Chapter 3

Cultivating a Growing Business

IN THIS CHAPTER

Bullet Defining the evolution of a business

Bullet Addressing matters in human resources

Bullet Handling time-management concerns

Bullet Pairing the right management tools with your growing business

Bullet Finding solutions for business problems

Bullet Making the transition from entrepreneur to manager

Given the choice, most small-business owners would prefer that their companies grow rather than not grow, stagnate, or even fail. After all, growth is the American way — not to mention it’s also one of the typical entrepreneur’s primary motivators.

This chapter is for you if your business is presently on a growth track or (you hope) soon will be. It provides you with insights into what awaits you on your journey, along with tips on how to survive the trip and prosper as you go. However, be aware that growth — especially that of the consistent and relentless variety — can feel like a climb up an uncharted mountain. And the climb becomes even steeper if you set out on the journey unprepared to make the change that has eluded so many small-business owners before you: the transition from entrepreneur to manager.

The changes to your growth-fueled business will be apparent everywhere. Five years from now, your customers will be different, their demands and needs will be different, and many of the products and services you offer them will be different. You’ll also have a number of brand-spanking-new superstar employees, and employee-related matters will take up more and more of your time. (Sadly, some of your earlier hires will have departed or won’t have the skills to keep up with your growth.)

Finally, you — the founder — will be constantly in the midst of change, engrossed in the not-always-enjoyable-but-always-necessary process of making the transition from entrepreneur to manager. Along the way, you’ll adopt skills such as delegation, focus, and holding people accountable — skills that every successful manager must eventually acquire to effectively lead a growing team of employees. And your financial, communication, and leadership skills will be tested and, we hope, improved. In other words, you won’t be the same Grand Poobah you are today!

The only characteristics of your business that won’t change as your company grows are its ethics and principles. However, if your top management (which is probably just you at this point) changes during the business’s growth years, as happens in so many growing entrepreneurial companies, even your company’s ethics and principles may be subject to change. Growth holds nothing sacred!

Recognizing Growth Stages

Small-business success doesn’t just happen. Some fairly predictable but not very orderly stages characterize its evolution. Most entrepreneurs caught up in the day-to-day goings on in a business don’t recognize these stages until they’ve passed. Well, it’s time to open your eyes. The following sections describe the three stages of business evolution.

The start-up years

The start-up years are the period when survival motivates your thoughts and actions. Everything that happens within the business is dominated by you; words such as delegation, team, and consensus generally aren’t yet part of the business’s vocabulary. These are the hands-on years. For some owners, they’re the most enjoyable years of the business; for all owners, they’re an integral part of the learning process.

The work during this time is hard — often the physically and emotionally draining kind of hard. The hours are long and sometimes tedious, but by the end of the day, you can hopefully see, touch, and feel at least some of the progress you’ve made. The gratification is instantaneous.

The duration of this first stage varies greatly from business to business. Some fly through the start-up stage in less than a year, but most spend anywhere from one to three years growing out of this stage. Others — often those in the more competitive niches — can spend as many as five or more years in the start-up stage.

Remember You know you’ve graduated from the start-up stage when profitability and orderliness become a dependable part of your business. The hectic days of worrying about survival are replaced by the logical and orderly days of planning for success.

The growth years

The growth years are the years when your business achieves some sense of order, stability, and profitability. Your evolving business has survived the mistakes, confusion, and chaos of the start-up years, and now optimism, camaraderie, and cooperation should play an important role in the organization. Key employees surface, efficient administrative systems and controls become part of the business’s daily operating procedures, and the need to depend on you for everything that happens diminishes.

The business of doing business remains fun for most small-business owners in this stage, because increasing sales translate into increasing profits — every small-business owner’s dream. The balance sheet puts some flesh on its scraggly bones as you generate cash as a result of profitability. You figure out how to delegate many of those unpleasant tasks that you performed in the past. And survival is no longer your primary motivator. At last, the daily choices you make can be dictated by strategic goals rather than day-to-day survival.

