Having a million-dollar business is the dream of many business owners. It’s a sign that you have really made it; the point when there is enough money and time to do what you want when you want to do it. That’s the dream. The reality is often quite different. In reality, growth often brings more headaches, more time on the job, less free time for your family and less time to do what you want.
So why is the dream of running a million-dollar or larger business often so different from the reality? Odds are you’re still running it the same way you did when you were a much smaller company and this is stunting your growth, limiting your profit, and adding hours and frustration to your day.
As your business grows, it becomes more complex. You have more customers; more employees; and possibly more target markets, services and locations. And the management skills and techniques that served you well when you were running a smaller company don’t work as well now that you’re running a complex business worth over a million dollars. Yet most owners don’t adjust to the new realities of their larger, more complex business.
To build a growing, profitable multimil-lion-dollar painting company that virtually runs itself, you need to update your management style and run your company more like the CEO of a major corporation than the owner of a small mom-and-pop shop. Corporate CEOs have mastered the art of running highly complex companies with hundreds of thousands of employees.
Let’s take a look at one CEO’s key to success that you can use to make your million-dollar business soar. Don’t have a million-dollar business? Read on anyway. There are important lessons here for you too, and you’ll get important insights into what you need to do to grow your business successfully to $1 million and beyond.
So how do CEOs run enormous, complex businesses? They run their business through key managers.
I worked at Marriott Corporation with 200,000 employees. Bill Marriott knew he couldn’t manage them all. He couldn’t supervise every hotel and every division. So he broke the company into parts – Marriott Hotel Division, Courtyard Hotel Division, Fairfield Hotel Division, marketing, sales, finance, etc. – and he entrusted key managers with full responsibility to run those parts of the company, and he managed his key managers.
You can use this same strategy of letting key managers run parts of your business work for your million-dollar painting business. To illustrate, here’s an example from a client of mine who owns a million-dollar, 40-person painting company. When we started working together, the business wasn’t growing and wasn’t making a profit. He was stressed and frustrated. He was an “I do everything” owner. He had his hands in everything. He spent so much time doing other people’s work that he wasn’t doing what he needed to do to move the business forward. He was actually holding the business back!
So we broke up the business into parts. He appointed a head of operations to manage the jobs and to ensure that the work was completed profitably and with high customer satisfaction. He appointed a head of sales and marketing responsible for generating leads and selling profitable business, and had an office manager to handle the financial and admin side of the business.
Now rather than try to manage all 40 people, my client manages three and they manage the rest. After restructuring, his business started growing again and he had a six-figure increase in profit. He also had less stress, more control, and more time to do the things he needed to do to keep improving and growing the business.
SUPERVISING VS. OWNING
You might be saying to yourself, “I already have people who are running parts of my business.” I want to make a key distinction between having people supervise parts of your business and actually run them.
Supervising is overseeing the work. When I talk about running a function, I’m talking about giving your key managers ownership of their function. Here’s a brief job description for the head of sales and marketing to describe what I mean.
The head of sales and marketing is the one person ultimately responsible for achieving the sales and marketing goals and objectives of the business. The head of sales and marketing is the owner and steward of sales and marketing and is responsible for planning the sales and marketing success and implementing whatever needs to be done to make that successful. They’re where the buck stops, no excuses.
So if your company’s goal is to grow by 25% this year, then the sales and marketing person owns that responsibility. Ownership means that the buck stops with them.
MAKING IT WORK IN YOUR COMPANY
Most managers don’t have experience with owning and running a function, so you will have to give them some assistance to help ensure their success and yours. Here are a few things that you should do:
Help them understand what it means to be an owner. This is the hardest part for most new managers. They are used to going to you for everything, so they will find it hard at first to take the reins and run their function. Use the job description I laid out above as a guide. You will need to reinforce the ownership concept consistently to help them make a successful transition, because it’s a difficult concept to get and hold on to.
Teach them how the company makes money. A lot of new managers don’t understand how the company makes money or how they can impact the results of the company. So you need to teach them.
Co-create their plan for success. Guide your team to success by co-creating annual and monthly goals, key priorities, and action plans. Monthly goals give you an agreed-upon way to measure if their results are on track. Action plans give you an agreed-upon blueprint for how they will get their key priorities completed. With goals, priorities and action plans, you can manage their results without micromanaging.
WHAT DO I DO NOW?
I have a client who successfully installed key managers to run the parts of his business, and when he was done, he asked: “I’ve got my key people running their functions and everything’s working great, so what am I supposed to do? Put my feet up on the desk read the paper and smoke cigars?” It’s a fair question. After all, you used to be the go-to person for everything, and now you have your managers doing what you used to do. So what should you do with your time? The short answer is – focus on the highest value work in the company – the important but not urgent work that you know you need to do to grow the business but have never been able to get around to. Work that only you can do. The work that can make a major positive impact on the company.
Here are a few things that you can do and the percentage of time I think you should spend on each:
Create and manage the annual plan for the business (15%).
Manage and develop your key managers through regularly scheduled progress meeting and training (30%).
Manage high-value clients and high-value projects (creating new services, opening a new location, buying a competitor, improving operations) (35%).
Miscellaneous other activities, such as going out to the field to keep your pulse on the business (20%).
UNLEASH HUGE POTENTIAL IN YOUR BUSINESS
You built your business being a “hands on, I do everything” owner, but trying to manage that way now that your business’s value is larger than $1 million is holding your business back and causing you unnecessary stress and frustration. If you feel like your business has huge potential that you just can’t seem to harness, manage your business like a corporate CEO following the steps I laid out in this article and watch your company soar! APC
Bill Silverman is the owner of Springboard Business Coaching. He is dedicated to helping you propel your business to the next level of growth and profit while you work less. He can be reached at (856) 751-1989 or email@example.com.