Remember how the Global Financial Crisis (GFC) wreaked havoc on stock markets, financial institutions and businesses whose profitability and growth forecasts were bedevilled by unanticipated, rapidly unfolding events? While Australian businesses and workers got off lightly, compared with their counterparts in other developed nations and economies, the downturn nevertheless generated a wave of lay-offs, as Read More…
How to take a year off without damaging your business
Mon 23 September 2019 - 3:30 pmEntrepreneur | Featured | Leadership
The holy grail for many business owners is to get to a point where they don’t have to work in their business, giving them the freedom to pursue other interests and even take an entire year (or longer) off. Many owners harbour dreams about going to live in another country for a year, or spending six months travelling Australia, or nine months travelling the world.
Regardless of the business owner’s specific ambitions, taking significant time out of the business is not only possible, it’s highly desirable, because it shows that the business is in a strong position to deliver value to the owner.
Too often, Australian business owners feel stuck in the day-to-day rut of running the business. They worry that, if they were to take time off, the business would collapse (or at least stumble) without them. Therefore, the first step towards that extended holiday is to position the business to run without the owner’s minute involvement.
This requires six essential elements:
1. There’s a strong manager or CEO, and everyone knows their role
Stepping back from the business means the owner must take on more of a chairperson and shareholder role, which means someone needs to step into the tactical leadership role. This means choosing a qualified general manager or CEO and giving them the time and tools they need to gel with the team and exercise real leadership.
For the team to succeed, every person must know their role and responsibilities, and be accountable for them. Business owners could start by listing all the activities within the business, from the smallest to the most significant. Then, they should put someone’s name next to each of these activities, ensuring the work is parcelled out to the most appropriate staff members.
It’s important to ensure everyone agrees on what they’re accountable for. This could take the form of a one-page position description with all the accountabilities and key performance indicators listed and signed off. This gives employees and managers a touchstone to make sure every person in the business stays on track.
2. Processes are written down rather than held in people’s heads
Subject matter experts can be valuable in a business but, if important knowledge sits in one person’s head, the risk is enormous. It’s crucial to make sure the information about how things are done in the business is defined and codified so everyone can follow the same processes and get predictable results, even if they haven’t been in the role for as long as others.
Formal knowledge-sharing is essential to ensure that new employees can become productive much sooner and existing employees can work more efficiently without reinventing any processes.
3. The business has a strong culture of performance that lives in everyone
A strong culture is one that all staff members not only agree on but bring to life in their behaviours and attitudes. Strong cultures can grow organically but it’s important to articulate the key points of the desired culture so there is no confusion or ambiguity for staff. And, business owners and other leaders within the business need to bring that culture to life through their actions, their words, and even through explicit communications such as posters on the walls or incentives for cultural compliance.
When the culture is strong and embodied in all staff members, the business owner can be confident that it will live on regardless of whether they are physically present.
4. Financial controls are in place
The business owner needs to ensure that they have put in place strong financial controls and appropriate rules around financial decision-making. This means the business needs to have reporting tools and a clear expectation about transparency and control.
These rules should cover everything from managing daily cashflow and expenses to annual budgeting and forecasting. Rules create consistency and predictability, which are essential in the absence of the business owner.
5. A business dashboard is working well and readily available from any location
Financial reporting and profit-and-loss (P&L) statements are a great indicator of the business’s health but they’re also retrospective reports. They can only tell the business owner what has happened in the past month, quarter, or year. For effective business planning, it’s essential to have a comprehensive dashboard that includes information about sales leads being generated, customer satisfaction information, and employee feedback. A good dashboard will also include some subjective information such as observations about new opportunities or potential risks.
This type of information is more predictive and can help the business owner get an early indication of potential issues. They can then intervene to address these issues before they become significant.
6. Communication is strong across the business and information is shared openly
Businesses are more successful when all members of the team have the information that they need to do their jobs well, and no one feels uninformed. Sharing the right information with the right people at the right time creates a culture of trust and empowers employees to succeed. This can happen through regular meetings, calls, emails, and the availability of dashboards.
While the business owner is away, it’s important for them to meet with the board or senior leadership of the company once a month. This should be sufficient to ensure everything remains on track and owners can relax and enjoy their time off. Ensuring this governance is strong is the final piece of the puzzle.
Without the strong governance and monthly meetings, it’s possible that the business could start to falter without the owner being aware. Dashboards and monthly meetings provide an early warning so that owners can address issues appropriately and in a timely fashion.
When all this is in place, the next step is for business owners to decide where they want to go and how they want to spend their time, secure in the knowledge that their business can thrive in their absence.
Andrew Laurie is an entrepreneur, CEO, and elite business coach.