Remember Here is some more good news: This stage can last a long time if the growth remains under control and if you manage the business and its expanding population of employees properly. (For information on out-of-control growth, see the nearby sidebar “Is your business growth healthy?”) More than likely, however, this stage will last anywhere from a few years to six or seven years or so before the next stage raises its ugly head.

The transition stage

The third stage, the transition period, can also be called the restructuring stage or the diversification stage. By the time this stage begins, something basic to the success of the growth years has changed or gone wrong. As a result, in order for the business to survive, a strategic change in direction is required. (See the later section “Redefining Your Role in an Evolving Business” for more on this topic.)

Warning Many factors can bring about this transition stage, including the following:

  • Relentless growth: Relentless sales growth requires relentless improvement in the business’s employees, systems, procedures, and infrastructure, and many businesses simply can’t keep up with such pressures.
  • Shrinkage of sales and the disappearance of profits, or even prolonged periods of stagnation: This is the opposite of growth. The causes for this shrinkage or stagnation can come from anywhere and everywhere, and they often include such uncontrollable factors as new competitors, a changing economy, new technology, and changes in consumer demand.

The solution to transition-stage problems lies in making a strategic change — a transition — in the fundamentals of the company. This transition often involves a change in top management. It isn’t unusual for a rapidly growing company to outgrow its founding entrepreneur (that’s you!). Additionally, the transition may involve the introduction of new products or services, the establishment of new distribution systems, the adoption of new technology, or the paring of the underperforming assets of the business.

Tip The good news to a displaced founding entrepreneur: If yours was a profitable company and you can sell it on the way out, you can then afford to go back to what you do well and what you enjoy. You can go back to the life of an entrepreneur and start all over again. Or, if you’re financially able, you can move on to other pursuits.

Resolving Human Resources Issues

The day that you hire your first employee is the same day that the bottomless pit of human resources (or HR) issues appears on your path (flip to Chapter 1 in Book 4 for an introduction to hiring). After all, that newly hired employee has needs, privileges, and rights — the last of which, lest you forget, are protected by a host of watchdog government agencies and lawyers. The following sections raise some important HR concerns you’ll face and provide suggestions on how to handle them.

Identifying important HR concerns

Consider, if you will, a partial list of HR issues, the mere mention of which can make a government inspector’s (and attorney’s) mouth water:

  • Sexual harassment
  • Discrimination
  • Wrongful discharge
  • Hiring violations
  • Workplace safety violations
  • Working conditions violations
  • Wage and hour violations

Unfortunately, much of the concern for the employee’s welfare that you hear about today is well founded and necessary, because of a minority of greedy and uncaring business owners over the years who have created the need for such scrutiny. This means that law-abiding and people-caring small-business owners like you must pay the price in the form of red tape and regulations. And the more your company grows, the larger that total price generally becomes.

Dealing with HR issues in three stages

How do you deal with such a wide spectrum of HR issues? The answer depends on which of the three stages of HR development your company happens to be in.

Stage 1: Handling HR issues yourself

Stage 1 is the start-up stage when your business has, for example, fewer than ten employees and you have no one on the payroll to whom you can delegate the wide variety of HR issues. In this stage, you must defer the activities that you probably prefer performing (sales, product development, and customer service) and deal with those that you don’t (working conditions, drug and alcohol policies, and employee conduct).

Stage 1 is the hands-on stage when you’re up to your eyeballs in the day-to-day details of running a business (see the earlier section “The start-up years”). The good news is that the HR lessons you learn at this stage of your business will benefit you forever. The bad news is that dealing with some HR issues may consume an extraordinarily large part of your time.

Remember When dealing with those sticky issues that have the potential to become even stickier — harassment, wrongful termination, employee theft, and the like — consult a professional (a human resources consultant or lawyer) before you act.

