Earlier this year, Michael O’Dwyer at City A.M. reported that more than 216,000 new businesses were registered in the greater London area in the last 12 months, a 6.45% increase on 2017.
Furthermore, 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 political and economic gloom we currently find ourselves in.
It’s exciting and, as Matt Smith, director of the Centre for Entrepreneurs (CFE) commented: “These figures demonstrate the resilience and confidence of entrepreneurs across the country, confirmed by … the strengthening of London as Europe’s leading start-up hub.”
While this is incredibly positive news, I wonder just 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. Of course, the ironic thing is that many of these people set up their own enterprise to give them more time to do things ‘outside of work’, yet now they 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.
Like most entrepreneurs at that time, I was busy working on my new business, creating contacts, networking and writing proposals so I didn’t have time for reading about business while actually in business. After all, I thought to myself, 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!
Fast forward to 2010 and 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.
When I look back to 2000, I was working for a small media agency. The owner was ‘keen to sell’ one day and even offered me a percentage of the business when it happened. With little progress to realise that dream, I left the agency in 2004 to pursue other opportunities. Recently, I saw that the company had at last been sold, some 19 years later.
One of the issues I saw first-hand in that agency was the owner’s need for everything to be approved by him. After all it was ‘his business’. And that issue is the same for most owners. Far too many see it as their ‘baby’ and are sometimes ‘afraid’ to actively delegate to others in the team, so they perpetuate the need for them ‘in the business’.
One of the biggest issues for business owners, of all sizes of organisations, apart from stifling the growth of the firm, is the impact or burden of the business on their shoulders. Sadly, stress for some can also be the downfall of not just the business but the owner and his or her relationships and health too.
Yet it doesn’t have to be like that. 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 for both tasks and functions. 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 benefits. 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.
So, taking a step
back and up, bringing in a team who can do things (better in many cases) will
ultimately boost profits. And when systems and revenue come together, the value
of the business goes up too.