The Number 1 Tip to grow your business.
Ask a group of "Small Business Owners" and Entrepreneurs "what is the number one issue that is hampering you in growing and developing your business", and more often than not the answer isn’t “Funding constraints” or even “Market access” it’s invariably:-
“Time - I just can’t seem to find the time to get everything done."
The constant rush to do things, to keep up with the email inbox, and operational demands of the day mean many business owners are just happy just to survive rather than thrive.
The reasons that business owners struggle with time is mostly down to themselves. Part of the problem of being an Entrepreneur is that Entrepreneurs can do all the jobs within their business better than anyone else, usually because they’ve done them all at some point from an early stage in the company’s development. The difficulty as a business grows up, is that sometimes business owners have difficulty growing up with it – in a business sense – they feel it’s their responsibility to do everything, or where they have got other people doing things, responsibility rests with the business owner to make all the decisions. This means as the business grows the pressure on time just gets worse, and the owner ends up complaining more that they haven’t got time to do the things they enjoy, or the things they can do which help make more profit for their business.
Some owners who recognise this risk often seek to delegate day to day activities and decision making only to find that their staff don’t make the right decisions, which leads to poor results which means the owner has to spend more time trying to rectify the situation.
Either way, Entrepreneurs end up working “in the business” rather than working “on the business” – a recipe for disaster, or at best disappointment!
But it doesn’t have to be this way.
Controlled Delegation is the answer
Delegating actions and decision making effectively is critical for a business to grow, and make the business less dependent on you.
The key is to ensure that the correct systems and procedures are in place so that you are comfortable staff won’t do things to damage the business, but equally your staff feel empowered and accountable to make decisions without fear that they will be punished.
A simple way to achieve this is illustrated in the diagram below:-
A Simple System for Delegating Decisions and Keeping Control
Here’s how it works:-
As a business grows, systems and procedures need to be developed that describe the way of doing things, and authority levels assigned, by way of an authority matrix to different managers and different job holders in the business for making decisions. Don’t start with everything at once – usually the best place to start is with the simple things that take time but that staff can be educated and trained on easily. First aim is to get your staff to take responsibility and empowerment for the things you are happy that their skills are capable of delivering. Over time, the aim should be to build up systems and procedures for all key activities of the business. These should include, but not be restricted to financial decisions, the legal requirements to hold employment policies, health and safety policies etc.
The Added Benefit of a Higher Sale Price for Your Business
The added benefit of such an approach is that when you come to prepare your business for sale, potential buyers of your business will be able to see how the business is run. If there’s nothing written down and everything relies on you, the reality is you will find yourself either tied into the business for longer than you would want, or the chances of an earn-out will be increased because the buyer will perceive a higher level of risk in buying a business that is too dependent on the owner. The sale price is also likely to be lower for a business with poorly documented policies and procedures and weak systems. All business owners that have been through a sale realise this, but as most owners only sell their business once, they don’t realise it until it’s too late!
David Prestney is the founding director of CFOCORP an organisation dedicated to helping business owners and management make their businesses prosper, through the provision of highly experienced Part time CFO’s for a fraction of the cost of a full time position.
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