How Much Do You Work On vs. In Your Business? | Ep 36

Speaker A

00:00:00.400 - 00:20:29.730

This is episode 36 and I'm going to discuss the age old question of working on your business versus in your business, but more importantly, how to figure out what's right for your business right now. This is the Bottleneck Breakthrough podcast.

I'm Josh Long and this is all about helping you find and fix the biggest challenges in your business to unlock growth and profits that last. Hey. Hey. It's been a minute. Happy to be back with you.

I'm excited to dig in today because there's this spectrum of business owners out there that struggle thinking, you know, I'm just stuck in my business all day, every day. I never get a chance to work on it.

And they feel shamed for never working on their business or they feel trapped because they don't know how to get out of it. And let's say that's one end of this spectrum, right?

Where they're so deep in it, they're working in the business, they own a job and they're there full time and have no leverage or very little leverage with very few staff that are an extension of them. And then you have the complete opposite end of the spectrum, right?

The, let's call it the private equity advisors that just pour money in a business show up to board meetings and expect everything to be run by the CEO.

And there's a lot of people in the small business space that are trying to buy businesses, kind of like private equity is, and run them remotely, kind of like private equity does, but they don't have the skills or the expertise or the money.

And those businesses that, that entrepreneurs are buying right now are way too small to think about running remotely and just showing up to like a meeting with the CEO, kind of like a board member, director of the board. And so how much should you be working in your business versus on your business?

And I think as we go through the revenue plateaus, that gives a better perspective of like what the right size is for your business. I find that a lot of businesses I've been working with this last year, the owner is able to grow to the probably 3 million, $3.5 million plateau.

They're just kind of getting to the upper limit of everybody being an extension of them.

And maybe they've got a manager or two that's doing mediocre, but they're not sure what to do next and things stall out and they try to remove themselves. But, but there's a few key pieces missing.

And as I look at their businesses, the number one thing that I see needed to transition from a 2 to 3 million dollars company and really start moving towards 10 million. Because I don't know if you've ever heard me say this before, but 5 million is never a worthy goal to hit. It's purgatory.

There's nobody stuck at a five million dollar revenue plateau that's happy. I've never seen it. They don't exist.

If you say they exist and you're one of them, I'd love to get on a call and argue with you and point out all the things you're tolerating and all the chaos you're putting up with that is less fulfilling than when you're at 2 to 3 million and completely unfulfilling compared to where you could be at 10 million.

So when you take that perspective of transitioning from that three, three and a half million dollar point and how do you get to 10 million and it doesn't have to be like a sprint, you don't have to get there in a year or two. But what are the pieces that need to be in place and how much of your time should be put in the business versus on the business? Right.

And so if we go back all the way to the beginning of the average business owner is fully stuck in their business, can't figure out a way out and has no perspective of how much they're stuck in a job versus trying to own and run a business, obviously that person would benefit from making some time to work on their business.

The biggest thing that they need to do is prioritize an hour a week, just being proactive to sit down, typically with an advisor, if not with one of their top employees, and spend some time just in that hour thinking through, okay, what is consuming my time, what is waste of my time, what am I majoring in the minors? And start freeing themselves up from that burden of day to day activity.

And most business owners at that spot, they are perfectionists or think they're the only ones that can do it. They don't know how to communicate or train others, they don't know how to delegate. So that's how they get trapped. And no judgment on them.

It's the existence of majority of small business owners out there.

So one hour a week would be miraculous for starting to free them up and starting to proactively work on the business and start putting out fires and cleaning things up. And just that little bit of intervention can go a long way for somebody at that spot.

But then we get to the, let's say 2 million, 2 to $3 million revenue plateau like I said, I've got a number of clients there right now. And they start getting frustrated because they're like, I'm getting pulled back into the weeds.

I'm having to do too much day to day and I'm paying people too much for this. And I don't know what's missing. I don't know if it's my team, I don't know if it's me. And what I'm finding is 100% of the time it's the owner.

They just don't have the sophistication of management, of communication, of knowing how much they have to communicate with their direct reports, their managers and their key employees to keep them on track. And the piece missing is they don't develop the tracking and reporting so that everybody doing their job knows what success looks like.

And then if they do have that reporting, which I've seen sometimes can be really great, but then they don't know what to do if things get off, off track.

And so like I had a client the other day, we were looking at one of his reports from one of his key employees and it was all red, it was just delay, delay, delay, delay. And I'm like, well, what happens here? And he says, well, nothing. Like, well, that's the problem.

