How to Build a Business That’s Independent of You

Learn how to build a business that is independent of you and has value – even when you’re not involved. Now’s the time to break free from the “Sucked in Syndrome”.

 

Do any of these statements apply to you?

1. You are putting more and more energy and time into your business but not seeing the proportional increase in output from your efforts.
2. You have not done any planning, training or systems development in your business in the past three months.
3. The thought of bringing in new employees or part-time workers to help deal with an increased workload seems like more effort than it’s worth.
4. Your business is almost totally dependent on the effort, ability and tacit knowledge of one, two or three people. If any or all of these people were to leave you would be in serious trouble.
5. If you won a two week holiday to your dream destination that you had to take in the next month, you would seriously consider not going for fear that your business would not survive without you being there.

The more of these statements that you identify with the higher your chance of falling prey to the “sucked in syndrome”. The sucked in syndrome is the name that I have given to describe a situation in which business owners and entrepreneurs feel that “it is just too much”. They are “being pulled in too many different directions”.

The challenge of serving customers, paying accounts, managing employees, sending out invoices, answering emails and budgeting is totally overwhelming. A very high proportion of business owners feel this sense of being overwhelmed at a point in the business development process. Let’s try to understand why.

When entrepreneurs launch a new business, they initially do a great deal of the work themselves. If they start a software company, they write code; if they start a retail business, they serve customers; if they start a bookkeeping business, they balance accounts; if they start a training business, they deliver workshops. As a new business owner they also need to take care of a multitude of other things such as accounting, marketing, sales, hiring, training and customer service. Initially this works out fine.

With only a few customers, most early entrepreneurs find time to deal with all these responsibilities and they typically enjoy the diversity of tasks. They enjoy the feeling of being master of their own destiny and are willing to work hard to see their dream come to fruition. In this phase of the business development process there is typically a strong relationship between effort and output. The harder one works, the better the results.

But because the entrepreneurs are enjoying what they are doing and because they are motivated by a sense of ownership, they keep acquiring new customers. Initially new customers are a blessing but slowly the entrepreneurs begin to feel worn down and vulnerable.

The challenge of serving customers and taking care of everything else in the business becomes taxing. They start missing deadlines, fail to send out invoices, the books fall behind, they don’t have time or energy to hire new employees and the employees that are in the business are complaining that they need more guidance.

The natural response in this situation is to work harder. In the initial phase of business growth, hard work paid big dividends but now hard work is just not enough. Even though the entrepreneur puts in more and more effort, the effort does not necessarily result in output and the output to effort ratio starts declining (see the diagram). The entrepreneurs just do not have the capacity to keep operating the business in this manner yet they do not know how to get out of this rut. They have fallen prey to the sucked in syndrome.

The mindset for avoiding the sucked in syndrome – or for getting out of it – is very different from the mindset for solving problems in the business development process. Up to this point, the natural and fruitful way to solve problems was to work hard, to put in more hours, and to do more in the business. The mindset for avoiding or getting out of the sucked in syndrome is to spend more time working on the business and to spend less time working in the business.

 

Working in your business means operating like an employee, doing the day-to-day tasks that are required to keep the business running. Working on your business means creating your business as something that is separate from you, something that is self-sustaining without your input.

When working on the business you establish the direction for the company and develop the systems and processes so that the business runs smoothly even if you are not there. You train and empower others to do the work in the business. Michael Gerber, the best selling author of the book The E Myth Revisited, suggests that the most constructive way to frame the concept of working on your business is to “Pretend that the business you own… is the prototype for 5 000 more just like it… In other words pretend that you are going to franchise your business.”

The Franchise Mindset

Adopting a franchise mindset – pretending that you are going to franchise your business – is one of the most constructive pieces of business wisdom I have ever come across. A franchise (e.g. Nando’s, MacDonalds, Mugg & Bean) is a business format that is replicated over and over again. The founder of the franchise creates a system that delivers a product within very particular parameters (quality, taste, experience etc.) at multiple locations across the globe. To do that, the creator of the franchise needs to:

1. Understand exactly what value the business should deliver to the customer
2. Create a set of processes that can be operated by people with the lowest possible level of skill
3. Capture all processes and practices pertaining to the operation in an operations manual
4. Provide training and development to new employees so that they are able to effectively learn the system
5. Be deliberate about the culture they wish to create within the organisation
6. Specify how the brand is to remain consistent across locations

Although, on the surface, it may seem simple to adopt the franchise mindset, it is difficult to implement effectively. But if done properly it can have a massive impact on a small or medium size business. The remainder of this article will provide you with practical tips for adopting the franchise mindset.

Five Focus Areas for Adopting a Franchise Mindset

If you were going to start franchising your business in the next few months, there would be five aspects of the operation that you would need to focus on intensely to get it to the point where it could be replicated multiple times over. Even though you may have no intention of ever franchising your business, by focusing on these elements of operation, you will be creating a business which is independent of you and one which has value even if you are not involved.

 

1. Planning a Goal Setting

If you were going to replicate your business many times over, you would need to be clear on what you expect each operation to achieve in both the short-term and the long-term. As a business owner it is easy to become so busy just trying to get through the day that you lose sight of where the business should be heading in the future. Goals and plans drive behaviour but as the leader of an organisation becomes more and more busy it is easy for them to stop doing what is important (setting and monitoring goals) and to only focus on what’s urgent (getting orders out, dealing with complaints etc.). When this happens, everyone in the firm loses direction and focus. They become less and less efficient in what they do on a day-to-day basis and the organisation gets caught in a downward spiral of expending wasteful energy.

