When you’ve spent years building up your own business, the idea of making yourself redundant from the company can seem like a rather strange concept. But if you’re going to get the very best from your efforts, and lead your people in the most effective way, you need to learn to step back from the day-to-day operations.
Mark Hewitson, Partner at Haines Watts Esher, outlines the benefits of stepping back from the business, and how to create an independent and saleable company as a result.
Stepping back from the day-to-day business tasks
As an owner-manager or founder, you probably see yourself as an essential and irreplaceable part of your business.
In my experience, most owners see the business as an extension of themselves. So imagining a scenario where YOU are no longer the central operational driver in the company can seem like a very scary prospect.
This business is your baby, a baby you’ve nurtured and grown – so stepping back and letting other people take on the key operational and administrative tasks can be terrifying.
But to move forward, you’re going to need to work ON the business, not IN the business – so, taking on a strategic leadership role is going to be critical.
Adapting to a strategic leadership role
What your business needs is an owner that leads from the front. A strategic and forward-thinking leader who’s got the vision, goals and strategic planning chops to help grow the business, bring stability to your future and generate profits.
I’ve seen people adapt very well to this shift from ‘operational’ to ‘strategic’ leader. And I’ve also seen people fail to adapt. But the transition is an essential one.
There are many reasons for making yourself redundant from the everyday running of the company. But one of the key reasons is the underlying value and worth of the company. If you’re so intrinsically embedded into every single process and operation within the business, there really is no value to sell once you’re removed.
In essence, if YOU are the business, the company’s intrinsic value will suffer.
Passing on the baton to your team
To take on your true role as the strategic leader of the business, you’re going to need the right people around you. So, building a talented, proactive and ambitious team is critical.
If every moment of your working day is taken up with fighting fires and sorting out operational and logistical issues, you’ll have no time left to focus on the bigger picture.
With too many everyday tasks reliant on you – as the owner – you create what is, essentially, a glass ceiling to the underlying efficiency and scalability of the business.
To set the best foundations for stepping back from the business:
Identify key processes and operational systems
The way every business works is different. And much of the inner workings will exist only in your head – not on paper. The first step, then, is to sit down and record the ‘how’ of how your business functions. Record each process in the operational, supplier and customer delivery chains, and where you (as the owner) currently fit into this structure.
Systemise and notate all procedures
To hand on the baton, your management team are going to need clear instructions and the right training. So it’s important to notate all underlying procedures, with clear easy-to-follows steps on how each stage of the business functions. This systematic approach gives your management and subordinates the rule book needed to get the job done.
Delegate key tasks to your team
To effectively lighten your own workload, you need to get used to delegating. Divide the key operational, administrative and financial tasks and assign each area to one of your management team. By delegating these tasks to your managers, you reduce your own everyday to-do list – and you also increase the confidence and ability of your team, by giving them extra responsibility.
Learn to manage, not do
This is the really hard bit. As the owner, you’re innately used to taking responsibility for every element of the business. The key to becoming an effective leader is learning to manage, not do. Delegate, provide vision and trust your managers to get the job done right – and resist that urge to micromanage.
Getting external guidance and support
On paper, this process of standing back and looking at your business objectively sounds easy. But it’s often the case that getting an external viewpoint will pay greater dividends.
When you’ve grown a company from nothing into a valuable business proposition, it can be hard to be objective. Often, you miss the flaws, you don’t see the key opportunities for change and you take an ‘if it ain’t broken then don’t fix it’ approach to things.
We’ve recently been through an 18-month business improvement with one of our clients, and the value of this exercise for their business has been tangible.
We’ve worked with the owner and company directors to:
- Give an external view of their business structure – so the directors have a clear view of their business model and the effectiveness of all operational elements of the company.
- Review their customer value proposition – so they know what customers want, what their products/services offer and how to improve that value for their clients.
- Assess their employee value proposition – giving them a better view of how to create good employee engagement and motivate their workforce.
- Give the owner a more hands-off role – allowing the owner to step back and focus on higher-level strategy.
There’s no one ‘silver bullet’ for getting this process right. But a key part of the value of an external adviser is having someone who will ask the tough questions.
Getting ready for a company sale
Making yourself redundant, and stepping into those strategic leader’s shoes, is a vital component when growing the business. But it’s even more important when you’re planning to sell up and make an exit from the company.
Selling your business requires excellent planning. And it’s not a process that can happen overnight. For the business to hold true value in the market, the company needs to run independently from the owner.
As the owner, you’ll need to:
- Have a clear goal and plan for your sale – are you planning to sell up and start a new venture, or is the idea to retire for good? Whatever the goal, you’ll need a defined plan of action, with clear milestones to track and monitor over time.
- Focus on the quality of your earnings – getting the best return on your investment will be important when you finally agree a sale. So there’s a need to nurture the underlying value and worth of the business, and to take tax planning etc. into consideration.
- Declutter and tidy up the business – handing over a tidy and organised company to a new owner is a big consideration at this stage. As part of the handover from owner to management team, a deep clean of all your systems and processes is advisable, chucking out all the rubbish and streamlining the overall efficiency of the company.
Helping you become the captain of your ship
Making yourself redundant from your own business may seem like a crazy idea. But there’s real value to becoming a true ‘captain of the ship’, rather than rushing from deck to deck trying to run the entire ship single-handedly.
As the captain, you should be at the helm, watching the course of your business ship and directing your crew in the most effective way.
Having this high-level overview is what separates the true leaders from the stressed-out, time-poor owner-managers.
If you’re looking to take the next step in your company’s evolution, then it’s time to make yourself redundant and start the next chapter of your business voyage.
Talk to one of our Business Advisors about stepping back from your business.
We are a firm of chartered accountants, tax and business advisors based in Surrey.
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