Unless one buys an existing business, the start of a new enterprise usually begins with the owner being the only employee. It’s the typical start-in-a-spare-bedroom/garage story. The owner fulfills every job and ‘wears many hats.’
If this new enterprise enjoys some success, eventually the owner hires their first employee, an important milestone. Hopefully more employees are hired as the business grows. With each new hire the owner can delegate some of what they do. The owner must manage these employees and if they have truly delegated some duties, they have started the process I call “The Shedding of the Hats.”
So often the owner feels that no one else can do things as well as they can. This may be true, but an owner sure limits themselves with this attitude. A better approach is to hire people better than you are. This takes a lack of ego but it is very freeing and creates a bigger and better business.
This ‘shedding of the hats’ is all about specialization of labor, which promotes efficiency, and growth of an organization. The owner, if they can do it, creates a new role for themselves. One of trainer, manager, supervisor, mentor and coach. This is transition to being a manager is one of the toughest transitions for an owner.
If successful and with further growth, the owner will eventually reach the point where they need to delegate entire functional areas of the business to managers who have their own direct-reports. This is the true ‘shedding of the hats’ and another difficult transition for the owner. Many, perhaps most, business founders have trouble really letting go.
One of the interesting challenges is deciding which ‘hats to shed,’ that is, which areas to delegate and which to keep. I advise going back to hiring people better than you are; if you can find someone more talented in a particular area, delegate that responsibility and do everything you can to help them succeed.
Eventually the owner should delegate everything in the business, including the business development, long-term strategy and, well, there’s nothing that can’t be delegated except the long-term responsibilities of ownership, including the owner’s exit from the business.
Often, before the eventual exit, and mortality means every individual will exit at some point, the owner’s role becomes one of high-level business development and community activism. This is partially to raise the profile of the company in the community but also provides a means for giving back.
As a company grows the role of the owner changes more than any other person. Most owners can’t make one or more of the transitions. But for those who work on their business rather than in their business, and can make the necessary changes, the rewards can be great.
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