You're, you're getting a report, but when the train gets off the track, you're not doing anything to get it back on the track. And he says, well, what do I do? I said, you confront the employee. And he says, well, that employee has a manager over him. I'm like, great.

Then you train the manager how to confront the employee the minute the deliverable is late or off or failed or whatever. And he said, okay, what do we confront them with? I said, great, you just talk through, hey, why? First you find out why didn't this get done?

And they're going to come up with an excuse. And then you say, well, how did you communicate that this wasn't going to get done on time? And of course they didn't.

So now you set up a policy that if this is going to be late, you have to communicate it. And then in the future, why are you going to be late again? What are you missing in your role? What more support do you need?

And just walk through, right? Like again, I talk about my book treating staff like 8 year olds. It's not a belittling thing. It's just being thorough from the owner's mindset.

For those of us that have had kids, when our kids are eight, we're not mad if they need some reinforcement because we know everything compared to them. We just need to keep reinforcing it.

And so when you break down reporting and accountability, that's what's missing most of the time in small business owners, especially in the 3 to 5 million dollars range, is they're not actually looking at the day to day reporting and then keeping those people accountable for the delivery of that, those goods and services or whatever the reports are reporting on. And so a lot of times the owner's like, well, I just want to be the visionary, I just want to have my integrator do this.

And all that BS from eos, if you've never heard of that stuff, the books are fine.

But I think Gino and those guys have enabled too many visionary entrepreneurs to stay visionary and not manage and put everything on these unicorn integrators that are supposed to be able to take your divine intervention, divine insights and translate them into perfect application and execution. And I just don't think that's realistic. I think you as an owner need to be a better communicator and need to have better follow through.

And I use the Chinese proverb all the time that the fish stinks from the head down. And it's because if you're not doing something at the top, it's not going to get done anywhere else in the company.

So if you're not having those types of confrontation meetings or conversations with your key staff, your direct reports, your managers, they're not going to do the same for their staff and it will just trickle on down.

So when we look at a three and a half million dollar, three to three and a half million dollar business owner, a lot of times they're thinking, you know, I just need to unlock this marketing or this strategic partnership or this visionary thing or this new service. And the reality is they just need to develop their managers better.

And so the working in the business versus on the business becomes like this false argument to even focus on. Because what they need to do is develop managers. And that is I think a hybrid of working in and on the business.

Because so many people equate to working in the business as going and baking the pies, going and mowing the lawns, going and delivering the goods or services directly to the clients. And working on the business is all about systems and documentation and processes and visionary stuff and market research.

But there's that middle ground, right, where the managers have to be developed.

And this is why I call it both in and on the business, because it's in the business because you're doing the management, you're managing the managers, you're developing and training, communicating with managers to show them how to do their job better. But you're working on the business because it's about the systems and the processes and the leadership of the business.

And so I think for any business owner between 3 and 5 million, you should be spending, gosh, 50 to 75% of your time working with, coaching, training, developing managers until they are bulletproof and dialed in.

And then at that point you're just having a weekly meeting with them, going over their key reports and reviewing what's going well, what's not going well, what they need help with, and supporting them to be able to get the most out of your frontline staff. And if they're not performing and they're not getting it done, then you replace them.

And it seems so cold and disconnected when I say it, but the reality is that most people that are hired as managers for small business owned businesses have no management training and the owners have no management leadership.

And it's kind of those who are promoted to that spot or placed there are placed in a dysfunctional engagement, a dysfunctional perspective, an ignorant perspective, let's say.

And as you get better and they're not getting better, then you got to replace them and you got to know like, hey, I'm sorry, this wasn't personal, I just didn't know what I needed. And now that I know better and I know this really isn't a fit for you, we need to move on.

And I need to find somebody who has XYZ traits that you don't have. Because I know better now and that's it. And it's as simple as that.

And so then when you get to the concept of like, okay, I want to just work on the business, I want to run it remotely, I want to be an absentee owner, those types of things, that's what you can get to next after your managers are running everything flawlessly.

And so if you're thinking about buying a business and running it remotely, you got to realize like, if this business isn't running absentee already and the key managers aren't confidently and proactively leading this company, then I'm going to have to get in and I'm going to have to fix a whole lot of things and get into the weeds to clean things up, document things and figure out what the core issues are in this business to get it to run really, really well so that customers are thrilled, they show up in droves, they're happy to pay for whatever goods or services we're selling and that the managers are compensated well and fulfilled and that people love working for those managers, that until you get to that point, you're going to be in the day to day.

