Best Practices

From creator to leader: The second stage entrepreneur

Published May 07, 2014 by Kate Hodel
Several years ago, the Edward Lowe Foundation began to focus on the second stage entrepreneur.
 
“This seemed to be the time when the entrepreneur created wealth and jobs, increased the volume of income into a region and attracted other companies and talent,” said Dino Signore, director of entrepreneurial education.

Signore spoke about the pressures of the second stage business at the recent U.S.SourceLink conference.
 
What is a second stage business?
Signore noted that these second stage companies are not gazelles. They grow at an incremental pace, but account for 72 percent of job growth. Second stage companies are privately held, have 10-99 employees and revenues of more than $1 million. 

Pressures at the second stage
The pressures on small firms to fail are significant. Growth in their companies often underscores their lack of management experience and/or their inability to give up control. They are typically facing several issues at the same time and often are faced with production capacity limits. 
The Lowe Foundation has identified some issues that tend to come up in the “no-man’s land” between startup and established growth:
  • Market misalignment
  • Outgrow management team
  • Managing money
  • Model does not scale, strategy
Signore noted that after studying these second-stage businesses, the Lowe Foundation has noticed some commonalities that can help those organizations trying to serve this audience:
  • Not attracted to traditional learning        
  • Only want relevant content
  • Process everything through their business
  • Hard to gain trust, but they do trust peers
  • Frustrated by bureaucracy
  • Love creating, not managing
  • Very positive
  • Strong internal locus of control
How to help second stage businesses
What is often required is for the founder to change form creator to leader. Only about 10 percent have business training, so building a management team is often a good first step.

Other things that help:
  • Round tables great for this stage
  • Objective and relevant input
  • Just in time learning
  • Camaraderie
  • Perspective
  • Risk reduction, learn about other issues
The Lowe Foundation offers a broad range of programming to support the second stage business. Find out more at edwardlowe.org.
Content contributed by Kate Hodel, KCSourcelink, a proud affiliate of U.S.SourceLink.  U.S.SourceLink is America's largest resource network for entrepreneurs.