Take action: To assess your focus on planning and goal setting, consider these questions:

• Do you have goals for the next 90 days, one year, three years and five years?
• Do your partners and employees know what those goals are?
• Do you have a plan in place to achieve each of those goals?
• Do you have measures and tools to regularly assess your process in relation to your plan and your goals?

 

2. Systems & Processes

In the very early phases of a business development process, when only one person is responsible for a task, they can over time figure out the best way of performing that task. They learn through experimentation and slowly become an expert at what they are doing. A problem arises when that person leaves or wants to go on holiday, or when they are the business owner and they have more pressing issues to deal with, or when more and more people get hired to do that same job but need to go through the same drawn out learning process to acquire the knowledge and skills.

There comes a point in a business’s life where the processes that have been developed over time need to be captured and documented. This entails creating an operations manual for the business. If you were to franchise your business you would need to pass on a manual describing all the major processes and systems in the business to the franchisee. Developing such a manual forces one to carefully consider whether all elements of a process add value and to identify the best person to carry out such a process.

Take action: In adopting a franchise mindset in your business, consider these questions:

• Do you have an operations manual describing the major systems and processes in your business?
• Have you reviewed those processes with the people carrying them out to look for inefficiencies and redundancies?
• Have you considered whether a person with the appropriate level of skill is carrying out each of the processes in the business? In most cases you should aim to have the person with the lowest level of skill necessary carry out a task. If people are too skilled for the tasks they are carrying out you are likely to incur excess cost and over-skilled people will get bored and frustrated.

3. Training & Development

One of the fundamental mechanisms used to empower others is training and development. A clear sign that a business is falling prey to the sucked in syndrome is when none (or very few) of the people in the business have been on any kind of training or development activity in the past six months. People in a business are either growing or they are becoming stagnant and unproductive. Training and development programmes are one way to keep them engaged and on an upward growth path.

If you were going to franchise your business, you would need to spend a significant amount of time training other people. This is one of the critical tasks for a business owner of an expanding business. Whether you are conducting the training or overseeing the process through which others are trained and developed, to adopt a franchise mindset, you need to take ultimate responsibility and ownership of the training and development process.

Take action: To assess the effectiveness of your business in this domain, consider the following questions:

• Have all your employees been on some kind of training activity in the past year? Who has not been exposed to any training and development? Why?
• Do you have informal activities within the organisation that encourage people to develop and grow e.g. brown bag lunch discussions, book clubs, mentoring arrangements, reading and discussing Entrepreneur magazine articles?
• Have you been on any kind of training activity in the past year?
• Have you spent any time passing on knowledge and training others in the organisation in the past 12 months? Could you do more?

 

4. Culture & Morale

One of the biggest challenges to creating a franchise is replicating and distributing an organisation’s culture. To ensure the right culture and employee morale across multiple locations, one needs to be very clear on the norms, values and assumptions that are relevant within the organisation.

Organisational culture can develop a life of its own. Therefore, if as the leader of a company, you pay no attention to culture, you are likely to wake up one day and discover that the norms, values and assumptions that are driving behaviour in your organisation are out of alignment with what you want them to be. A leader should own the culture of his or her organisation and as the organisation expands, so the leader should pay more and more attention to the culture that is emerging among employees.

Take action: To critically assess the culture in your business, consider the following questions:

• What are the values of your company? Would all your employees agree?
• What sort of culture are you trying to create in the organisation? How is this culture demonstrated in your behaviour and in the behaviour of the other employees in the organisation?
• What are the things that carry and retain the culture of the organisation – language, rituals, stories, traditions, people or activities?
• Is the culture and morale of the organisation getting stronger or weaker? Why?

 

5. Brand & Reputation

For anyone franchising an operation, one of the biggest risks is the potential destruction of the brand and/or reputation of the business. Prior to franchising a business, the franchisor will therefore need to be absolutely clear about the important elements of the business’s brand. In some of my dealings with Nando’s I have discovered that this is the most critical element of the franchising arrangement for them. They can’t allow a franchisee in a far off corner of the country to make a decision that puts the Nando’s brand in jeopardy. Therefore they are absolutely clear about what the Nando’s brand means and how it should be represented in every aspect of the business arrangement – signage, menus, greeting and customer service.

If you wish to build a business that is independent of you and has the ability to expand and grow in an effective way, you need to be explicit about what’s important for its brand. You need to consider both tangible elements (logo, colours, signage, design, communications, mantra) and intangible elements of the brand (brand values, behaviours, routines, service delivery).

Take action: The following questions will help focus your attention on brand and reputation related issues:

• What does the brand of my business stand for? Would employees agree? Would customers or the public agree?
• What are the strongest elements of my brand? What are the weakest elements and risks of my brand?
• What elements of my brand do I expect to evolve and change over the next three years? What elements of the brand should remain steadfast?
• What kind of employees are best for my brand?
• What kind of customer does the brand of my organisation appeal to? Is this my target customer?

The Challenge
Adopting the franchise mindset is difficult when you first start out. After months or years of being manically busy with day-to-day issues it is challenging to take a step back and focus on the bigger picture. It takes immense discipline to work on your business and not be tempted to fall back into the trap of working in your business.