Stage 2: Delegating HR responsibilities to others

As the number of employees in your company grows, you should look for the opportunity to offload some of HR’s details onto someone else in the business — most likely a full-time bookkeeper or the person who manages your office — or consider outsourcing your HR to a professional employer organization. Whatever option you choose, the basic HR functions will remain as a part of your day-to-day business procedures until your business enters Stage 3.

Stage 3: Hiring an HR professional

You may think you’re in heaven when your business grows to the point when you can finally afford the small-business owner’s greatest luxury: your very own Director of HR. (This typically happens when you have somewhere between 50 and 100 employees.) You may find it hard to believe that people make a 9-to-5 living dealing with, and actually enjoying, the seemingly endless details involved in HR. Imagine, someday you can have that person on your payroll!

Tip Strangely, people capable of becoming HR directors are similar to consultants: There seems to be one on every street corner. Run an ad for an HR director in one of the many online resources (for example, LinkedIn, Glassdoor, Indeed, Monster, ZipRecruiter) and you can expect to measure your responses in the dozens. Among those dozens, you can reasonably expect to find a number of quality applicants. (See Chapter 1 in Book 4 for tips on how to hire the best one.)

Addressing Time-Management Issues

The faster a company grows and the bigger it becomes, the more important time-management issues become. The increased size of an organization requires increased communication between its members — which in turn increases the demands on your time and that of your employees.

Remember Time, and the efficient use of it, is one of those cultural issues that starts at the small-business owner’s desk. You, by way of your actions, determine how your business utilizes its time. If you ensure that meetings start on time, that the workday begins at 8:30 a.m. sharp, and that prolonged gatherings around the copy machine are unacceptable behavior, your company is bound to develop a culture of efficient time management. On the other hand, if you don’t pay attention to such issues, human nature will take its course, which doesn’t bode well for your business’s efficient use of time.

Here are just a few of the ways that a small-business team can waste time:

  • Missed deadlines and appointments
  • Meetings that last an hour when they should last only ten minutes
  • People who arrive late to meetings
  • Meetings that shouldn’t be held in the first place
  • Long voice-mail messages, unreturned phone calls, unanswered phone calls, and unnecessary calls
  • Unnecessary or long-winded emails
  • Employees who conduct personal matters on the job (texting and making calls to friends, shopping online, surfing their Facebook page, and so on)
  • People who take 15 minutes to say what can be said in 5
  • Time spent waiting — in waiting rooms, outside offices, or for someone to get off the phone or away from the copier
  • Equipment that malfunctions, systems that don’t work, and supplies that run out of whatever is needed at that instant

Imagine what your company would be like if everyone practiced effective time management. How much additional work would each employee get done? How much time would he or she save? Five hours a week? Ten? What can every employee do with another 5 hours a week — 250 hours a year? And what can your company do with those 250 hours a year, multiplied by the number of employees you have?

Remember To increase efficiency in your small business, you should insist on employee attitudes and behavior that value rather than abuse time. For example, you should insist on a culture within your business that

  • Requires people to be on time for the start of the day, for meetings, for conferences, for whatever.
  • Doesn’t hold unnecessary meetings and disbands meetings that are unnecessary.
  • Requires every employee to use a time-management system, whether it’s a simple to-do list, an intricate store-bought system, or contained on the latest handheld device.
  • Has definitive rules governing such issues as surfing the web for personal purposes and/or playing computer games on company time.
  • Deals with its in-house nonstop talkers and time abusers (every office has them).
  • Requires that telephones be picked up after the first or second ring, voice-mail messages be shortened, and telephone calls be returned promptly.
  • Respects visitors’ time. (How do you like it when you visit another business and you wait in the lobby for half an hour?)
  • Encourages thoughtful delegation. (Don’t waste your time doing a task that someone else can do faster — and often better.)
  • Understands that shorter and quicker is better when it comes to meetings, memos, emails, letters, manuals, and rules.
  • Insists on employee accountability. You should be able to count on employees to perform such detail-ridden tasks as keeping the supply inventory at adequate levels, maintaining equipment to minimize downtime, and designing and implementing workable internal systems and controls.
  • Uses time-proven technology efficiently.

