Edition 164 – Management Capacity

In editions 66 and 67 of Growth (26th April, 2017 & 3rd May, 2017), I talked about the roles of Technician, Manager and Entrepreneur in a family business.

Essentially, we start out as technicians in our field. Then, when we’re good enough, we progress to a management role. Finally, we’re either invited to become an owner, or make the decision to run our own flag up the flagpole.

Whilst this is the ideal, most family business owners don’t play enough in the Entrepreneur’s space. As far as I’m concerned, that’s mostly to do with the fact that most family businesses continue to lack management capacity. As such, the owner falls back into the role of manager – running a crew on site, or organising the team in the warehouse – simply because work has to get done.

Here’s the rub. The lack of management capacity in family businesses is an ongoing impediment to:

1. Growth.
2. Building profit.
3. Maximising business valuation.
4. Enabling the owner to focus on entrepreneurial activities and build future revenue streams.
5. Creating time for the owner to spend with their family.
6. Freeing up the owner’s time to engage in their own activities, which stimulates them and replenishes their reserves.

When we’re busy, head down, tail up, we don’t like to think of the alternatives that may be available to us to solve the problem. We immerse ourselves in the here and now. Except, in a lot of situations, we allow that to continue to the point where we completely cease engaging in entrepreneurial activities and instead, revert to the comfort zone of a manager.

My challenge to every family business owner is to look at the management capacity inside their business. You do have options and unless you’re willing to invest in those options, you will continue to feel as if you’re losing control of your business.

Essentially, there are four options.

1. Subcontract it in – the fastest approach, though culturally, not necessarily the most effective.
2. Buy it in – by recruiting for new people in your organisation. Remember, advertising online is not necessarily your solution here.
3. Train it up – for me, your best future managers are your really good technicians today with a great attitude. It’s a slower process, however it’s by far the most effective means of building management capacity.
4. Downsize – which is an option that some owners should consider if they don’t want to take on management capacity and can’t handle what they’re doing now. By the way, the downsizing can be your choice – or it could be your client’s choice (particularly if you’re someone who is always struggling to play catch-up)

 Any of these options are your choice as a family business owner. However, the very first step is that you need to recognise it’s an issue in your business.

Keep a log of your time for a week and allocate it into three buckets:

1. Technician – time I’m spending doing the do.
2. Manager – time I’m spending managing people, projects and the business.
3. Entrepreneur – time I’m spending building client relationships and future revenue streams.

Where does your time actually sit vs. where you would like it to sit?”