How to Build a Business That Works Without You

How to Build a Business That Works Without You

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Do any of these statements apply to you?

  1. You’re putting more and more energy and time into your business but not seeing the proportional increase in output from your efforts.
  2. You haven’t 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 a few people. If any or all of these people were to leave you would be in serious trouble.
  5. If you won a dream holiday 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’.

Related: Grow Your Business By Building A Community

The mind-set for avoiding the ‘sucked in syndrome’ – or for getting out of it – is very different from the mind-set 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 mind-set 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 separate from you 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.

 

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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 mind-set

Adopting a franchise mind-set – 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 (Nando’s, McDonald’s, 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 of the operation in an operations manual
  4. Provide training and development to new employees so that they 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 mind-set, it’s difficult to implement effectively. But if done properly it can have a massive impact on SMEs and lead to real growth, and building a business that makes more profits, has a higher cash flow, and can one day be sold. It allows you to step away from your business and have a better work life balance while all of this is happening.

Focus areas for adopting a franchise mind-set

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’re not involved. Music-stand

1. Planning and 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’s 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 busy it’s easy for them to stop doing what’s 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 efficient in daily tasks 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 and 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 it.

They learn through experimentation and slowly become an expert at what they do. A problem arises when that person leaves or wants to go on holiday, or when they are the business owner and have more pressing issues to deal with, or when more people are hired to do that same job but need 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.

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?
  • Have you reviewed those processes with the people carrying them out to look for inefficiencies and redundancies?
  • Have you considered whether an appropriately skilled person 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 you are likely to incur excess cost and over-skilled people will get bored and frustrated.

Related: How to Build a Business to Sell

3. Training and 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 growing.

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 responsibility and ownership of the 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, for example, 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 to others in the past 12 months? Could you do more?

4. Culture and 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 it expands, so the leader should pay 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 other employees?
  • What are the things that carry and retain the culture – language, rituals, stories, traditions, people or activities?
  • Is the culture and morale getting stronger or weaker? Why?

5. Brand and reputation

For anyone franchising an operation, one of the biggest risks is the potential destruction of the brand of the business. Prior to franchising a business, the franchisor needs to be clear about the important elements of the brand.

In some of my dealings with Nando’s I have found that this is the most critical element of the franchising arrangement for them. They can’t allow a franchisee to make a decision that puts the Nando’s brand in jeopardy. They’re absolutely clear about what the Nando’s brand means and how it should be represented in every aspect – 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 brand’s strongest elements? What are it’s weakest elements and risks?
  • What elements do I expect to evolve and change over the next three years? What elements should remain steadfast?
  • What employees are best for my brand?
  • What customer does the brand appeal to? Is this my target customer?

Related: How To Expand Your Business To 5 Times Its Size In 5 Years

The Challenge

Adopting the franchise mindset is difficult when you 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 avoid the trap of working in your business.

Greg Fisher
Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.