A LACK of time is the enemy for most entrepreneurs and business owners as they grow their business.
The constant rush to do things, to keep up with the email inbox, and operational demands of the day mean many businesses owners are just happy to survive rather than thrive.
The reasons business owners struggle with time is mostly down to the way they work. 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 that, 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 that 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 and 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.
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 members feel empowered and accountable to make decisions without fear they will be punished.
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.
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.
Rupen Kotecha is regional director WA at The CFO Centre, which aims to help small and medium sized businesses find tangible value-add solutions to their financial issues.
Contact Rupen on: 1300 447 740 | email@example.com | www.cfocentre.com.au