And I'm watching this firsthand right now because a friend of ours, they bought a small business in a little vacation town three hours from us and thought that they were just going to step in and convert it where even though the owner was there, previous seller was there full time, they just thought they were going to convert it to run remotely. And I tried telling them ahead of time, like, hey, you're going to run into some problems, especially around staffing in a small vacation town.

And they're just struggling and it's hard to watch.

And so I think as I look at that and I look through all the other businesses I've consulted with and helped business owners grow to improve their team and get them to run well without them and for extended periods of time, but not forever. There's just so many layers to this.

And getting that management team and developing those managers is really the ultimate bottleneck that prevents you from being able to run this remotely or absentee. And so as you think about where you're at, there's really this hierarchy, right, of are we even doing everything well with me here?

That's step one, right? Like, is everything running well with me here? Then step two, is everything running well while I'm gone for a few days or a week?

And I remember Teresa Sedmack. She's a great client, great friend. Now she's got a company called Everbreak Coatings and I took her through this exact process.

It took a number of years. We were not in a hurry and she just wanted to keep getting better and improving revenue.

And so we kind of did a holistic, step by step, chip away at it process. But in 2019, she was able to take 12 weeks of international vacation throughout that year and nothing went wrong.

And revenue kept going up and there were no fires.

And I was the backup because she was international and I was three hours away down the road from Sacramento and I never got a call the whole time she was gone. And it was because we kept leveling up her team.

We started replacing her F employees and then we started working our way up and then got the Cs out of there and then got her an operations manager. And by the time she was ready to start taking those vacations, it was running like a top.

And so as you think about okay, is Everything running well with me here? If not, get to work on those bottlenecks. Then can I take a few days off? Can I take a week off? Then can I take two weeks off?

And can I take two weeks off without needing my laptop? And then can I take two weeks off without needing my laptop or my cell phone and not checking in and like really being honest about those things?

And my friend Dale Raney, I reference him in the book and he, he had the dry goods brokerage and said, he said every time he came back from vacation, whatever was on his plate that his staff couldn't solve, he'd figure out how to create a checklist or a system or delegate it to somebody and give them authority. And I just thought, man, that was so simple that whatever couldn't be done while he was gone, he would just work on systemizing it and delegating it.

And that's what got him to be able to only be in the office half a day a week and have it run like a top.

And so as you go through this hierarchy of effectiveness, really then you start realizing, oh, there's a lot to being able to buy and run a business out absentee or remotely, unless that business is fully remote, fully distributed and remote already, where you're just getting in on zoom and you're in the day to day, but it doesn't matter where you're located.

The effort needed to get a company to run well and profitably without you is way, way more significant than anybody will make it out to be in the market out there. Especially all the guys saying, oh yeah, it's the silver tsunami, go buy a business.

There's so many great businesses to buy and you could turn them into cash cows and all this stuff. I mean, it's just not reality.

And so I'm excited to keep helping you develop your management skills, develop your leadership skills to lead others so that those others can lead your front line and you can get leverage on them, because that's what's needed to go from the 2 to $10 million range. And all of my clients right now are in that spot.

And we're unlocking growth with better sales leaders, sales teams, and that's putting a lot of pressure on everything else. But the beauty is that by getting the right salespeople in that can close and lead the sales efforts, all the other stuff pulls you into it.

You're not having to be pushed to solve things.

You're not having to force yourself to get up and deal with documenting things or recruiting other leaders as sales puts pressure and brings in new revenue.

It's exciting as a as one of my clients said this year lit a fire under his ass and having a new salesperson that was energized and outperformed the last guy and is giving the best performer a run for his money. My client said that it lit a fire under him that he hadn't had in the last 10 to 15 years of his business.

So that I think is the difference and where the balance is of working on your business versus in your business and would love some feedback from you. So feel free to shoot me a note comment you can email.

I think podcastottleneckbreakthrough.com gets through to me and feel free to chat anywhere I post this. Would love your feedback on how you find the balance of working on your business versus in your business.

And do you lean too far to one end of the extreme or the other?

Obviously most people lean to too far in the business doing the day to day work, but I'm curious how you struggle with getting work done when you feel like it's tedium or minutia or you just wish that your managers would just do this stuff.

Like I've had a number of clients that have been in that spot and funny enough, they're never clients that I can really help the business owners that just lean on the side of not wanting to work in the business and just would rather give edicts and shot from the mountain ledge at the troops down below.

I've never found a way to help them because it's more of a mindset thing of wanting to provide the support and be the the leader that leads out front and pulls instead of cracking the whip from behind. So yeah, super curious where you fall on that spectrum. Look forward to getting more of these out to you and have a great day.

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