Working on the Business and Not in It
The number of new companies registered across the whole country in the last year rose by 5.7% to over 660,000. A record high, especially when you consider the current political and economic gloom.
While this is great news, here Phil Rose, Founder-Director at Ignium, questions how many of these new business owners really appreciate what they’re up against?
It’s a cliched phrase I know… but it’s so true for business owners, especially start-ups, that the founder is often the one who works long hours in the business and never has real time to work on it. I know because I’ve been there, not just for my own business interests, but also in supporting others.
Over the last fifteen years I’ve worked with SMEs across the UK, China and the USA. And I’m sad to say I’ve seen the same thing happening over and over again. Business owners work long hours to keep it running. Many of these people set up their own enterprise to give them more leisure time, yet find themselves stuck working in their business.
Listen and act on advice
I set up my first business in 2004. At my first meeting with my new accountant, she handed me a copy of Michael E. Gerber’s book, “The E myth revisited”. She told me to read it before we next met.
I was busy working on my new business, so I didn’t have time for reading about business while actually in business. After all, I have an MBA from a top business school, and years of corporate experience so why did I need another book?
It wasn’t until a few years later that I picked up the book again and began to take it in… if only I had read it when my accountant had instructed me to!
In 2010, I started to work with business owners wanting to grow and exit their businesses. The strategies we developed started with ‘getting the owner out of the way’. Too often, the owner is the blockage to the growth of the business, and therefore obstructs the potential value the business could achieve.
Working on the business is about understanding a number of various aspects. The first is the value of time. That is the value the founder puts on their time and the amount they can ‘earn’ per hour for their time relative to the cost of doing a task.
The second thing that a founder needs to remember (or indeed recall) is the reason they set up their business in the first place. Many owners do it because they simply want to work for themselves (and that’s the start of the problem) while others want to change the world in different ways. They want to create something that’s bigger than them but still they get ‘stuck’ running the business, working in it not on it.
With stress impacting the lives of many people in the 21st Century, entrepreneurs can help themselves by taking a step away from the business, through active delegation and working with other suppliers, rather than doing all the work that they used to do as the business grows.
The key to stepping back is to actively engage employees and allow them to take on responsibility. Building a clear organisational structure, with allocated responsibilities for functional activities, will enable a number of critical processes to happen.
Firstly, it will free up time for the founder to work on the business, secure in the knowledge that the required tasks that they used to perform are now being completed. This in itself can have a major impact on the growth potential of the business.
Secondly, tasks that had been ‘left’ in the past get done by the appropriate people with the appropriate skills. These are the jobs that were often on the business owner’s list but just kept being put off as they weren’t as important as others.
And finally, the biggest benefit is that the owner can choose what to do with his or her time. They can take time off to do whatever they want, or they can invest that time back into the more strategic elements of the business, like re-engaging with the real reason they set it up in the first place – the purpose.
By taking this approach both the business and business owner benefit. Both will start to grow, stress and frustration will decrease and, importantly, the company will become a better place to work. The culture will change, engagement will go up and people will enjoy working for the firm (again).
And that’s not all. The end result of better engagement, improved culture, renewed focus on purpose and better systems is increased profitability.