Time management itself is impossible to measure. What you can measure are results — results when compared to plans, budgets, and goals. You can usually figure that whenever you see improving results in areas you can measure, your management of time is improving, too.

Remember You alone can make effective time management a part of your company’s culture. After hiring the best people that you can (see Chapter 1 in Book 4), you need to set the right example. Your employees will take it from there. (If they don’t, you’ve hired the wrong employees.)

Choosing Your Management Tools

So, what are you, the small-business owner who’s looking for ways to continue growing your company, supposed to do when you think your business is ready for a dose of something new? What management tools should you use to ensure continued growth? Whose advice should you take? And how can you possibly know which of the latest fads to glom onto?

The truth of the matter is that no one management tool will turn your company around. Just as no one strategy will produce profitable customers, no one tool will change your culture, correct your infrastructure, or unite your employees.

When you’re considering adopting the latest management tool (or system), let someone else be the pioneer. Other organizations have needed restructuring, other employees have needed motivating, and other cultures have needed change. (As someone once said, “You can always tell the pioneers — they’re the ones with the arrows in their backs.”) In other words, be aware of the fads making the rounds, and don’t bet the farm on the latest one. Feel free to cherry-pick the key components of a tool that make the most sense to you and your business.

Tip Use the following tips to help you determine whether a newly adopted management system will work for you:

  • Don’t be the first kid on the block. Determine which similarly sized businesses have already pioneered the system and/or utilized any of its most appropriate tools and then solicit their suggestions and advice. This step is particularly important when you’re considering new, costly, software-driven applications. Make sure the program you’re considering has been time-tested and has many satisfied users. Also do your due diligence to ensure that the software company will be around to service and upgrade the system you buy.
  • Make sure your key employees agree with the need for and the basic elements of the new tools before you introduce them. Include your key employees in the purchasing, planning, and especially the implementation processes.
  • Consider the downsides as well as the upsides of utilizing the new tools. Be sure you know what it will cost to pull the plug midstream if the tools don’t work as you planned.
  • Understand the time frame needed to implement the tools and measure their success. Ensure that you can live within the time frame. Whatever figure you come up with, you generally can multiply that number by two.
  • Be certain that you, the owner and chief culture-setter of your business, have the time and energy to devote to the proper implementation of the new management tool you select. The implementation of new tools always requires the total commitment of the owner; if you aren’t willing — or able — to make that commitment, don’t even think about introducing a new management system.

Remember If your business is working well (as measured primarily by profitability), don’t break it. (You can, however, bend it.) If your business isn’t working well, consider a change. One of your many responsibilities is to be the systems and tools matchmaker. Be sure to stay current with the latest and greatest management systems and the tools within them, and then match your business’s need for change with the applicable system.

Consider, for instance, the management tools in the following sections. Each of the tools has at least one key management component that makes sense — ranging from setting goals to redefining processes, from paring expenses to sharing financial information. Every tool offers a degree of management wisdom and an accompanying management component, but that doesn’t mean you need to adopt the entire system. Cherry-pick as you see fit.

Management by objective

An old-timer for sure, the basic components of management by objective (MBO) — setting and reaching goals — have endured and are still used by many successful businesses. The process of goal-setting is discussed at length in Chapter 2 of Book 4. Most successful businesses — small and large — use goal-setting in one form or another; so should yours.

Participatory management

The primary characteristic of participatory management is that all employees take part in determining the direction and policies of the company. Great in theory, this approach can work wonders when organized carefully and phased in over long periods of time. The participatory tools inherent in such a system work for two reasons:

  • Given a voice in the decision-making process, employees are much more likely to make a personal commitment to the decisions reached.
  • Given the fact that employees see the business through different eyes and often more frequent experiences with customers than the owners, their input enhances the quality of the decisions made.

