Now You’re In Business. So How Do You Grow Your Organization?

Notice I said your organization, not your business. In my mind, they are two separate things. Yes, first you grow your business, but if you don’t quickly grow it into an effective organization, you’re going to leave money on the table. And you work way too hard to afford that!

Almost anybody can grow a business, especially in a rising economy. But without an effective organization, all you’re doing is working your butt off and chasing your tail.  

John Wooden, UCLA’s legendary basketball coach who won 11 NCAA national championships, had a number of great quotes. “Never mistake activity for achievement!” is one of my favorites.

If you break the word “business” down, it becomes “busy-ness”.  And boy, can you stay busy, because there’s ALWAYS something to do in growing your business.

Yet, without an effective organization, all you’re doing is creating chaos, frustration and dysfunction for yourself and anyone who works with you.

I know this firsthand because I was involved in creating not one, but two businesses that didn’t have an effective organization for many years. So what happened to cause that to change?

Two books were literally life changing reads for me. Michael Gerber’s book, The E-myth Revisited, was one. The other was First Break All the Rules by Marcus Buckingham.

If you don’t like reading, download the audio versions. They are both business classics. And they are both must-reads.  I am grateful to both writers and their teams because their books contributed tremendously to our success.

The E-myth: Giffin & Crane had been in business for 15 years before I read The E-myth. Our NAHB Builder20 Club made it an assignment to read before our Fall 2001 meeting. I was resistant to the idea “because I knew how to organize a business”. At least in my head I did.

So I didn’t read it until I was on the flight across country to attend the meeting. And as I read the book, I thought, “My God. I should have read this 10 years ago. It would have made my life so much easier.”

In a nutshell, Gerber states in the E-Myth, that EVERY business has 5 essential positions, whether you know it or not.

They are:

                                                                                CEO

VP of Marketing and Sales       VP of Admin              VP of Operations                   VP of Finance

Each positions has separate and unique duties and skill sets. You need to define what they are. Those duties and skill sets need to be listed for each position. Don’t worry. Those descriptions are easily available on the internet. 

The primary thesis of First Break All the Rules is that you’ve got to recruit people whose natural traits and talents are strengths for each of those positions. So you need to define the type of person who will fit most naturally into those roles.

For instance, you wouldn’t put a carpenter into the role of bookkeeper. Nor vice versa. The carpenter enjoys building, action, activity and movement. The bookkeeper likes to be focused, still and quiet as they solve number problems. The two personality types are very different.  Sounds easy enough, but as you develop your organization, slicing of the diamond of personality facets becomes more refined.

I know. You’re saying, “I’m just starting out. I can’t afford to hire all those people.”

 And you’re absolutely right. You can’t. 

So when you’re starting out, your name appears in every single box. And as you experience working in each of those roles, you start refining what each of those jobs’ duties and requirements are. And you start looking for the person with the right personality traits and skill sets to fill those positions as you grow your organization.

The first and highest priority is to recruit someone with the right traits to fill the Finance role. But at least now you know what’s involved and you have a way of checking the work. You don’t need to do the work. You don’t need to micromanage the work. You need to be able to check the work.

Remember Cash is King. It’s possible for a short period of time to operate a very profitable business, at least on paper, AND go broke.  If you can’t collect cash in a timely fashion, your Accounts Payables and Liabilities quickly spiral out of control. And if you’re like me, you are a control monster or you wouldn’t be operating your own business.

So, having a proper set of procedures and processes for billing your clients, paying your trades and vendors, and job costing every single job to see where you made or lost money is crucial for long term success. And if you’ve hired the right person for your Finance role, they will enjoy creating those procedures and processes because that’s the type of person they are.

When you have that position filled, and as the company grows, then you can consider who and what’s needed for Ops, Marketing and Sales, and Admin. You may discover that you enjoy certain components of each role and want to continue to be involved in those. You may want to let go of some roles completely, but since you’re CEO you will always want the capability of vetting that their work is getting done effectively.

As your business evolves, and business always evolve, the job requirements will as well. So without a list of requirements and activities for each role, you create chaos and confusion. As CEO, you need clarity and confidence.

Eventually, your goal is to get to a place where the business can run effectively without you. It might take a decade. Or 20 years Or perhaps, like me, most of your lifetime to get there, but that is the end goal. Because when you’re not needed, then you know you’ve built a business that has value, transferable value. Meaning you can sell it for a valuable consideration. And that is part of your long term retirement planning. But that’s another chapter.

Just remember, as Michael Gerber says, “If you’ve created a business that can’t run without you… then you haven’t created a business, you’ve created a job! And worst of all, you’re working for an idiot!”

*****

Find out more at The First Baby Steps