Are you a prisoner of your business?

The day-to-day reality for most people running small businesses is that they spend more of their time working in the business rather than on the business

When you started your business, the service you provided was excellent. You had enough hours in the day to ensure all customers were dealt with personally. You built up a good reputation with your clients. Your work was to a high standard. As a result, you kept getting new customers so you took on new staff. Your accountant looks after the payroll and made it sound as if that was all you needed to worry about.

But ever since you took on staff, things have not been as good. Service standards have slipped. You’re now spending a lot more time doing admin and when you’re not doing admin it feels like you’re spending your time putting right things that your new staff have got wrong. Customers don’t seem as happy anymore and you feel like your hard earned reputation is slipping.

The solution is often to start working on your business not in it. To put together systems, identify roles, recruit and train. Or is it? Because actually you are at a crossroads and there is more than one direction you can go? The first thing to consider is whether you are a Ronald or an Elton.

Are you a Ronald?

Ok bear with me on this. I need you to imagine that after years of entertaining the kids, the real Ronald McDonald has now stepped back from the front line and trained up others to wear the flipper-like shoes and red nose. Ensconced at the top of McDonalds tower in a smart designer suit, he works on strategy, marketing, recruitment and systems. He’s built a franchise that can be replicated all over the world.

On a smaller scale, Ronald the owner-manager has realised that the mini-me he’s been looking for doesn’t exist but with real attention to detail on the internal systems of his business, he’s also managed to step back from the front line. The business no longer depends on him. Holidays are more frequent. And now that it’s no longer dependent on him, the business is now much more sellable. A potential buyer (a much bigger company from a connected industry who wants to get into a new market) has been sniffing around. A lucrative sale followed by either a comfortable retirement or new challenges beckons.

“Kirk Smith, partner with A4G Growth, says this the number one issue small businesses face and he has had no client who has not wanted to address it.  Thankfully, there are techniques you can use, with the help of experienced advisers, which can break the business’ dependence on you.  What would you do with the majority of your week freed up? Take it easy maybe – you earned it – or push your business even further and increase the wealth you deserve from it”

But is that what you want? Do you have the skills to make the changes to your business to achieve a goal like that? Are you prepared to invest the time and money required in making those changes?

Does that approach even work in your industry? Has anyone else made it work?

Or are you an Elton?

There’s nothing wrong with following a “Ronald-like” strategy. It worked for McDonalds after all. But it might not work for you. And you might not actually be happy either. You might quite enjoy doing whatever it is that you do.

At the other end of the scale is Elton John. He’s one of the most financially successful people in the UK. And the one thing he hasn’t done is train up lots of little Elton Johns to go round the country performing Goodbye Yellow Brick Road every Saturday night.

He’s the star performer. He’s the one they want. So his business model has to be different.

The key for star performers is to get rid of the tasks that someone else to do. Get a PA, a good accountant and bookkeeper. Buy a dictaphone so you can dictate letters and instructions. Delegate everything but the things that no-one else but you can do.

Use the skills and expertise you have to deliver a quality which is better than your competitors and then make sure you charge for your services accordingly. There’s only one of you so you better be focussed on earning as much as you can for each day that you work.

Some “Eltons” forget the last bit. But it’s absolutely crucial because when you can no longer do what you do, there will be no business to sell because the business is you. Unless you are the real Elton John and are likely to be receiving royalties, you’re going to have to squirrel away enough of what you earn in order to build an investment fund that you can live off when you retire.

How much will I need?

Let’s say you have a lifestyle that costs the equivalent of £50,000 per annum before tax. Most financial advisers would suggest that someone in that position will need to build up a fund of about £1m in order to generate that sort of return. Are you focussed on that sort of figure or just busy with the day to day?