Small business owners wear many hats. Which hat fits you best?
When we start our small businesses, most of us will have zero employees to delegate to. So, we basically assume all the hats. The Manager hat, Administration hat, Production hat, Accounting hat, Marketing hat, Human Resources hat, etc.
As the company grows the goal is to start hiring and delegating hats. In a typical service industry, you will see the owner mainly wearing the management hat, as well as the production, accounting and human resources hats.
If a married couple starts a service business together. This is what is commonly known as a Ma and Pa business. It can be quite effective if done properly. You will typically see the wife assume the administration hat, answering phones, collecting data on new prospects and jobs. Entering the data, communicating with both the manager and production, as well as being a resource for the customer. She will also likely wear the accounting hat, or at least share it. Doing all the billing (A/R) and paying all the bills (A/P), Payroll, banking etc. She may join forces with her husband on the Human Resources side, performing such tasks as hiring, reviews, raises, vacation, insurance etc.
The husband will likely be wearing the management (decision maker) hat, as well as the Production hat. Visiting job sites, estimates, ordering supplies, talking to vendors, managing crews, running meetings, communicating with customers and sub-contractors etc.
The hat that usually gets put on the shelf until work demand slows down is the marketing hat. Many companies will try and save money on this hat, however, this hat should be delegated or shared. Most will start marketing when it is slow. This will produce a large trend of peaks and valleys in the financial statements. The marketing hat is the key to continuing to see slow and steady growth in your business. It will also start to bridge the gap of slow months. You will likely always have slow seasons or months. But as a business matures and the brand is more recognizable and trusted. The slow times are not as painful.
As companies grow more hats become available. This is the key to true ownership and business success. An owner who wears the manager, admin, or marketing hat, should set a goal to delegate all those hats at some point, and put on the CEO hat. The CEO (Chief Executive Officer) will likely manage all the manager hats. The manager hats in return manage their specific divisions. While looking at the organization from an eagle eye 30-thousand-foot view. The CEO is no longer working in the business and is now working on the business, and or executing. The CEO is looking at financial statements and trends, organizational charts, data, and meetings and brainstorming with the managers on where to save time, be more cost-effective, and ultimately be more profitable.
Other hats become available with growth, such as the Controller hat. The controller is responsible for all financial ends of the business. The controller may manage a few to several employees depending on the size of the company. A/P, A/R & Payroll may now need 3 people. This in turn may create new hats, one A/P hat, one A/R hat, Payroll etc,. The controller hat may also manage the administration hat as well. Admin or office hats may now work with a human resources hat. The same goes for Production.
The goal is to continue to create, delegate and wear a bigger hat. The CEO may delegate that hat and spend most of his time on a new hat called Visionary Leader.
Regardless, if you are a new business or an established one, the key to steady growth, with little risk, is to hire, train and maintain the best talent possible. Easier typed than done. This is why we see 50% failure rate of all small businesses in the first 5 years.
When starting your business, I urge you to play to your strengths. My strength was marketing. I was able to wear the marketing, accounting and production hat, and the first hat I delegated was the administration hat. With that came slowly, over time, the entire hat.
With that in mind, there are two things you never fully delegate. The checkbook, and the marketing. At the end of the day, I want to know where that dollar is coming from – marketing. And how much of that dollar is left at the end of the day – financials = net profit. CM