Warning But don’t give away the keys to your business too soon. Figuring out how to grow a small business takes years of training and preparation. Besides, not all employees want the responsibility that goes with management positions. Employee participation takes time and patience, neither of which is a common trait of most entrepreneurs.

Employee ownership

There is motivation inherent in offering employees the opportunity to own a piece of the company (in other words, employee ownership), but sharing the pie isn’t always as easy as it sounds. Sometimes you don’t have enough pie to go around; sometimes the pie isn’t divided the way everyone would like it to be; and sometimes some of your employees would rather bet their futures on T-bills rather than on small-business pie. Besides, minority shareholders can be a pain in the rear.

But for many people, ownership is one of the best motivators available. That’s why, despite the problems that come with sharing the pie, more and more pie-sharing is going on today than ever before. Even the federal government recognizes this fact, which is why it offers a number of incentives to companies who want to establish such employee-empowering tools as Employee Stock Ownership Plans (ESOPs).

Quality circles

Quality circles are ad hoc groups or temporary teams (also known as ad hoc committees) of employees assembled to solve specific problems. Most successful businesses use forms of this team approach to problem solve. In many cases, businesses assemble specially formed teams to solve a problem and then quickly disband the team after the issue has been resolved.

The appeal of the problem solving tool inherent in quality circles is the age-old theory that two heads are better than one. This is especially true when those two (or more) heads are focused on solving a specific problem and when those heads bring differing perspectives to the problem solving table.

Open-book management

Open-book management dictates that informed employees can make key decisions usually reserved for management — within, that is, their areas of expertise. An informed employee is one who’s privy to nearly everything that goes on within the company, including a variety of tools usually reserved for management, such as using and understanding financial statements.

Similar to any other management system, the open-book management system has an upside and a downside:

  • Warning The downside is that your employees may discover things you’d prefer they didn’t know, like how much you spend on travel and entertainment in a year and how much your new sports car costs the company.

  • The upside is that informed employees tend to make better day-to-day decisions than uninformed ones. Informed employees are also more likely to be committed to the cause — in this case, to increasing the profitability of the company.

Troubleshooting Your Business Challenges

From time to time, businesses call in small-business consultants to troubleshoot. Although troubleshooting can be an effective tool any time, many small-business owners use it only when their growing business suddenly slows down. Consultants can help a struggling business by evaluating important areas of the business — such as finances, employee morale, and business appearance — and then making suggestions for improvement. Find out how in the following sections.

Filling out a troubleshooting checklist

Most consultants use checklists to help them determine the seriousness of a business’s problems. Here’s a checklist used by one particular troubleshooting consultant.

  • Rank each of the following categories from 1 to 10:
  • ______________ Quality of cash-management procedures (cash flow reporting and forecasting) (1 = poor, 10 = excellent)
  • ______________ Quality of financial reporting (profit and loss statement and balance sheet) (1 = poor, 10 = excellent)
  • ______________ Quality of financial forecasting (budgets) (1 = poor, 10 = excellent)
  • ______________ Dependence on borrowed funds (1 = heavy, 10 = none)
  • ______________ Late with payroll tax deposits (1 = often, 10 = never)
  • ______________ Lag between sales growth and profit growth (1 = substantial, 10 = none)
  • ______________ Employee turnover (1 = heavy, 10 = nonexistent)
  • ______________ Quality and frequency of strategic planning (1 = never, 10 = regular and dependable)
  • ______________ Owner has more work to do than time to do it (1 = too much work, 10 = balances time efficiently)
  • ______________ Owner’s feelings about the business (1 = hates it, 10 = loves it)

If you were your own troubleshooting consultant, how would you rate your business overall? What areas would you target for improvement? Use this checklist to determine how your business checks out. How many items would receive close to a 10? How many areas would receive something less than a 5?

Tip Although there’s no overall key to grading your answers, consider giving immediate attention to working on any answer that received a 5 or below. For the 6s and 7s, put the issue on your long-range to-do list. For the 8s and above, pat yourself on the back and make sure that the employees responsible for the rating are publicly recognized and, where possible, rewarded.

