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 from "star" to "director" starts by changing your focus. When you begin the process of establishing yourself as the director rather than the star of your business, you open yourself up to a range of better possibilities.
You'll begin to operate strategically, not reactively. You'll spend more time working on the business, not in your business.
The point of working on a business is to create a structure that is independent of the owner. Once that infrastructure is in place, you can work on the bigger issues, such as long-range product strategies, strategic alliances, exit/merger plans or whatever is important to you personally.
Often, owners don't know where to start. They are so busy getting the work done that they can't get off the hamster wheel long enough to develop a plan or explore whether someone else could do the work. But once you make a commitment, it doesn't have to take months and months of planning or hiring lots of "overhead" positions.
Here's a simple sequence of steps to get started:
- Do a simple time study to determine where you are now spending your time. Make a log and keep track for a typical week.
- Rank the activities with biggest time-consumers first.
- Determine which activities could be handed off to an employee. And don't get tripped up by thinking you're the only one capable of doing everything. News Flash: You're not.
- Take the biggest time-hog that can be handed off and get work to develop a tool, process or system that will let an employee take over the work. Include a method to record and track results. (This will mean more hours for an existing employee or require a new hire, but grit your teeth and spend the bucks. Either way, it's an incredibly leveraged investment.)
- Monitor the results carefully to insure that your process is producing the results you want. This does not mean looking over the employees shoulder every minute, nor should you jump in and take back the work yourself, every time a problem comes up.
- Refine the process as needed.
- Move on down the list.
The process is as simple as that. Although it will require work, (years of habits aren't easy to change), you can begin to make a shift from "star" to "director" by merely following these steps.
Delegation Systems Set You Free
When you act as the "director," you are not responsible for "doing work," but ensuring that "work gets done right." Delegation must include developing systems and procedures that enable you to effectively transfer knowledge and skills to subordinates, while avoiding the temptation to do the work yourself.
A key delegation skill involves providing sufficient information and guidelines to properly perform delegated tasks and achieve desired results. Often I hear, "I've tried delegating, but these people never do it right." This common response usually indicates that the business owner has not effectively developed delegation skills and systems, or they need to be more effective in selecting the right team. There are good people out there. If you truly don't have any, or can't seem to attract the people you want, this is probably an indication that your recruiting processes are in need of an overhaul.
As discussed above, once you've done the first step of identifying the target work, the next step is where the rubber meets the road...this is the step of using documented processes (or "best practices") to reproduce a result in your business-without YOU doing the work!
Here's a "down and dirty" way to get started on processes:
- Identify the employee who performs the work in the most effective way. (In this case, it's going to be you, since you're the one doing the work.)
- Have the employee (again, you, in this case) write down every step and action they take to complete the task. If this isn't feasible, have another employee "shadow" the person you're studying and take the notes.
- Translate the notes into a checklist.
- Test #1: Perform the task yourself following your checklist to the letter. See if you get to the desired result. Edit the list to eliminate any gaps or ambiguities.
- Test #2: Have one of your employees with little or no knowledge of the task use your checklist to do the work. Observe and take notes. Keep revising the checklist until there are no gaps or ambiguities.
- Turn the task over to the employee.
- Make it clear to everyone that checklists are to be followed religiously, but are always subject to suggestion, improvement and revision.
The Gold Standard of System Checklists is:
The checklist should allow a person with no prior knowledge of the process to create the desired result without asking questions or otherwise seeking help.
You'll be absolutely amazed that a checklist you're sure is foolproof will, in the hands of someone without your knowledge and experience, create lots of questions and a variety of results.
Every time they have to ask a question is a point when they'd have to make an assumption. If five people try it, you can end up with five different assumptions and five well-intentioned, but different results.
Again, it doesn't need to be months and months of planning or writing processes before you can delegate work. But do make sure to delegate effectively so that you are more likely to get the result you want and less likely to get burned again. We don't want to reinforce the idea that you are the only one who can do the work.
"Star" to "Director"
The process of going from "star" to "director" doesn't happen overnight. Depending on your current business size and status, you probably only spend about 20 to 30 percent of your time in the director's role. If you want your business to grow and you want to enjoy a better quality of life in 2006, you need to take active steps that move you toward wearing the director's hat-and only this hat-full-time.
About now you might be thinking that this is too much trouble. Creating processes and delegation systems within your business is hard. How will you ever get the ball rolling? And aren't you really the only one who can do a task properly?
Remember, it took you months, maybe years, to refine the processes that happen automatically within your business that now depend on you to see things through. It's not difficult, it's just painstaking. The good news is that once you've got it right, you can delegate tasks to anyone (well, almost anyone) and know that it'll get done right. That's a really big deal.
And, here's a thought-creating checklists is a process itself. If you can properly create a checklist for creating checklists, you could have your employees create the processes instead of you! What a concept!
Construction Business Owner, February 2006