Changing Your Role in the Business to Help It Grow
If business owners want to grow their businesses, it’s practically a given that they must change their roles within their companies at some point. You cannot continue to wear numerous organizational “hats” as your company grows. You must change your role for your company to evolve and grow!
Charles Darwin, a key contributor to the science of evolution, confirms that this is true not only in business but also in life. Darwin states the same observation in a quotation often attributed to him:
“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”
The Owner’s Role in Company Growth
Essentially, if businesses are to provide a launchpad for their owners’ successful transition and eventual exit, owners need to change their perspective, their roles, and their activities in those businesses. For that reason, I have listed below three changes that most owners must make occur.
Keep in mind that each change is not a one-and-done event but part of an ongoing process. As you accomplish the first, the second comes into play and requires your complete attention. As you achieve the second change, you begin to make the third and final change. You must move through each change if you wish to:
Set the stage for your business to move to its next level and…
Move to the next chapter of your life, which is, after all, the point of having a business transition plan.
Change 1: You must change your focus from growing your business based on your talent and effort to increase it beyond your capabilities.
Change 2: You must change your role in your company from hub to spoke. Owners who are spokes retain an important role in their companies, but their companies can function and grow well without them.
Change 3: As you make the first two changes, you gain freedom (and time) with fewer duties and responsibilities. With more time, you can explore and develop both new business and non-business pursuits. You have more time to put your attention where you want!
Lessons for Owners:
Lesson 1: You, as an owner, choose your role within your business
Lesson 2: Unless your role continually evolves and becomes increasingly less critical to the ongoing success of your company, growth will be slow or stunted
Lesson 3: If a business has no transferable value, a successful and profitable exit is not likely
Lesson 4: Successful business exits can require the help and involvement of advisors to move your company to the next level
Lesson 5: It is your decision to transform your relationship with your company as it approaches critical growth points. The choices you make will separate your business from one that cannot be sold to one that attracts the best employees and becomes a community and industry leader.
Transferable value means that a business can be transferred to another with minimal disruption to its cash flow. Companies with transferable value do not rely on their owners for success!
Who Can Help:
Who can help you make the choices and changes you must make if your company is to grow? There is a role here for outside advisors. Peter Drucker, who is widely considered to be the founder of modern business management principles and who wrote nearly 40 books on the topic, reviews the benefits of outside advisors who can help owners be capable of performing the following:
“…the founder does need people with whom he can discuss basic decisions and to whom he listens. Such people are rarely to be found within the enterprise. Somebody has to challenge the founders’ appraisal of the needs of the venture and his own personal strengths. Someone who is not a part of the problem has to ask questions, review decisions, and above all, to push constantly to have the long-term survival needs of the new venture satisfied by building in the market focus, supplying financial foresight, and creating a functioning top management team (1).”
How Much Do You Need to Change:
The business value becomes transferable by:
Delegating daily management to others
Creating systems to manage workflow and all other processes within the company
Focusing on growing the value in other ways that build transferable value
Conclusion
To exit in a way that meets all your goals (including the foundational goal of financial independence) requires that you transfer responsibility for value creation and sustainability to others.
Ownership Evolution Assessment:
Is your business at a key “inflection point” that requires you to choose between changing your role or continuing to do business as usual? The following questions are designed to help you determine where you are in your transforming your role from the hub of your business to a spoke in the wheel:
Have you established any business transition or exit goals?
Do you know the size of the gap between where you are (financially) today and where you want to be when you exit?
Do you have a written business exit plan that maps out how you will reach your exit goals?
If you are still an army of one, are you willing to become one in an army of many?
Overall, is your business capable of succeeding without you running it?
Is your current management team capable of assuming greater levels of responsibility and growing your company?
Are your current advisors capable of supporting you and your management team in changing your roles?
Answers are not right or wrong, but they do provide insight into whether:
You are on the road to creating a business that can run successfully without you. Businesses that do not depend on their owners to succeed have transferable value
Your current involvement in the company needs to change to allow for faster growth. If so, consider what role you should take in the company going forward
Your current advisors have the experience and skills necessary to help you create a business with transferable value.
This conversation is at the core of any successful business exit and transfer. To learn more about this process, please contact me at david@remodelforce.com or visit my website to learn more.
[1] Drucker, Peter F., The Essential Drucker, HarperCollins, 2001, pages 159-160 ©2020