To Scale and Grow Your KC Business or Startup, Build Efficiency with a ‘Pyramid’David Cawthon
By Jack Harwell, Kansas Small Business Development Center adviser
Have you survived the startup phase of your business? Are you looking to grow to the next level?
The truth is (and you may not be ready for it) if you want to scale your business, you’ll need to rely on others to get things done. Yes, growing from survival to success means you’ll have to reduce how much you’re involved in the day-to-day operations of your business. You simply can’t do it all yourself AND grow your company. A fast-growing business can overwhelm even Superman because it’s hard to keep up with the pace of activity and to have the amount of detailed knowledge you’ll need to keep the company on course.
And so, at some point you have to shift from working in your business to working on your business.
To be clear, a startup requires the founder to participate in all aspects of the business because in the early stages, the money to hire employees is scarce. Plus, you should have a hand in shaping every behavior and attitude of the fledgling business so it grows up in your likeness. But as the business grows, you soon find that tasks might not get done. Quality can suffer, and there’s no time to fix problems.
An obvious solution is to eventually hire more people. But this is only the start. You also need a plan for how and where to plug these resources into the business operations.
The Hierarchy of Owner Participation is a good way to look at your current participation and develop a strategy to transition from doer to manager, moving up the pyramid.
Hierarchy of Owner Participation
The Hierarchy of Owner Participation defines five levels of activities in a business where an owner can participate: Backroom Operations, Product/Service Delivery, Customer Acquisition, Relationships and Strategy.
Backroom Operations involve activities that don’t generate revenue but are important for the business to operate. Examples: Making sure the books are accurate and updated, taxes are paid on time, restrooms are clean and other tasks.
Product/Service Delivery includes all activities tied to the delivery of the company’s products and/or services.
Customer Acquisition involves sales and marketing activities.
Relations include all relationships between the business and its internal and external stakeholders. Those can be customers, vendors, employees and community members.
Strategy involves all decisions regarding long-term direction and the resources needed to succeed in the mission and vision.
We’ve visualized all this for you on a pyramid that has multiple levels and two considerations as you move up and down.
The arrow to the left of the pyramid shows that assigning tasks to others at the lower levels is faster and easier than those at the higher levels. These tasks are simpler to train and are not as critical to the success of the business. As you move up the pyramid, tasks become more specialized. Employees will need more training and experience, which takes time to find or develop. At the lower levels, the amount of opportunities to extract yourself are also more plentiful.
Tasks at the higher levels are more important to the success of the business and rely more on your involvement as shown by the arrow to the right of the pyramid. You bring more value to the business at these levels. These activities have more impact on the success of the business and require input from the owner to remain true to the mission and vision of the company.
There are no strict lines that define each level, and every business has its own set of activities that would be a good fit for certain levels. Still, the categories in the pyramid apply to any business.
Now, use this hierarchy approach to develop a Replacement Strategy for each level. These strategies should define how you will replace yourself with other resources. Start at the bottom for some quick wins that you can build on. Here, you can develop your management and delegation skills with a lower risk of failure.
Replacing yourself at the lower levels will give you more time to focus on the higher-level tasks where you can add more value. As your focus shifts, plan your next move up the pyramid. You’ll learn how to manage resources as you climb the pyramid, whether you hire or outsource.
Want to learn how to put all this into practice? Get in the GAME, active learning sessions designed to help growing companies get focused, set a growth agenda, make decisions and take action. Contact the Small Business Development Center at Johnson County Community College for more information.