Are You Too Cheap to Scale Your Business? Are You Overwhlemed?
Are you leaving millions on the table to save thousands?
I never thought I would be writing an article with a title like this but in just the last six months I have encountered four different clients that I think would need to answer “Yes” to both of these questions. And it was holding them back in a big way. Two had become so unhappy in their work they were ready to “quit” their business to prevent depression or a nervous breakdown. An Owner/CEO has few people to go to when they have twice as much on their plate as they can physically handle. And it is unhealthy, unproductive and even dangerous to continue without a close look at their organization and support systems.
So here is a solution to this problem to help you get real honest with yourself and make logical, data driven and analytical decisions to be sure you are not the one holding your company back from growth or slowly destroying your life, marriage and/or health.
First you must understand that being a CEO is literally an unlimited time suck! There is no end of requests from others for your time and usually daily attempts of people trying to put their monkey on your back. There is always need to hire, train and coach people up if you are growing at all. However, the CEO’s main job is to delegate, not do. Hiring, coaching and training should often be 50% of your day. To develop and refine processes that allow 100% accountability, visibility and encourage people to grow into larger jobs is another 25%. Saying “no” is also an important part of the job. In fact, sometimes 90% of answers are no because few people, if any, understand the scope of the company’s mission as well as you. Another 25-50% (yes that could be 125%) is Strategy, focus on key quarterly rocks (objectives that must happen) and special projects.
Step #1 – Ask yourself what your time is worth? $100/hour, $200? $300? This is just math. If you have a tough time answering this question and own the company then take your salary plus profit for the year and divide it by the 2,000 hours you work per year. Let’s ignore overtime for this exercise. This is a very conservative number because it does not include equity value created which can and should increase this by a 2-10X PE multiple in a growing business. Even if you have investors and shareholders the math should be the same because they want you to grow the business too. And they don’t want you having so much stress you leave, do a poor job or something worse.
Step #2 – Do a time study for 1-2 weeks noting down daily, or 2X per day, everything you spend more than 5% of your time on in categories. This surprises many CEOs and Owners because they do not realize how many low value things they are spending their time on every day that someone could be doing for $15 to $50 per hour, freeing them up for higher value creation in the business.
Step #3 – List everything you spend more than 5% of your time on and categorize it by a job title that could be doing that. Likely you will find work that a Virtual Assistant, Accountant, bookkeeper, Administrative Assistant, Sales Person, Customer Service Representative or other individual contributors could easily handle most of this with a little training. If you have good Managers then they can take these tasks over.
Step #4 – Now imagine if you had that many more hours what you could do to expand your business. Calculate what that could potentially be worth in revenue. Profit? And even the equity value increase it could cause? The math should make your next step obvious and compelling. It should pull you out of the weeds to see the forest. Now sort this list by the hours you could save and write a job description. Then an ad for the top one by potential time savings. Outsource or delegate the hiring too if you can so you only interview the top three people.
Step #5 – Hire a part-time or full-time person, or assign these tasks to people you already have. Learn to delegate everything that would cost less than 50% of your selected hourly rate. Even if you would have zero work to do. You will find more valuable work quickly. I guarantee it. Realize it may take a month or so to train that person and they likely cannot do it as well, or as fast as you in the beginning. However, you will get this time back FOREVER. Also realize you are the bottleneck on your company’s growth if you are not constantly taking things off your own plate to work “on”, no “in” the business. Your job as a CEO is to grow your team. A business is something you can walk away from and it keeps running without you. Anything else is a job, not a business. Your job is to build the machine, not run it. Optimize the people and processes. Apply your limited “intellectual capital” only to new and hard problems that only you can solve. Find new products and markets. Lead, do not do.
Step #6 – In two months or so repeat this process from Step #1, or hire the second person/title on the list if it is still obvious from your time study. That will free another large chunk of your time to do more valuable things. It will also empower and grow your staff, allowing them to have more challenge and career growth, which will be a win-win to attract and keep the best people. Soon you will always be asking yourself “Who else could do this?”. Now you are free to grow your business, not run it.
If you are not growing at least 15% compounded annually I guarantee you are working too hard, and not that smart. Most small companies should be growing at 20-50% per year. You need to set a realistic goal each year, and quarter, and work backwards from that revenue goal to determine the staff and other resources needed to achieve that goal. This annual plan and financial projection must be updated annually at least. Each new person should pay for themselves if properly managed and if your processes and training are done well. If not, your focus should be fixing those first. This is building the machine.
And if you started this process too late and feel like the wheels are going to come off the wagon before you can execute this plan then I am available as an Interim Executive to take almost any project off your plate for 30, 60 or 90 days. The math will often even justify paying for senior Contractors or Consultants to do well defined projects. Even if it is break-even for the short-term. As a relief value that could save your health, improve your company and even add additional creative perspective and talent to the team other advantages will accrue.
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