Griffin Sharp: Make Yourself a Non-Essential Worker

The deep personal involvement required to run a small business can be both the best and worst thing about ownership. An owner with their hands in every aspect of operations will feel the pride and joy of business successes far more tangibly, but is also likely to find themselves stretched thin as the years wear on. Serving as not just a manager, but in many cases also an accountant, recruiter, HR manager, general contractor, or salesperson would be enough to leave anybody exhausted. 

But what if there was a way for owners to have it all? What if you could feel the same sense of connection and business satisfaction, while also having the flexibility to take a day (or a week, or two!) off? And what if this solution not only provided greater freedom to you as the owner, but also made your business more valuable? That kind of win-win proposition would seem almost too good to be true, right?

It might be surprising, then, to hear that all of these lofty goals can be achieved by…delegating.  Stepping back. Doing less.

Seem counterintuitive? Maybe at first, but the results can be real – and eye-opening. An owner who commits to development of their employees, empowering them to begin to take on the many tasks currently borne by the owner alone, will see all of these benefits over time.

Let’s face it – there are rarely enough hours in the day for everything on your to-do list. And most businesses have smart people on the roster who want to learn – most owners started in a truck or a basement themselves. So, if you’ve got managers or everyday staff that you trust, why not see what they’re capable of? Many financial duties can be learned by an experienced CSR or Office Manager.  Service or delivery department leadership can often be developed in the responsible technicians and drivers you already have. People management skills? Well, those are built from competence, confidence, and the trust that other employees develop in their skilled peers. And as your employees grow into these new shoes, you’ll see the added benefit that delegation of some responsibilities will enable a tighter focus on the items still on your plate. That means that fewer hours spent on accounting tasks, approving install estimates, or scoping a new delivery truck order can mean more hours spent with customers, other employees, or even at home with family.

To be sure, this isn’t a quick fix. Building new skills in your office employees or field staff isn’t a process that happens overnight – particularly when new responsibilities differ significantly from what they’ve done in the past. Mistakes may happen. For motivated employees that are interested in growth, though, the learning curve might be shorter than you’d expect. And the impact goes beyond operations – it can also result in a higher sale price for the business when retirement rolls around.

Let’s take a simplified example of an oil business with $1 million in EBITDA. In the first column of the table below, we consider a business owner that has kept tight control of the business; this owner has a strong, well-staffed business, but wasn’t ready to entrust key responsibilities to his employees. When this owner retires, nobody at the company is likely to be able to step up to replace him. A buyer of the business will instead need to hire and install a new general manager.

In the second column we have the same business under a different set of assumptions. This owner has trained existing employees in many of the key responsibilities of management; they’re capable of running the business when the owner is away, and they’re capable of stepping up when he retires. A buyer wouldn’t need any new employees to run the business, and instead can simply promote a skilled employee already on staff.

Below we examine the value of the business to an acquirer under each set of assumptions:

In our first example, the owner’s compensation gets credited to Adjusted Business EBITDA, but this benefit is then cut in half because the buyer needs to backfill operations with a skilled general manager. In the second example, by contrast, the buyer incurs a lower cost to promote a well-trained existing employee – nobody new is needed, and the business value retains much more of the benefit of the owner compensation adjustment. Better still, the business retains a familiar face at the helm and a level of continuity for remaining staff. At the end of the day, this difference turns out to be worth nearly $400,000 to this owner – not bad for an investment that had already made their life easier in the first place.

So maybe you have an Office Manager that’s trusted, organized and always on the ball. Perhaps your young lead technician is eager to learn anything you’ll teach. Progress can start small, like walking these promising employees through the P&L, having them take on delivery planning items, or giving them oversight of additional employees. If things go well, providing these employees incremental exposure to all aspects of the business and its management responsibilities can build a knowledge base that will enable them to make good decisions even in new or unfamiliar situations. Before you know it, you might find yourself taking December trips to Florida, secure in that your team can reach you by phone if they need to – but that they probably won’t need to.

It can be difficult to relinquish control, especially over critical business tasks like ordering fuel, approving estimates, or setting pricing. But an owner should weigh this discomfort against all the upside potential: the satisfaction of seeing employees grow and take on new opportunities; a higher future sale price for the business; and most importantly, the ability to spend more time with family, friends and passion projects, confident that your business is in good hands. Something that seemed unthinkable might instead turn out to be long overdue.— Griffin Sharp

Griffin Sharp is a director at Cetane Associates (www.Cetane.com), which provides financial advisory services to business owners in home services industries.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button