Growing your enterprise team – does size matter? 

Team size 2Recently I’ve had cause to re-think whether working on my own from home is the best way to develop my enterprise start-up plans to create The Repair Shed – a social enterprise bringing older men at  a certain stage in their lives together to make, mend and learn.

A recent radio discussion about shared workspaces extolled the virtues of co-working with other (often lone) entrepreneurs. Wearing my UK Men’s Sheds Association hat, I’ve also been learning about Association members through interviews and visits. A recurring theme is ‘shedders’ having their own garden sheds, but still wanting to work with others, on both their own and group projects, in Men’s Sheds.

Unless you’re my former next-door neighbour – an author who loved his own company (writing at home) and even travelled the world alone as a location scout for BBC documentaries – it appears the majority of people prefer to work with other people.

In 35 years in the not-for-profit sector, I’ve tended to work in small organisations. I always said I’d never work in an organisation where I didn’t know the person walking down the corridor towards me. I then promptly did so, by working with the National Association for Voluntary Organisations (NCVO) which at that time had 120 full and part time staff. I hasten to add that NCVO was one the friendliest organisations I’ve ever worked in.

So, assuming you’re not destined to always work alone as a sole trader, what’s the right size for your enterprise team? I’m talking about the number of people who work in the business on a paid basis. This is not to under-estimate the sweated labour of volunteers but that’s a variable not easily built into a business plan.

Clearly optimum size will vary from enterprise to enterprise and many, of course, start with only one person – the entrepreneur – probably only earning an income after shedding a lot of blood, sweat and tears. In an earlier blog, I recounted US business scholar Michael Gerber’s theory that the success or failure of a new business is determined by the ability of the entrepreneur to cover three roles – entrepreneur, manager, and technician.

Gerber suggests that these three roles (he doesn’t appear to address financial management skills) are unlikely to be found in large enough quantities in one person to sustain the enterprise beyond a table-top business, probably run from home.

But there may be some kind of half-way house between working alone while wearing several hats and developing a staff team before the outlay can be justified or sustained.

Mike Southon, co-author of ‘The Beermat Entrepreneur’, points to the use of virtual networks of freelancers to build an initial team – bringing in expertise as/when necessary. But he observes that, as the business grows, so does the need for a ‘fixed office’.

The Beermat Entrepreneur’ author has calculated a certain staffing level which triggers a step-change in the way the business functions. That figures is 25-35 people, since made more precise by another commentator at 31. Above this figure, says Southon, people cease to know what’s going on all of the time, communications break down, and rules, procedures and processes have to be obeyed.

If the smooth functioning of a business relies on good internal relations between employees, the next significant figure is said to be 150 – the science-based ‘Dunbar number’. Named after anthropologist Robin Dunbar who defines it as ‘the theoretical cognitive limit of the number of people with whom one can maintain stable social relationships’.

Apparently Richard Branson has his own upper limit for a company’s staff team for optimum social inter-action and internal communication – 300. Above this figure he believes that employees are unable to feel part of a team. Apparently when the Virgin Group was sold, Sony found they’d bought a cabinet of companies with ‘only’ 300 employees in each.

So what does this mean for my own enterprise development plans? Well, we’re about to have a first gathering of half a dozen (nice number) of would-be ‘founding members’ of The Repair Shed. For members read ‘workers’ as they’ll be the people generating income if things go according to plan. I’m also recruiting a steering group – a sounding board, a group to whom I become accountable. I hope this makes for a faster route to getting the Shed off the ground – but it won’t be at the bottom of my garden.

References

Slowing the spin about Social Entrepreneurs https://enterpriseessentials.wordpress.com/2013/12/21/slowing-the-spin-about-social-entrepreneurs

The Beermat Entrepreneur  www.hive.co.uk/ebook/beermat-entrepreneur-revised-edition-turn-your-good-idea-into-a-great-business/17085649

Of related interest…

Seth Godin on a paradox around investing in scaling up http://sethgodin.typepad.com/seths_blog/2013/12/the-moderation-glitch.html

On scaling and social innovation  www.theguardian.com/social-enterprise-network/2013/dec/16/scaling-up-growth-social-enterprise

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