You finally found the key to spending more time as an owner and less time as an operator . . .
As a business owner, do you feel like you work longer hours for less predictable take-home pay?
Congratulations. You are one of over 28 million small business owners in the United States (Source: Forbes) who battle the very real struggle of the dreaded owner-operator.
As business owners we often wear many hats in our business. We are the de facto chief of operations, finance, and sales. As business owners we learn fast.
We fail fast. We get back up fast.
And now, technology allows us to grow fast . . .
You did not start your business because you wanted to always wear all of these hats. It was borne out of necessity.
And if you are anything like the 55% of business owners who continue to work more than 50 hours a week (Source: Zane), then even to this day you are still wearing many hats.
But this is not why we risked it all to start our own business. We took extraordinary risks for extraordinary rewards. We risked our savings. We gave up a steady paycheck working for someone else. We gave up once-in-a-lifetime moments with friends and family.
We risked it all for the reward of someday being a business owner with time freedom and financial freedom.
Let us first define what should be the roles of a business owner and operator. These, after all, are two very different roles (even though we often only separate them by a hyphen).
If you were only a business owner, then you would not go into the office every day. The value you deliver is in your pocketbook and your strategic direction. Your cash flow is based on the cash flow of your business. Your “paycheck” is the return on your investment.
If you were only an operator, then you would go into the office every day. The value you delivery is in your daily management of resources. Your personal cash flow is based on a salary and perhaps a bonus plan. Your “paycheck” is the salary of someone with your managerial skills.
What Limits Your Growth?
At its core, the foundations of any business are the functions of finance, operations, and sales. Any business’s success or failure lies in the individual success of each of these functions. The weakest of these functions limits the success of the whole.
For example, if operations is able service 50% more customers, but sales can’t supply those customers, then the sales function limits profitability as a whole. The same holds true if sales is crushing it, but operations is unable to manage its resources to handle the inflow of new customers. And if sales and operations are both killing it, but finance is unable to secure additional debt or equity, then you may not have the working capital to support additional operations.
Becoming More Owner, Less Operator
The only way to become less operational is to build repeatable processes that can be delegated to others.
- You cannot micromanage and scale.
- You cannot do everything yourself and scale.
- Your time is your most valuable asset and time does not scale.
So back to wearing all the hats . . .
If you are still at that stage of business where you must wear all the hats because financially you just . . . well . . . simply put, you must still wear all the hats because you must . . . that is completely understandable. We have all been there.
But when you are ready to become an owner and not just an operator, you must focus on your strengths.
Whether you are a 5-person local contractor or a 100-person accounting firm, you must know your strengths and invest your time (your most valuable asset) into those strengths.
For most companies, the founder is strongest in operations. In fact, this is even true among CEO’s of some of the world’s largest companies.
- Rex Tillerson, CEO of Exxon Mobil, received his degree in Civil Engineering and was first hired by Exxon Mobil as an operational engineer.
- Brian Krzanich, CEO of Intel Corporation, joined Intel as an engineer and holds a patent for semiconductor processing.
- Satya Nadella, the CEO of Microsoft, began his career with a Bachelors Degree in Electrical Engineering and Masters Degree in Computer Science.
The reason why shareholders are able to appoint these operationally-focused chief executives is because they have strong systems in place to support sales and finance.
In order to grow your business as an owner (not just as an operator), your challenge is to take a good hard look at yourself in the mirror and honestly assess your strengths.
Sales Cures All
Before you even began reading this article, you already knew what your strengths were. Most likely, you already knew that your sales function is limiting the profitable growth of your business.
If you had a steady increase in new customers, could you:
- Train new operations personnel to handle the increased workload?
- Justify investing in new capital assets?
If you answered “Yes” to both of those questions, then now is the time to implement an efficient system for generating new customers.
Sales does indeed cure all. More revenue justifies greater investments in people. More revenue increases the bottom line as margins improve. And increasing your top line is the surest path to increasing your bottom line.
3X Your Sales Function
Your sales function consists of two distinct processes: prospecting and sales. Each of these processes consists of several steps that take a prospect from cold (the prospect not aware of you having a solution to their problem) to hot (the prospect knowing and liking you, and trusting that you can solve their problem).
For sales managers, the answer to lagging sales is to hire more salespeople. For marketing managers, the answer to lagging sales is to spend more money on advertising.
However, the key is understanding how the entire lead generation and sales system fits in with the economics of the business. This is not a decision that can be delegated to the sales team or to the marketing team. This is a decision that must be made by the business owner who writes the checks and has the most to gain (or lose) from the decision.
At ReallyLocal Marketing, we take a finance-first approach to the sales system. Our first order of business is for our CPA to understand the economics of the business and the prospect-to-cash cycle. We do not build a thesis to support our theory on internet marketing.
In fact, we are the first to admit when internet marketing is a bad investment. When weekly mailers or door-hangers are the best return on your investment, we identify other opportunities to improve the customer conversion process.
But truth be told, for most businesses with a sales team that currently cold calls or knocks on doors to meet new prospects, you are wasting 90% of your sales team investment on prospecting, not selling.
Are you a business owner who needs top-line revenue growth this year?
Profitable top-line growth that doesn’t burden your overhead costs?
You need more production out of your existing sales team?
Then take a moment now to download this PDF “Grow Faster Than Your Competition (With Fewer Salespeople)“.
In this short guide, you will learn why it is critical for you to stop hiring salespeople and invest in your lead generation process. No more buying poor quality leads from HomeAdvisor who are just price-shopping for low bidders. No more Thumbtack. No more Angie’s List. No more bidding against 4 competitors for leads that you pay for!