Business owners and the three stages of leadership
Daily Telegraph – http://www.telegraph.co.uk/business/sme-management/three-stages-of-business-leadership/
Evolving from an entrepreneur into a manager and then into a leader is a path well trodden, but not necessarily an easy one for small business owners
There aren’t enough hours in the day. Ask any entrepreneur. Every small business owner can relate to the struggle to balance the competing demands on their time from man-management to research and development, accounting and marketing. It’s a wonder anything gets sold at all.
The risk to continuing in this manner is obvious. Aside from the health implications of working long days and seven-day weeks, battling with the day-to-day details means tomorrow rarely gets the attention it deserves.
Research conducted by the Telegraph in association with easyJet identified the biggest challenge facing organisations today to be managing the day-to-day business, which ranked ahead of other pressing issues such as cash flow (34pc) and the recruitment and retention of talent (33pc). Some 22pc of businesses, meanwhile, identified planning and strategy as a major challenge.
Coping with the daily responsibilities of running a business is even more significant for small businesses, with 41pc of those with one to five employees identifying this as a significant issue, rising to nearly half (46pc) for those with six to 20 staff.
Learning how to evolve from being an entrepreneur into a manager and then on into a leader is one of the hardest elements for small owners to get to grips with, says Ed Molyneux, CEO and co-founder of FreeAgent.
Mr Molyneux has grown his business from three founders to 90 employees since 2007.
“At first glance, the issue appears to be time: there simply aren’t enough hours in the day for an entrepreneur to take on all the jobs that need doing in a growing company,” he says. “But when you delve deeper, it turns out the issue is actually brainpower; there’s no way an entrepreneur can make the best decisions without the help of a team of highly capable senior executives.”
He believes small business owners need to gradually divest themselves of operational tasks, and eventually focus more on building a leadership team and company around the entrepreneur’s original vision.
Nigel Botterill, founder of the Entrepreneurs Circle, has launched eight businesses over the past decade, and believes stepping away from operational and day-to-day activities is the single most important thing entrepreneurs can do if they want to scale up.
“Most business owners are most comfortable when they are doing the work they know best – essentially being a technician,” he says. “To become a leader, not a manager, you must genuinely be prepared to change – and that’s not for everybody.”
He argues entrepreneurs need to hire experts – particularly in sales and finance – rather than recruiting people who simply become their assistants.
“The benefit of bringing in specialists is it leaves you to deal with the single most important aspect of the business: marketing,” he adds. “That’s the lifeblood of any business and the one the entrepreneur should continue to drive.”
Shaz Nawaz is director of aa Chartered Accountants, and a business growth advisor. His advice is to focus on introducing systems, which rely on processes rather than individual people. “Once these are in place you can employ another person to follow the processes and to do your job,” he says. “This then forces you to adopt the role of a leader, which is where you want to be.”
At this point, the founder’s role becomes more around overseeing that management team, says Tom Higgins, CEO of Gold-i. “I have maintained a strong overview of all key functions by implementing a clear structure to manage our senior team,” he says.
“Every morning without fail, we have a 10-minute stand-up meeting during which the management team members go through their key priorities for the day. I also have one-to-one meetings with each management team member every week, a monthly management team meeting to talk about more strategic issues, and six monthly away-days to think about longer-term planning.”
In the longer term, it may even be necessary to appoint a managing director to oversee the operational side of the business, as was the case for James Layfield, CEO of workspace provider Central Working. “The only way to successfully transition from an entrepreneur to a leader is by empowering others to make a decision that you may disagree with,” he says.
“Until you can give someone else the clear authority to make choices in their own way without consulting you, you will never truly stop working ‘in’ your business.”