Roadblocks to business growth
The Owner’s Trap
Many individuals set up businesses because they are looking for freedom. Freedom from bosses, from routine and drudgery and the freedom to work with who they want, how they want.
Unfortunately, the reality is somewhat different for many business owners, particularly after the first two or three years.
By now, things have fallen into a pattern, and you’re the first to unlock the business in the morning, the last to get paid, and you generally deal with all the complaints and problems. And you’re working longer hours than ever.
Sales slow whenever you are away, and your company seems to have stalled in its growth.
No one is taking responsibility, all phone calls seem to be for you, and staff are hanging around waiting for your instructions.
Being in the Owner’s Trap is bad news for you and bad for your business.
Signs that you are in the Owner’s Trap
- Has your revenue reached a plateau?
- Does your business slow down when you are away?
- Do customers come to you when something goes wrong?
If you were to draw a picture representing your role in your business, would you be at the top of a traditional Christmas tree-like organisational chart, or are you stuck in the middle of your business, like a hub in a bicycle wheel?
Are you able to leave the business for a month without serious repercussions? Do you need to be consulted whenever decisions are required?
If this sounds familiar, you are not alone. Most business owners and CEOs face this challenge at one time or another in the evolution and growth of their businesses.
More than 60% of businesses fail within the first three years. And many that do survive past this start-up stage are firmly in the owner’s trap.
(See our Ultimate Guide to Business Growth for more roadblocks to growth).
Six tentacles of the owner’s trap
Those businesses that go on to be successful and sustainable enterprises have learned the key to standing back from the coal face and focusing on growth.
So why do a handful of start-ups make it through this critical stage whilst others languish and become a lifelong burden for the owner?
Let’s review the six tentacles of the owner’s trap and examine how each may hold you back.
Competence is probably the leading cause of falling into the owner’s trap. Most entrepreneurs start a business because they are technically competent at something. They have a skill and assume that no one else can deliver the product or service as well as they can.
Customers go to the owner for issues, employees go to the owner for decisions, and suppliers go to the owner for orders. The growth of the business ultimately becomes dependent on the amount of time the owner can devote to it.
The owner mistakenly believes they are working hard for the business’s good but, in reality, may be sacrificing family for nothing. When a company depends on the owner in this way, it is not a valuable business.
Striving for perfection
Many entrepreneurs caught in the owner’s trap believe their delivery to the customer must be perfect, creating an immense strain on both owner and business. Good and on time is far superior to perfect and late. Perfection is always elusive and cannot be accurately specified; it lives in the owner’s imagination and holds back productivity and growth.
Fear of delegation
Fear of delegation results from an owner’s belief that no one can perform a task better than them. In this situation, the owner mistrusts their employees, believing they are not as dedicated as them —lack of delegation can result in low employee engagement and high staff turnover, seriously impacting business growth.
Business owners caught in the owner’s trap often know their customers on first-name terms and deal with them directly; they are eager to satisfy their needs and believe they are always right. As a result, customers may become more demanding, requesting additional services that are typically outside the primary offering.
Turnover over profit
Focussing on growing turnover rather than profit can manifest itself with the owner adding more products or services for incremental growth in turnover without understanding the cost of providing such additional services.
This leads the business to experience cash flow issues where the working capital required to grow the company cannot be covered by the low margin return.
Anything more than incremental growth may strain resources and result in a poor customer experience. On the other hand, Scale is about exponential growth in turnover with incremental growth in resources, which is far less risky.
Three cost-effective strategies to help you escape the owner’s trap
If you aspire to build a valuable company, the ability for your business to operate independently without you is crucial.
Let’s explore three cost-effective, simple strategies to set your business on a path to autonomy and allow it to thrive without your constant presence.
1. Narrow down your offering
Most owners can’t replace themselves because a substitute would be too expensive. Trying to replace your breadth of experience would likely require a very high-salaried employee. If you can’t afford to replace everything you do, narrow down your core offering.
Attempting to be all things to all people may spread yourself too thin. Think carefully about your target market and your range of products and services.
When you narrow down your offering, you can bypass the high salary that comes with someone with a wide breadth of experience.
2. Create a question diary
When Steven Davies was building his digital marketing agency, he made a conscious choice every time an employee came to ask him a question.
The easy thing to do would have been to answer the question, but he forced himself to write each question down. He turned that question diary into a business manual that documented how to do every task his employees required.
His manual came in the form of an Excel spreadsheet with 50 tabs, each documenting a specific process.
Challenge yourself to do the same: When an employee asks you a question, resist the urge to answer and move on. Document those queries and turn them into a standard operating procedure (SOP) that enables your staff to develop expertise. The go-to reference will become the manual instead of you.
3. List your employees alphabetically on your site
Most companies list their employees by seniority, with the owner and CEO as the top listing. However, this communicates that you are the most important person in your company, which will trigger everyone, from salespeople to suppliers and prospective partners, to want to go straight to the top by calling you.
An effective strategy for downplaying your role in your company (and getting others to step up and shoulder more) is to list employees alphabetically rather than by seniority on your company’s website. This approach can minimise the spotlight on you. Additionally, using titles like “Head of Culture” and “Head of Product” instead of “CEO” or “Owner” can further obscure your seniority, making it less likely that customers will call you by default.
“Many years ago, my wife and I were starting up our software business. After a few months, we were fully-fledged residents of the Owners Trap. I knew we had to break out somehow, and we took on our first employee, a field engineer. Naturally, it took a few months to get him to become useful.
“One memorable day, the phone rang, and someone asked to speak to someone else but me. I’d never even met the customer! It was a great feeling, although a scary one. I wasn’t the hub of the business any more; I was out of the Owner’s Trap.”
Step out of the owner’s trap and manage yourself out of the business
Find out what’s holding you back
Diagnose what may be holding you back from creating a company that can fully thrive without you.
Take our 15-minute survey and see how you fare against the industry averages. Your answers will also unlock a 21-page report with recommendations on escaping the owner’s trap. Take the survey
“If you can remove yourself from the day-to-day stuff of the business, you can get into your helicopter and see how things look from above.”
Getting your business to thrive without you gives you the freedom to cherry-pick the projects you want to work on or own your business and collect passive income. A company that runs without you is also a valuable, sellable asset if you decide to move on to a new chapter in your life.
Narrowing down, creating SOPs, and downplaying your role on your website are all tactical things you can do today to get your business running more independently in the future.
If you’re experiencing the owner’s trap, or would like further information about the services Business Doctors provide – get in touch.