There are several roadblocks to growth that an entrepreneur must overcome to make their business a success. Likely, you’ll have encountered a few of these to get where you are today but one of the most common blockages comes in the form of business owners who are too fully engrossed in the day-to-day running of their company.
Have you ever:
- Felt like you can’t get any actual work done because the administration of your business takes up too much of your time?
- Spent entire days in meetings about the running of your business?
- Felt like you had to oversee even the smallest elements of your company’s day-to-day running?
- Been accused of being a micro-manager?
If the answer is yes to some (or all) of these then you’re very likely in too deep.
A book we continually refer back to is The E-Myth Revisited by Michael Gerber. One of the core truths revealed in this excellent book is “you should be working ON your business, not IN your business.” That is to say, y
ou should be the strategic lead, the top-level decision-maker, the visionary touchstone for your organisation and your time should be spent improving processes, systems and people rather than doing the actual work of the company.
But how to break free from this trap?
We’ve worked with a lot of companies from sole traders to family businesses to large tech companies with venture capitalist funding and we’ve found that the business owners who had the clearest understanding of the various roles within their organisations were often the most successful. As always, clarity is of the utmost importance.
Many books analyse the organisational structure of companies and try to distil down the various functions of modern businesses. We particularly enjoy the approach laid out in both Traction by Gino Wickman and Systemology by David Jenyns.
Both of these fantastic books talk about “departmentalising” your business and freeing you up to become the strategic lead in your organisation.
The 10 Departments In Every Organisation
Every company has ten departments – even sole traders!
- Shareholders – These are the investors who own the company. Their job is to hold the directors of the company to account for performance. Their goal is to increase the overall value of the company in terms of profitability and perhaps even valuation.
- Directors – These are the strategic leaders of the company and may be made up of shareholders or delegates from the shareholders, as well as managers working within the company. Their job is to set and achieve the strategic objectives of the company.
- Leadership – This is the senior management team of your organisation and can include your managing director and departmental heads. They make decisions to execute the strategic plan laid out by the Directors and feedback into that plan regularly.
Below the leadership there are seven operational units:
- Product / Service Department – the people creating the product or actively doing the work of the company
- Operations / Delivery – the people who support the people doing the work of the company or who deal with the operational aspects of making the product or the logistics of delivering the product or service
- Marketing – the department tasked with increasing awareness of the company and attracting potential buyers to it
- Sales – the department tasked with converting prospects into customers and increasing revenue from these customers
- Finance – the department which manages the budgets to allow the company to operate and which deals with invoicing, credit control, cash flow and tax
- Administration / Technology – the department which supports all of the other departments through clerical and technological support
- Human Resources – the department which resources all of the departments with people
As you can see from the above description all of these departments are of vital importance to any organisation and if you’re a sole trader or the leader of a small company you’ll recognise parts of your daily work in multiple different departments.
How to use organisational structure to improve your business
Documenting and understanding all of these departments will allow you to set goals for their improvement. Every operational department will have some sort of result that can be quantified and scored to demonstrate how that department is working.
Whether that is the number of reported errors in accounting, the time spent on tax affairs, number of inbound sales enquiries, social media engagement, rate of technology replacement or cost.
However that department functions there should be a statistic that will indicate how it is performing.
Finding a performance indicator (also known as a key performance indicator or KPI) will allow you to see the departments which are operating smoothly and those which are struggling and very likely, having a knock-on effect on the other departments in your business.
Setting KPIs will allow you to look out for problem areas and address their root causes. Even if that root cause is you!
Undertsanding Your Time
No entrepreneur likes to hear that they are the problem holding back their business but it is often the case that business owners becoming too heavily involved in the day-to-day results in their time being misdirected and bottlenecks happening in more critical departments. When we discuss this with clients they often report that they are overwhelmed by their workload.
An exercise we often ask of these clients is to spend a week (or a month if they can) recording how they spend their time. They can do this very easily by taking five minutes at lunchtime and at the end of their day to think back over the past few hours and estimate the time they spent on each area of their business.
If they are a little more high tech there are free online tools such as Clockify which you can use to create ‘timesheets’ and the analysis can then be a little more scientific.
Clients are always surprised by how much time they spend performing tasks that are not strategic or profit-generating. Likely these are tasks that do not require their input and could be easily delegated to a more junior member of their team or which take them twice as long as it would take a skilled contractor to carry out on their behalf!
Understanding the various roles within your organisation will allow you to prioritise workload, delegate tasks and potentially outsource jobs to improve the efficiency of your business.
The next steps
We’d urge every business owner to take an hour to write out these departments and identify the specific tasks in their business that fall under each structure and who performs these tasks. If you’re a sole trader it won’t surprise you to see your name under every department but if you have a team around you, you might be surprised to see your name everywhere.
This is natural in the early stages of running your business but if you want to see true growth in your company, you need to separate yourself from the minutiae of your organisation. The problem is, many business owners are too close to their business to see why their input is not completely necessary.
We will often spend time reviewing these organisational charts and timesheets with clients and offering advice on where efficiencies can be made through technology, automation, delegation or outsourcing. If you’d like to speak to us about how we could guide you towards running a more efficient business and free up your time to focus on strategic growth, we’re ready to help.
Click here to book a discovery call with one of our team today.