Taking the five-minute appearance test

Your business’s appearance is important, especially to your customers. With this in mind, check out the following appearance test. Five minutes are all you need to take it.

Start with a business other than your own. For instance, you can offer to give a friend’s business the following five-minute appearance test. Or use the test on a business you frequent, such as your dry cleaner. Simply drive into the parking lot, walk into the customer service or office area, peek into a few doors here and there, step into the restroom for a quick look around, and then check out the areas around the coffeemaker and copy machines before you go.

Note the following as you go, ranking your observations from 1 (poor) to 5 (excellent):

  • THE EXTERIOR
  • ______________ Parking lot: Well cared for and clean
  • ______________ Grounds and exterior: Well maintained, trimmed, and inviting
  • ______________ Windows: Clean, unsmeared, and uncluttered when viewed from the outside
  • ______________ Signage: Well maintained, readable, and understandable
  • THE INTERIOR
  • ______________ General neatness: Desks and working areas neat and uncluttered
  • ______________ Restrooms: Neat and clean
  • ______________ Expense awareness: Unnecessary lights and unused equipment turned off, no original van Goghs in the lobby
  • ______________ Time-management: Employees appear focused and busy, no gossipy gatherings around the coffeemaker or copy machines
  • ______________ Employee attitudes: Polite, alert, attentive, and focused
  • ______________ Employee appearance: Neat, clean, and dressed appropriately
  • ______________ Sense of urgency: Employees going about their business at a pace that indicates they don’t have time to waste
  • THE BEST AND THE WORST
  • The one thing I saw that impressed me the most:
  • ______________________________________________________________________________________
  • The one thing I saw that bothered me the most:
  • ______________________________________________________________________________________

Then give the questionnaire to the owner and ask her to repay you the favor. Your business could use the five-minute appearance test, too.

Redefining Your Role in an Evolving Business

Owning a business is like raising a teenager: As it grows, the business is sure to get into trouble, yet you can never be sure what the trouble will be, how severe it will be, and how the company will weather the experience. Whether the business (and the teenager) will survive and subsequently thrive or fail depends on the quality of leadership provided.

That leadership, in the case of your business, anyway, must come from you.

Remember So why is growth, especially that of the rapid variety, so hard on the typical small-business owner? The reasons are twofold:

  • Most small-business owners aren’t prepared for the managerial demands of a growing business. In most cases, the owner’s expertise is in a specialized area, such as sales or accounting, or is related to his craft or to the product or service that the company offers. As a result, he’s untrained and unskilled in the management aspects of running a business. To make matters worse, many of the management skills required to run a growing business are usually counter to the way the owner is accustomed to doing things.
  • The bigger your company becomes, the farther you fade from the center of the action. Visions get blurred as a result of that distance, missions fade, and communications falter. Also, the more the business grows, the more layers you have between you and your customers, vendors, and employees. With this distance comes misdirection — unless your management skills, as delegated to your key employees, can keep pace with the growth.

A proficient manager requires a number of traits, but most of these traits aren’t required for a successful start-up; they come into play only as a company grows. The ability, or inability, of the entrepreneur to adopt these skills determines the ultimate success of the business.

Making the transition to manager

Here’s a popular entrepreneurial axiom: “The day you hire your first employee is the same day you begin making the transition to manager.” This transition isn’t an easy one to make because many of the personal traits of the typical small-business owner run counter to those of a successful manager.

Remember Consider the following required traits and job descriptions of the successful manager — traits that aren’t always near the top of the typical entrepreneur’s list of skills:

  • Focus: The successful manager focuses on the project at hand, no matter what else is going on around him. The typical entrepreneur stops in the middle of the task to respond to the latest opportunity or crisis.
  • Attention to detail: The successful manager devoutly dots her i’s and crosses her t’s. The typical entrepreneur is often too busy or simply isn’t the type that enjoys dealing with details.
  • Follow-up: The successful manager understands that employees need to know that their work will be evaluated. The typical entrepreneur doesn’t think that employees’ work should have to be followed up; he believes that the employees should do it right the first time.
  • Conflict resolution: The successful manager views resolving conflict as an important part of her job description. The typical entrepreneur sees it as an intrusion on her time.
  • Training: The successful manager views training as an investment. The typical entrepreneur sees it as an expense.

