force. Each company hits it at some point, but the size, specific issues, and level of complexity varies dramatically.
A comprehensive study of organizations by Dunn and Bradstreet concluded that 90% of small business failure was directly attributable to a lack of management expertise. In my humble opinion, that number seems low. If failure occurs, it’s virtually always a fault of leadership. The question is “what kind of fault, and is it preventable?”