If you could do one thing to improve your business, what would it be?
If you are like many overworked entrepreneurs, you might suggest something to improve time management or establish a better work-life balance.
In his best-selling book “The E. Myth,” author Michael E. Gerber noted that most small business owners actually function as three people in one – the entrepreneur, the manager and the technician – all vying for time in the owner’s stress-filled day. The inevitable conflict, he said, is one of the primary reasons why most start-ups fail.
During a recent conversation with Claude Lilly III, president of Presbyterian College in Clinton, S.C., I gained new insight into this thorny dilemma.
Lilly, who previously served as business school dean at Clemson University and UNC Charlotte, said one of the best options any entrepreneur might consider is firing himself or herself as day-to-day business manager and hiring someone more competent to do the job.
The skills needed to give birth to a business – risk-taking and vision – are different than those needed to manage its daily operations, Lilly said. Unfortunately, he added, too many entrepreneurs insist on thinking they can do both. (Gerber calls this “the fatal assumption.”)
“Smart entrepreneurs know that as the company grows, they have to lay off more and more of the activity on other people,” he said. “But it’s hard to do that. It’s very, very hard to do that.”
Lilly said that as start-ups grow, they usually follow one of three paths:
• The entrepreneur becomes mired in daily operations and the business strangles and dies. (The most common path.)
• The owner finds ways to share the growing workload with others.
• The owner sells the business and moves on to something else – often another start-up.
So why don’t more entrepreneurs hire business managers?
For starters, Lilly said, entrepreneurs often buy into the false image of the lone individual who battles adversity to build the next great American brand. While such success stories do exist, he said, they are few in number. Most successful start-ups eventually need help at the management level.
Then there is the problem of self-awareness, or the lack thereof.
“Most entrepreneurs can’t operate a business once it really starts to grow,” Lilly said. “That’s not their strong suit. Their strong suit is ideas and risk-taking and being willing to bet the farm. The skills it takes to gamble, to hit your relatives up for money, are different from the model of someone who runs something.”
Another option, of course, is to sell the business.
“Once you work yourself out of a job, if you can’t add value at the top, then you need to go away,” Lilly said. “Why not take the money and walk away rather than sticking around and making everyone miserable?”
Lilly acknowledged that most small businesses probably can’t afford to simply hire a business manager, even though a business manager is often what they need most – the old chicken-and-egg conundrum. But as operations and revenue grow, he said, owners who are stretched thin should start looking for ways to share the load. And in some cases that means giving up daily control.
“If you can stay at the creative level and let the (chief operating officer) run it, you’re great,” he said. “But if you try to maintain the creative and tell the COO how to run it, you spend a lot of money on a COO that you don’t even need. … You have to know your own limitations.”
Glenn Burkins is editor and publisher of Qcitymetro.com, an online news site targeting Charlotte’s African-American community. He is a former Wall Street Journal reporter and Charlotte Observer business editor.