Of course, not all small-business owners fit this entrepreneur’s profile. You can make changes in some, if not all, of the managerial traits that you lack. However, the transition to manager isn’t an easy one, and it involves some basic — and often wrenching — changes in the entrepreneur who originally founded the business.

Implementing strategic changes

Warning The Peter Principle, which says that managers rise to their level of incompetence, constantly creeps up on all small-business owners as their companies grow. For one entrepreneur, it may arrive when his company has only one employee; for others, it may creep up when their companies reach 1,000 employees. But everyone has limitations — managerial and otherwise. Having limitations doesn’t make you a bad person; it only means that, where the management of your business is concerned, there may come a time when you should either move over or move on.

Once you notice that the Peter Principle is hanging over your management skills and you’re having a difficult time making the transition from entrepreneur to manager (you’ll know it’s happening when your business isn’t fun anymore), take some time to consider the four alternatives in the following sections.

Downsizing your business

Downsizing involves shrinking your business back to the point where you’re able to spend your time doing those things you enjoy and are best at. For example, you may decide to limit your customer base to only those within your market area, thereby cutting your sales and allowing you to shrink the number of employees you must manage.

Before making the decision to downsize, ask yourself the following questions:

  • What are the downsides of shrinking the business (losing income, reducing the market value of the business, letting go of customers, and possibly laying off employees)?
  • Will you be able to emotionally and financially cope with these losses?

If the answer to the second question is no, consider the alternative in the following section.

Taking a personal inventory

Taking a personal inventory includes assembling your own managerial defect list — a list of the traits that make managing your business difficult, such as inattention to detail or fear of conflict. Consider which entries on the list you can, and would, change in order to make the managerial transition.

Tip Ask your spouse, friends, and key employees to help you make your managerial defect list.

After you make your list, ask yourself the following questions:

  • How many of the traits on your managerial defect list can you hire around?
  • How many of the traits can you train around?
  • How many of the traits can you delegate around?
  • Of those traits that you can’t hire, train, or delegate around, which ones can you reasonably expect to change?

This exercise will tell you what you need to do to improve your managerial skills and how you can go about doing so. Assuming that, as a result of the answers given, you decide you can make the transition, get busy! Start hiring, training, delegating, and, where applicable, making changes in your organizational structure (see the earlier section “Choosing Your Management Tools”).

If you decide that you can’t — or won’t — make the managerial transition, consider the following alternative.

Hiring a replacement

Hiring a replacement includes hiring a president or Chief Operating Officer (COO) to run your company while you become Chief Executive Officer (CEO). The president or COO takes control of the day-to-day management of the business, while you concentrate on the things you’re good at, such as sales or product development or strategy. (See Chapter 1 in Book 4 for details on how to hire the right person for the job.)

Before hiring a replacement, ask yourself the following:

  • Is your company big enough and profitable enough to afford a president or COO?
  • Are you capable of letting go and keeping your nose out of the day-to-day operating functions of your business? In other words, can you keep yourself from micromanaging your company?

If the answer to either of these questions is no, you have two options:

  • Go back to the preceding alternatives (downsizing your business or making personal changes) and decide how to adapt one (or both) of them to your situation.
  • Consider the fourth alternative.

Selling the business

Before you decide to take such a big step as selling your business, ask yourself the following questions:

  • Will you emotionally be able to sell and walk away from the company you’ve built?
  • Is your company salable at a price that works for you?

Ultimately, you may decide to sell your business and move on to something you’re better suited for or more ready to do. Or, most importantly, something you’ll enjoy doing.