A few years ago, Carmine, a small business owner, faced a common problem. Not only were the day-to-day operations of his business dependent on him, he was responsible for 60 percent of all customer billings. His staff was not effective in freeing Carmine so he could tend to crucial management issues, and his business suffered.
Like many contractors, Carmine was so busy tending to day-to-day cash flow needs through his own personal production that he was unable to build the business, train and manage his people. He faced the classic trap of having to bill a large amount to keep the business afloat, but was not devoting enough time in building processes to effectively train other people to produce results in his business.
This method of operating was damaging his potential to create a stand-alone business-a business not dependent on Carmine for all the billing. After careful analysis, Carmine realized that instead of creating a profitable business, he had created a stressful, underpaid job for himself, and he was determined to do something about it.
First, he identified and developed "best practices" for key processes in his company. Next, he trained, monitored and managed his staff on those processes so they could duplicate the results he'd been producing on his own. Although it was hard at first, mostly from years of being burned by failed attempts to delegate, he learned to let go.
Within a few months, his leap of faith paid off and his bottom line grew dramatically. When he started the process, his revenues averaged around $600,000, with upwards of 60 percent of billings being personally generated by him. Now, Carmine has grown to $3.4 million in annual revenues, and he is responsible for less than 5 percent of total billings.
Not only did profits grow, Carmine's business no longer runs his life. His newfound freedom has enabled him to work fewer hours and buy a beach house where he takes long vacations. This improved lifestyle has given him energy and enthusiasm to add new divisions and start a new related business.
Are You A Director, or the Star of the Show?
Business owners assume many roles in their businesses. The one role they often ignore, or put aside, is the director's role. These "star of the show" business owners are the center of their business universe. Everything revolves around them. Their presence is necessary for anything to get done correctly.
Unfortunately, this star role comes at a cost, not just to profits but also to the owner's comfort. These business owners work long and hard, but success is always just out of reach. They aren't making the money they want, they work too many hours and can't even take a vacation. They're stressed out, disillusioned and unhappy.
Contractors are notorious for building businesses around themselves. There's nothing inherently wrong with an owner working in the business, but this should only happen because they want to, rather than because the business depends upon them.
Businesses run by "stars of the show" pay a price in the overall quality of the end product or service. These businesses tend to be less efficient, deliver poorer customer service and have lower levels of employee satisfaction. Owner-driven businesses are also harder to grow, harder to sell and often impossible to pass on.
Are you running your business as the star of the show? Ask yourself these questions:
- Would your business be in shambles if you took a month off?
- Are you working too hard for the return on your investment?
- Are you fighting fires with no time to think, plan or manage?
- Do you have trouble finding good employees and capable managers?
- Do you believe that success requires pain and sacrifice?
- Contrary to popular belief that is NOT just the way it is. You don't have to pay for your business with your life!
Change Your Focus
The process of moving
