Ever feel like your job is just putting out fires?
- “They all want pay rises, but we’re not making enough money.”
- “Nobody documents anything—we’re flying blind.”
- “I only hear about problems when they’ve become emergencies.”
- “All I seem to do is make myself unpopular.”
Sound familiar? If you’re nodding along, you’re not alone. Every SME hits a point where what used to be small and simple suddenly feels chaotic. You’re no longer in that cosy, informal phase where you can eavesdrop on conversations to know what’s happening, but you’re not a big corporate with layers of support either.
It’s that weird middle ground where you feel stretched too thin, trying to juggle everyone’s expectations – pay rises, promotions, growth – while barely keeping the lights on. What’s happening? Welcome to the “second-generation” (2G) business.
The reality check: your SME is growing up
As your business transitions from scrappy start-up to a more established operation, the dynamics change. The casual approach that worked when you were a smaller team no longer cuts it. People start expecting structured career growth, pay rises and perks, but the business might not be ready for that kind of overhead.
It feels frustrating, doesn’t it? You’re working harder than ever, and now your team is grumbling. This is when you realise you’re running a 2G business, an area where SMEs account for over 95% of UK businesses and employ over 12 million people.
What makes a 2G business unique?
Most people are used to two kinds of businesses: start-ups (1G) or big corporations (3G). Start-ups have that scrappy, “we’re all in this together” feeling, while 3G companies are all about structure, bonuses, and promotions. But 2G businesses? They’re somewhere in between.
In a 2G business, people expect career growth and stability – but without the often cumbersome, over-structured environment of a corporate giant. In fact, ex-corporate employees sometimes struggle in SMEs because they bring too much process. On the flip side, founders often resist any structure, thinking they’re avoiding becoming “corporate.”
The hard truth? Your organisation needs structure, just not the corporate kind.
You can’t keep running things like a start-up. But you also don’t need a full suite of corporate departments – HR, IT, Finance – on the payroll; you can use freelancers, part-timers, or agencies. The key is finding balance, and the success of your business hinges on everyone understanding that.
How do you lead a 2G business effectively?
Now that you know you’re running a 2G company, how do you lead it to success?
- Work on the business, not just in it. Yes, you’re sometimes still in the trenches, but your main job is to step back and look at the bigger picture. What’s the next step for your business? What gaps are emerging as you grow? You can’t think it through if you’re buried in day-to-day tasks.
- Stop doing everything yourself. If you’re emptying the bins because “no one else notices,” you’re part of the problem. Your job isn’t to do everything – it’s to inspire others to take ownership so you can focus on strategy.
- Infect your team with your vision. Sit down with your co-directors (if you have them) and get clear on what you want for the future. Then talk about it. All the time. Paint the picture of where the business is heading – your standards, your values, your mission. Enthusiasm is contagious, and if you’re excited, your team will be too.
- Keep systems simple. Yes, you need processes as you grow, but don’t get lured by fancy over-engineered systems. Your business doesn’t need the complexity – stick with simple, scalable solutions that work for you now.
Final thought: embrace the change
Your SME is evolving, and that’s a good thing. But as you grow, you’ll need to adjust your leadership style, your processes, and your expectations. It’s no longer about doing everything yourself – it’s about building a team to carry the load with you. You can do this!