Are you stuck trading time for money?
I’ve talked to quite a few people lately that have recognized that they are the constraint for their business.
In order to make more money, based on the way they are currently working, they personally need to work more hours. The problem with that approach is that they’re already working more than they’d like to be working, and generally it’s been that way for quite a while.
I hate to break it to them, but they actually have a JOB, not a business.
(Along those lines, here’s a great article from Steve Pavlina on 10 Reasons to never get a job! He states things pretty strongly, but even as someone that had a job for 15 years, I think he’s right on the money.)
So ultimately what is the problem with the small business owner being the constraint for their business?
- They are trading time for money – either directly as an hourly rate, or somewhat indirectly as the only resource available to the business that can do certain critical functions (i.e. sell the product, make the product, deliver the service).
- When it’s all said and done, their business, without them working it, isn’t worth much if anything. The new owner would immediately have to jump into 50, 60, maybe even 80 hours of work, just to keep the revenue stream. How much would you pay for that opportunity?
- It’s exhausting…and you better hope that you don’t run into an injury or an illness that precludes you from getting the work done.
Having said that, there are times when this isn’t a problem. Almost all new businesses fit this description – potentially for several years as they’re in ‘start-up’ mode. Also I’ve met more than a few people that totally understand their situation and they’re doing exactly what they want to do and they have no plans to ‘sell’ their business when they’re ready to move on.
However if you’ve recognized that this isn’t the situation you want to be in, what can you do about it? Ultimately the right answer depends on what kind of business you’re in and what you, as the owner, want to create.
Here are some high level ideas that might be helpful in brainstorming some next steps for your situation:
As a short-term fix, identify the non-critical functions that you could outsource to a service or an assistant kind of position. This could be things like book-keeping, follow-up communications to existing clients, web site updates, ordering supplies, etc.
This will give you some leverage, but ultimately you are still the bottleneck. It’s a great short-term fix and a step in the right direction, but if you don’t follow-up with something else it will only get you so far.
Pick a key area that you could delegate to the right person. Maybe you need to hire a salesperson to go out and be your rainmaker, leaving you with the responsibility of delivery (along with all of the other owner responsibilities).
This can be dangerous for a couple of reasons: People that are driven enough and talented enough to really take control over something are likely good candidates to start their own business or take the clients they develop with them to their next opportunity. Secondly if you abdicate your responsibilities to your new employee, you might find out too late that they’re not getting things done the way you want them done. The key is to delegate the work but keep the ultimate responsibility for quality, using key metrics to manage the situation as much as needed.
Productize the output of your business.
If you’re currently making widgets by hand, can you find/create an automated manufacturing process?
If you have a service business, can you create Do It Yourself products like books, audio solutions or videos that clients could buy to solve their problems without your direct help?
The beauty of this approach is that in a lot of cases it’s actually adding a revenue stream, not replacing one. Having said that, it can be difficult to do well and as a lot of published authors can tell you, it’s difficult to make money from a book.
Change the game – you’re seeing examples of this on the technology front a lot these days. Before Apple came up with the IPod, mobile music was a Walkman radio or portable CD players.
Amazon totally changed the way people thought about buying books.
Obviously this doesn’t apply to everything, but if you can come up with that new paradigm that the market adopts, you can write your own ticket!
Finally, here’s the long term view:
Create a set of business systems for all aspects of your business that minimize the skill level or experience of the employees needed to run them successfully.
The perfect model of this is McDonalds. Virtually every position in a McDonalds can be run by a minimum wage high school student with very little training. All the employees need to do is to follow the system as written for their job.
This sounds daunting, and it can be. However you don’t have to do this all at once. If you pick one area and document what you personally are doing to the point that you could hand that document to a new employee, complete with metrics that measure success, then you’ve got the ball rolling.
It can take a lot of time and a lot of iterations of improvement, but if you can do this across the board, you will be free of the day to day needs of your business.
You will be free…and your business will be worth several multiples more than what it was worth before!
The best way to really make tangible progress on any of these ideas is to have a business advisor (or Peer Group Advisory Board) that you can use as a sounding board, help you with brainstorming and hold you accountable on taking actions. If you think you’re in the market for this kind of thing, give me a call – I know some resources that can help. 😉
I’d love to hear other ideas on how to solve this dilemma. Share your thoughts here.
Shawn Kinkade www.aspirekc.com