Tuesday, 18 March 2014

Billy’s Eighteenth Law: The entrepreneur must develop ahead of the enterprise.

A business growing faster than its owner is like a little kid taking a big fast dog for a walk.  Sometimes, we wonder who is walking whom.

Several years ago, I worked with Elizabeth Lake Ledoux of Denver Co. on some consulting concepts relating to business development.  Elizabeth, along with her business partner Dr. Mel Wernimon developed a methodology of moving a business through seven different ‘strata’ with the ultimate goal of developing a sustainable, transferable enterprise. 
When I looked at it, I thought it was great, but that it needed something.  That something was the development of the entrepreneur.  This later became the Entrepreneur’s Strata in their highly successful Entrepreneurial Flight™. 
The eighteenth law emphasises the need for the entrepreneur to develop ahead of their enterprise.  When the businesses’ development outpaces the development of the founder, the results are disastrous. The founder / owner is quickly in over his or her proverbial heads.   If the ultimate goal of a business is to become transferable, then it must have the systems in place that allow it to operate successfully without the founder’s involvement.  This allows for a successful succession plan… through either sale or a family member operating the business. 
Businesses develop through three stages as they become ‘mature’ enterprises:
Nascent:  This is the foundational stage of the business.  The founder is usually an expert in the field, and is now learning about operating the business.  Many founders never develop the business past the nascent stage and are happy to remain self-employed. They own a business that provides them a job.
Developmental:  When the business owner begins to develop the business, they spend less time in operations or production and more time managing the business.  At the same time, there are more specialist positions that develop within the company.  If the business founder cannot develop managerial skills, the business often stalls in this area.
Sustainable: A sustainable business is a systems based business not dependant on any one individual…even if there are essential positions within the company.    The business is often both scalable and duplicable increasing the growth potential.  The founder must now develop even higher level skills called executive skills… thinking about the long term future of the business. 
Matching these levels of business development are levels of entrepreneurial development.  These three roles are:
Operational: In this role, the founder is an essential part of selling the product or service and producing or providing the same.  She works in the store, provides the legal services or helps construction of the products.  The time frame at the operational level is next week!
Managerial:  In this role, the founder is actively managing the business.  Although she is not necessarily producing or providing, she is actively recruiting, hiring and directing the operations of this company.  This stage becomes a trap…with a larger enterprise requiring constant attention.  The time frame is one month to one year.
Executive:  In this role, the founder is directing the long term vision and direction of the company.  She is thinking ahead, and ensuring that the development of the enterprise is consistent with her pre-determined vision and values.  The executive time frame is beyond one year.
The eighteenth law is a warning… if you want to develop your business you must develop your skills before you enter the next phase.  You must develop managerial skills before you leave the Nascent stage and enter the Development phase.  To develop a sustainable business, you must develop your executive skills before you get there.  To use a football analogy you ‘the passer must lead the receiver’ allowing him to run into the ball. 

When I am working with my clients, I am constantly using the term ‘move north’.  I get the owners to spend less time working on ‘today’ and more working on the future of the business.  This inevitably means that others must also ‘move north’ in order to fill in the space left by the owner.  This creates a chain reaction, of people moving north and fulfilling more executive and managerial positions.  The result is a business reliant on positions rather than individuals. 
If you want to develop your business, ask yourself, how much time you are spending on operational, managerial and executive tasks.  The more time you are able to spend in managerial and executive tasks, the better ready the enterprise is poised for business growth. 
If you are interested in more on the Entrepreneurial Flight, purchase Accelerate Your Entrepreneurial Flight: How to Energise Business Value and Entrepreneurial Growth, by Elizabeth Lake Ledoux and Dr. Mel Wernimont, Ph. D. It is available from Amazon.  Alternatively, contact them through their website at:  http://www.vnacelleconsulting.com/

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