One of the great privileges of my job is meeting people from all walks of life, and stages of their careers. I talk to the engaged, the excited, the disillusioned, the frustrated and the bored! I spend time with those who have lost their way and those who are enjoying great success. It is clear that we are working in an industry at a time of great disruption, significant change but most of all terrific opportunity.
I have always had a particular interest in talking with those who own all or part of a business. Owners’ responsibilities are wide ranging and often draining. This article is for you, to share a few perspectives on common challenges and a few suggestions and ideas on how to tackle them.
The fundamental challenge:
All business owners have seen their organisation evolve from an initial great idea into a commercial enterprise. I often hear variations of the line, “It’s my baby” and “I’m very proud of what I’ve created”. And rightly so. Most new businesses fail and your pride and drive will have been critical to early success. However, as “your baby” develops into childhood, adolescence and adulthood, it is inevitable that the owner’s role has to change in a similar way to a parent’s. The baby has to be given the space to grow, mature and become more independent of the owner. This loss of control is something that all owners find difficult, some, impossible. It is the primary reason why so many businesses fail to grow.
However, there is a more fundamental shift for many owners than a loss of control. It is in the redefinition of their value and contribution to the business. Most organisations have relied on the owner to win new business, champion their points of difference and to gain traction in the market. They are often the best equipped in their team to win new work and manage key clients. But they also know that unless they transition relationships and equip a broader set of individuals, they cannot scale beyond a certain size. When others start to be the rain makers, some owners struggle with the transition. They can feel pushed into roles that are more operational and less suited to their core strengths. They lose the adrenalin rush and energy that comes with new wins and can suffer under the administrative burden of running a bigger organisation. Everyone needs to feel valued in order to flourish, and if the owner’s own sense of value falls, the impact on the whole organisation can be damaging.
At the same time as these challenges over control and personal value combine, additional pressures start to weigh on the shoulders of the owner. Bigger overheads, larger teams, expansion into new markets or territories and challenges over future growth plans make every decision feel more difficult and higher pressure. The combination can be overwhelming. And these challenges often hit when the owner has been running at full pace for a number of years to build the business to a certain size. They may be tired and feel that the financial rewards of a sale or an exit still seem some way off. At times, these pressures can feel all consuming. This is often the stage where me or my colleagues get a visit.
Changing the Game:
My experience of talking with owners over the years is that there are 10 core areas which are potential game changers at critical transition points as their business matures.
Legacy is best preserved through culture. Culture inevitably shifts with growth but if it is underpinned by a set of core values, it is more likely that the business you founded will continue to be one you are proud of. You will be able to cede control of management, business development, client ownership or even strategy, provided there is strong alignment around the company’s purpose, mission and values. In entrepreneurial organisations, the personality of the owner and what delivered initial success, while it can’t be replicated, must be embedded within a sustainable long-term culture of the organisation. If the owner is ‘passing the baton’ to others who operated in a way that makes them proud, the challenges of control and personal value, are more easily overcome.
The right governance for taking your business to the next level is critical. The angel investor or founding Chairman may not be the right person to give the owner the feedback or counsel for further iterations of growth. Fresh views, new ideas and effective challenge to often deeply engrained and potentially outdated thinking is vital to unlock new opportunities and give the business the oxygen and momentum for further development. The best board will provide the owner with support and confidence as well as encouraging them to strive to new heights.
Many owners are fiercely loyal to staff who have been with them since the beginning. You have likely been through much together, which inevitably creates strong connections. That loyalty can influence people / leadership decisions which sometimes conflict with what the business needs to move forward – which can be radically different to what got you to this point. It’s important to ensure objectivity in relation to leadership and people, so that the right skills are in place for the current strategy and level of maturity. Refreshing the team can bring different perspectives, new energy and help combat ‘group think’. Recruit ambitiously, for the business you want to become, not who you were ‘yesterday’.
Energy and momentum are critical to any organisation. Whilst many interviews with successful people often give the impression that they are able to combine the exercise routine of an Olympic athlete with a Stakhanovite work ethic at the office, the reality is of course very different. Running a business is wearing, emotional and relentless. If the business owner is tired, frustrated or unhappy, they cannot do their job effectively. A proper holiday – without a phone – a commitment to a new hobby, learning a new skill or a complete break from the business can be advantageous. There will never be a “good time” to do this but those that have, often get a new perspective on the quality of their management team and their own value to the organisation. It can be a game changer.
Securing a NED or advisory role with another organisation can bring benefits, but also additional pressures. The right role can broaden learning, provide different perspectives as well as give some reassurance of the many great things you are doing yourself! The caution is that the wrong additional advisory roles can be time consuming and cause you to resent the additional time out of your day.
For many owners, an exit and a financial return on the hard yards put in over the years is the holy grail. It can become all consuming, disruptive to the business in the short term and disastrous for the business in the long term. Your legacy can be destroyed quickly. And yet, there comes a time when it will be right for you and perhaps even more critically, right for the business. Plan your own exit carefully: it’s so much better to go out on your own terms at the time of your choosing than to wait for the tap on the shoulder!
Inevitably, most owners focus on all that is going wrong and lose sight of all that is going well. Good never feels good enough and bad feels really bad! This is damaging to personal motivation levels and can also be disruptive to the business where people who are working hard and giving their all, feel that they are not being valued for their efforts. It is so easy to forget to say “well done” when the focus of your day is dealing with problems and challenges.
It is easy for owners to lapse into conservatism and to allow risk and challenges to suffocate ambition and growth. The danger here is loss of momentum and the business losing its sense of direction, drive and purpose. A new project, a new office, a new service or an acquisition or merger can give everyone a lift and renewed energy. It can look expensive or daunting and it can be stalled for any number of reasons, but it is vital to keep the business moving forward, challenging the team to take on new roles and responsibilities, to adapt and to evolve. As soon as a business becomes routine and repetitive, problems will ensue with retention of staff and personal levels of motivation. Very few good people want to be doing the same every day, every month, every year. The best owners get themselves, and their teams, out of their comfort zone, take on new projects and retain a boldness and ambition over the long term.
For many entrepreneurs, process is irritating, seeing it to be getting in the way of the “proper job” of winning work and servicing clients. However, poor process is a significant obstacle to scale and it sucks the energy and enjoyment out of the day job. A well-oiled support function who can give the team what they need to flourish is an absolute necessity. Invest in it because the short-term pain and cost will be worth it in the longer term.
It is surprising how little owners talk to other owners about the problems they are facing. Whether it’s employees, clients, processes, Brexit, financial issues, shareholders or personal motivations, there is an enormous amount of common ground. Your problems will always feel daunting but I promise you that others are in the same boat (or a worse one!) and meeting up over a coffee or something stronger with other business owners can make you feel a whole load better!