Handing over the business DNA: transitioning from owner-doing to owner-managing

by: September 23, 2013


Many good businesses reach a size which is limited by the capability of the founder(s) to do any more work, despite great market opportunities. As a general rule, from experience, this seems to be around the £500k to £2m turnover mark. It’s one of the most significant transitions that a growing business has to make if it is going to continue to grow successfully. So assuming good products, people and a receptive market, how should this be done?

Recognise your own strengths and limitations

This growth phase of the business will be predominantly about the owners transitioning from doing just about everything, to focussing on what they are particularly good at, through to becoming much more hands off and predominantly providing leadership and business direction.  So you need to determine those business areas you are good at and which areas of running the business would be better done by someone with more specialist knowledge and focused skills.

One of the key strengths you will need is an infectious energy and enthusiasm for your business, that attracts good people to join you and motivates them to do outstanding work. What you must guard against is micro-managing people, not letting go, and seeing too much fault in what other people do. 

The skill is all about making sure you recruit (and develop internally) excellent people, then allow and facilitate them to excel in what they do.

Building an effective management team

Making good business decisions requires time for thought, discussion and consideration.  If you have too much to do, that time will not be there, poorer decisions will be made and you’ll need to revisit them more often. Not only that, but unless you’re Superman or Wonder Woman, you’re not likely to be amazing at everything. 

The real strength of a business relies on building a core team of people who are amazing at what they do.  For example, in your dream team you might aim to have:

  • A Sales Director who not only sells brilliantly but also can build a team of great sales people;
  • A Financial Controller or Director who focuses his or her time on making sure the business and financial planning is thorough and effective, who manages the finances and provides meaningful useful business information, who is proactive in making sure the business runs at its optimum performance levels;
  • A Client Services Director whose goal in life is delivering excellent customer service and maximising revenue generation opportunities.

Bring outstanding people into the business who can focus on their specialism and allow you to focus on yours.

Introducing business planning and financial control

No longer is back of a fag packet planning sufficient (actually, was it ever?).  

Understand completely the market you’re in and work out what you can realistically achieve. What other markets could you take your products and services into and how could this be done?  Have a detailed plan for the next 12 months, an outline for the following two years and longer if you want. Carefully consider all the costs, and don’t forget steps in costs that might be necessary like new buildings. 

Make sure that you’re comfortable with the revenue projections, that they are genuinely realistic and achievable.  Make a plan for worst and best cases as well, so that you’ve pre-thought through the implications of both how to save costs to match lower revenues, as well as how to expand more quickly to meet greater demand.

Carefully look at cashflow, the life-blood of your business, and make sure your plans include ensuring that you have the cash in the business to succeed.

Then work to the plan.  If the plan needs changing as reality takes the place of forecasts, change it.  Keep within budget.  Manage the business financially.

Defining, communicating and achieving complete buy-in of culture, values, vision

When you’re owner-doing, you know without thinking how you want to go about doing business, your commitment to customer service, what you’re trying to achieve.  That’s because your way of doing things and your values are part of your work DNA. 

As you make the transition to owner-managing, you cannot expect your employees to telepathically grasp and adopt your work DNA.  So you have to communicate it in such a way that the people who work for you buy-into it completely so that they adopt it as their own. How?

Firstly work out and articulate what you want the culture to be like, what the businesses values are to be, and what you want the future to look and feel like.  Then consider what you’ve articulated from a customer perspective and from an employee perspective, and re-work your words until what you’ve written works for everyone who’s going to be playing a part in the achievement of your vision and the living of the values.

Then communicate.  Talk about vision and values, have them on your website for customers and prospects to see, find examples to help illustrate values, make them truly part of everything you do and your business does. Live by them, and keep them live.

Transition from doing to coaching and leadership, developing helicopter vision

This is not an overnight transition; typically it’s something that takes months maybe several years.  Over time you’ll build a new confidence, as you attract great people to support you and they do an amazing job, as business planning materialises into reality, as you see people who work for you doing things that are way better than you could do yourself.  This will give you time, time to think, and time to develop.  That’s when the leadership role becomes enjoyable and you realise the impact you can now make on your business is far greater than it was when you were required to do all the doing.

Tapping into expertise

If you don’t have some self-doubt then perhaps you’re over-confident – a dangerous place to be!

It can make all the difference if you have someone who can help you through this transition, not only in terms of listening, understanding and giving advice, but also in terms of getting their sleeves rolled up and helping you out practically. 

You might tap into their expertise in running a business, in recruitment of senior people, in business planning, in defining values, in coaching and leadership; after all this transition is all about harnessing the skills and expertise of others to support the growth of your business. But it has to be you that runs the business, you that makes the final decisions, because it’s you that will make the difference.

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About Author

Paul is Zonata's founder and MD. He has a true passion for business and is massively excited by the opportunities that Zonata provides for its clients and partners. He loves helping owner-managed businesses be exceptionally successful, and enjoys the phenomenal quality of the people who work with him.

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