When you start a business, you have a vision of what you want running your company to be like. While every founder is different, most entrepreneurs envision customers who love their product or service so much that they see it as the best (or only!) option in the market.
Years after they start their business, unfortunately, many founders find themselves still stuck in the day-to-day operations of the business. At this point, you should no longer be responding to customer issues or entering receipts into QuickBooks. You should have a team to help you complete these day-to-day tasks, so you can focus on what you do best: growing your business.
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Below, you’ll learn how to get yourself out of the day-to-day drudgery, delegate tasks and grow your business:
Your highest and best use
The concept of “Highest and Best Use” (HBU) was actually founded in real estate development. It’s the process of determining the highest value for a property. This principle, surprisingly, can be applied to entrepreneurship, as well.
You started your business for a reason. Maybe you had a solution to a problem or a vision for a new product that needed to be brought to life. No matter, the most successful businesses are the ones that make it because the company’s founder has a secret weapon.
The major secret weapons that we see are:
- The entrepreneur is an expert in his or her field.
- The entrepreneur is a great salesperson.
- The entrepreneur has a huge network that makes revenue generation easy.
As has been documented by books like “The E-Myth,” most people find that starting a business ends up involving a lot more administrative and managerial work than expected.
It’s time to look at your “Highest and Best Use” and try to get as much off your plate as possible to optimize your time. But just how exactly do you do that?
Step 1: Make a list of every task that is required for your business to function. This should be as granular as possible: everything from answering emails and reaching out to X number of prospects per day, to making weekly deposits or reconciling bank accounts at the end of the month.
Step 2: Break all of the tasks you’ve just identified up into the categories of: daily, weekly, monthly, quarterly and annually.
Step 3: Group all tasks into “departments” or groupings that make sense for your business. For example, everything related to prospecting, sending prospect emails, outreach for potential partnerships, setting up Facebook ads, etc. could go into the “sales and marketing” group. Everything having to do with receiving inventory or packing and shipping could go into “logistics.”
Step 4: Now, put a name next to each of the tasks to designate who on your team performs them currently.
Step 5: Label each task as “easily repeatable” or “not easily repeatable.”
Step 6: Label each task as “easily documented” or “not easily documented.” Now it’s time to apply the process.
Step 7: Look at all the groupings or departments that you made for these tasks, and ask yourself, “Are there people in your team who fall neatly into taking over that department or grouping?” If so, let’s put them in as the “leader” for that grouping. You can quickly audit this assumption by asking if that person could handle all the tasks listed. If not, this might mean considering reorganizing or bringing on a freelance or part-time hire.
Step 8: If you have an empty slot in the “leader” for a particular grouping, put yourself in there. At this point, you’ll start to see that you probably do way too much for your business day to day.
Step 9: Document all “easily documented” tasks with as much detail as possible. Create a Google sheet for each of them and create a folder structure that matches your new groupings or organizational structure.
Step 10: Begin to have meetings with your groupings “leaders” and start the process of delegating the newly documented tasks to them. Let them know that there are other processes that aren’t easily documented that you want to hand off to them but that it will take time to work through those. Set a target of having them implemented by a certain calendar date.
Step 11: Work to get the “not easily documented” tasks into a documented form. If they are extremely complex, it’s time for you to put your thinking cap on and figure out how to make them less complex until they are something that can be documented and handed off. Always ask how something can be automated or made less complex. As these tasks become documented, continue delegating and training until they are off your plate.
Step 12: For groupings where you are the “lead,” it’s time to think strategically about who could fill that role and when you can afford them, if it requires bringing someone new onto your team. This is an entirely different process in itself, but at this point, you should be getting very clear on what your organization needs to look like in order for you to get out of day-to-day operations.
Key Person Risk
Most entrepreneurs have a vision of selling their business one day. One of the major reasons businesses can’t be sold for what they’re worth is something called “Key Person Risk.” This is the concept that if the operations of a business depend too much on any one person, the risk of the business goes up as something might happen to them or their performance. To increase the value of your business upon exit, you need to decrease Key Person Risk as much as possible.
A simple way to think about it is to look at all the tasks that you’ve listed in the process above. Take the total number of tasks created and divide that number by the total headcount of your company. This will give you a Key Person Risk Ratio. It’s a rudimentary way to look at your Key Person Risk over time, and less of it means more value upon exit.
Originally published Sept. 25, 2020.