Breaking through the Phantom Ceiling



Many factors interplay to cause the phantom ceiling effect. It is necessary to recognize all interplaying factors and address each to break through the phantom ceiling in order to effectively make the transformation from being small to becoming a big business. The following are the many factors that one must give a careful thought to - 

 

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1.   The influence of revenue stream on the ability  to deliver profitably.

2.   Delivery as interplay of Structure – System – Staff and the Role of the Chief Entrepreneurial Officer (Business owner).

3.   Capital adequacy and financial leverage to prepare for opportunistic growth.

4.   Capitalizing on external expertise to bridge the competence gap.

5.   Relating to the external world to leverage relationships that add value.

In the blogs that follow I will be addressing each of the above points one at a time. The next blog takes a look at the revenue model to throw some light on the possibility that some products/service or customer groups keeping you too busy for your good?

To get the full picture please see the following links –

The Phantom Ceiling Effect

How do you recognize the phantom ceiling effect?



How do you recognize the Phantom ceiling effect?

We need to look for the presence of three concurrent symptoms.

First important symptom is that the order books are full and there is never a revenue famine. You are in the right market at the right time, revenue is good, and so is the cash-flow, salaries are paid on time, the vendors and creditors are paid on time and the receivables do not pose a problem although you may be a bit lax on it. Second important symptom is that your revenue growth is incremental and not multiplicative any more. Third, the company is the busiest that you can see, with lots of action and running around – but the business is constraint by the ability to deliver. The delivery times are longer than ideal and the quality of delivery is variable, requiring corrective actions following multiple client feedback.

Failure to act correctively may result in many or all of the following –

1.   High people turnover – You want to add more people, to address the problem of delivery, but every time you come close to filling up your budgeted vacancies, a few people quit and upset your plans.

2.   People turnover creates further inefficiencies due to poor competence and lack of training (too busy to put new recruits through a training process).

3.   Customer complaints increase due to variable quality of output requiring more time being spent to keep the customer discontent low.

4.   Your products/services are never ‘Zero Defect” and often need corrective action.

5.   Your cash flow is OK, salaries are paid out on time, People are adequately paid – but the general morale of the company is low. Everybody is working hard long hours, and employees are getting rather tired.

6.   You are putting long hours too because you have now become the Chief Worker instead of the Chief Executive – you are filling into the gaps caused by employee turnover and lack of training. You are continuously handling one crisis or the other – never failing but never happy either.

Why are you in this situation? Why has the phantom ceiling effect hit you? The primary reason for this is that you are using the same methods that helped you be a small successful business to grow your business big – you are applying small thinking for creating a big business!

The phantom ceiling effect occurs primarily because every business settles to the level of its delivery capability. An enterprise always over-estimates its delivery capability and imagines that brute force is the answer. The simple belief is that you can add more hands and the work will get done. This is a sure shot way to fail big time.

How can you break through the phantom ceiling effect and make the transformation from being small to becoming a big business? Please wait for the next blog that’s coming soon.

To read the Blog “The Phantom Ceiling Effect” click here

The Phantom Ceiling effect

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It is a very tough act to get off the starting block and build a successful small business having good revenue and great profit. You have a great value proposition in your product/service offering and you are able to generate revenue with relative ease. The going has been good for the first couple of years, and then you hit a revenue ceiling. Your revenue growth that was exponential has become linear and is now crawling. You are working harder than before, all resources in the firm are fully engaged, you have added more people and have also increased your marketing budgets – but you are just not getting the big bang growth that you are looking for. You can see that the market is growing, there are many small players entering your market space and some of whom are beginning to show signs of being your serious competition. What seemed like an open and clear market made just for you is getting crowded. You may still be one of the larger players in the market but you don’t seem to get big enough!

This is the phantom Ceiling effect that many small firms hit when they want to make the transition from being small to becoming big. It seems as if you are running on a tread-mill, running faster and faster, yet you are still there. This is called the phantom ceiling, because it is really not there, the ceiling is made of ether and you can actually break through.

If you look carefully, the potential market may be attracting many opportunistic players, over time they could hit the phantom ceiling too. In the process of market consolidation, a few will break through and dominate the market and many will fade away slowly or quickly depending up on how they act out their business models. If you are going to be the one to lead your market then you must act now.

The occurrence of the phantom ceiling is a good sign provided that you can recognize it early. It is a sure sign that you are in the right market poised for growth, and that you are among the early strong players in the market place.

How do you recognize the Phantom ceiling effect?