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Running a business requires management. This is no news. Whether you run a small or big business, you need to be in control and to be in control you need to follow a certain set of management principles and instruments, which provide you with the necessary information to make decisions, informed decisions that is. Just how much management is required depends on the size of your business. There are many investors who have a good business idea and start off on a small scale. It normally takes time for any business to recover the initial investments and to make some real profit. Let us assume that the new business is beginning to pick up. By this I simply mean that the business is beginning to get customers and sales figures are slowly growing. Tilahun – I am referring to nobody in particular – who started the business, is pleased by these developments and is anxiously looking forward to making some profit soon. He is the owner and manager at the same time. He is the boss, it is his business. He has all the information he needs and he makes sure he alone has access to it. After all, others might just run away with it. He keeps all the records, on his stock, his expenses, the income, taxes to be paid, the lot. He also does all the advertising and controls the production process. He is busy. As the business is growing he is now in a position to employ some staff, which he expects will be able to help him a bit. He needs a secretary, a book keeper and a few sales girls. As he cannot afford higher salaries, he goes for cheaper personnel, who are not really qualified for the job, one of them a distant relative who has no job. They will catch up, is his assumption. To his disappointment, they keep doing things wrong though. He is frequently confronted with blunders by any of them. The accounts don’t reconcile, correspondence is not followed up, customers complain about the service. Tilahun gets upset every time something goes wrong and cries that it is easier to do it himself. He hires and fires but the situation does not change for the better. Until he managed to get a temporary accountant, who knows what she is doing. After some time, the accountant makes a few suggestions how to improve the administration. Tilahun gets upset again: “How dare you interfere with the way I manage things here! This is my business! Just do your work!” The accountant leaves the business and things go back to what they were before. Tilahun’s business has the potential to grow, which is what Tilahun wants as well. But how? It just doesn’t seem to work. The customers in their own way contribute to this state of affairs. They want to see the boss, they want to talk to the owner, who takes the decisions.
If a business has the potential to grow, the pace of the growth will be limited by the amount of management time that is available. And with Tilahun doing it all by himself, it is clear that he doesn’t have much time left. As long as Tilahun holds on to this way of running his business, things will not get any better. So what are some of the factors that stand in the way? Well, some business owners simply enjoy the position and the power they have created for themselves and they find it difficult to share this with others. We also see often that the staff that are employed are indeed not qualified for the job. This may save money, but doesn’t help in the long run. As employees make mistakes, the owner/manager may find it easier to keep on doing things himself. Not everybody has the gift to teach and coach staff how to do it right. Disappointments and mistakes in the past sustain the state of affairs. Finally, the employees feel uncertain themselves. They are afraid to make mistakes and they do not want to take responsibility. They continue referring every decision and initiative to the boss. What can be done? In the first place, more time to manage the business needs to be created, by employing professionals who know their job and who can manage their part of the business. A growing business needs professionals like a production manager, a marketing manager and a finance director. Secondly, they must be included in making strategic decisions for the company. The habit of working with a management team needs to be developed. With a professional management team there is more time for management and thus a better chance to do things right. It will allow the owner to concentrate more on leading the company. Remember, leadership is “doing the right things” and management is “doing the things right”. With a professional management team in place, responsibilities can now be delegated. Delegation means entrusting authority to somebody else. It is here where most business owners fear to let go and find it difficult to trust others enough to transfer power. And yet, without delegation the future will not get any better. A few suggestions here:
Make sure your employees have the capacity to carry out delegated tasks: hire professionals.
Accept mistakes. Only by making mistakes we will learn.
Really entrust authority to them. Don’t hover around or go checking behind their backs.
Include them in your management decisions; develop a management team.
Provide the support and information they require. Ask: “How can I help?”
Finally, remember that without proper management, there is no real future, no guarantee to continuation. I have seen many projects, organizations, businesses collapse after the initiator left. Even if it was running well, under the sole management of the owner, it collapsed because there was nobody to take over, nobody who knew how to run the business, who the customers were, how the accounts were organized, where the materials came from, what to do in case of a brake down. And that is not what we want, if we want to sustain the business.