From the June 2010 issue of Investment Advisor • Subscribe!

A Clear Sign You Haven't Achieved Critical Mass

Profitability is critical to any business because it funds future growth, and productivity of your people is a key driver of profitability. Productivity can be devastated by high employee turnover: just as you'll know you've achieved critical mass when the departure of an employee or significant client doesn't send the business into a tailspin, the inability to absorb extra work in the short term--because there is no staff redundancy--reveals that a business is not at critical mass. For this firm, every vacation taken by an employee and every staff departure casts the business into turmoil. To resolve productivity issues, decide how big you have to be in order to minimize disruption if certain people are not present or available.

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