Larry started his practice under the tutelage of a renowned branch manager, and in less than four years, this rising star was headlining industry conferences. When his manager retired, Larry decided he wanted to be independent. He engaged us to help with his marketing plan. He then went to work with his characteristic zeal and continued his growth. You can imagine my surprise when a visibly worn Larry walked into my office. He got right to the point. “I’ve been thinking lately that this business might not be for me after all.” That shocked me. Larry’s ambition was to build “the best financial advisory practice in the country.”
He told me it wasn’t fun anymore. His growth had slowed, and the grind of running a practice – tension among the support team, decreased productivity, high overhead, pressure – was getting to him. I told him that where he was now is inevitable.
“You remind me of the child prodigy who finds himself attending university at age 15. While brilliant at his studies, he often finds it difficult to cope on campus because he hasn’t had the chance to develop social skills the way children need to. You grew very quickly in this business and missed developing some of the skills you need to manage a large practice along the way. Your manager was a great mentor who insulated you from business management issues; however, he left you underprepared to be a full-time entrepreneur.”
Entrepreneurs seldom set out to be managers. As a result, they have no formal structure or role descriptions for their team. They tend to supplement low salaries with bonus plans. As jobs evolve, employees become confused about their roles and accountabilities. Work falls through the cracks and the entrepreneur becomes frustrated and doesn’t understand why his employees just don’t get it. Employees, on the other hand, start to burn out and quit, client service suffers, opportunities are missed and the entrepreneur sees his long-term vision fading.
He asked how to start fixing it.
“It’s not what you need to start doing, Larry, it’s what you need to stop doing that will make the difference – things like assigning work in an unclear manner, hiring based on emotion rather than skill, letting compensation substitute for management, working all the time in the business and never on the business. Basically, you have to stop believing that you can take your business to where you want it to be without being a capable manager.”
Most entrepreneurs in Larry’s position have two decisions to make. How big do they want their practices to become and what role do they want to play? Their answers will determine the type of organization they’ll require. Business owners need a conscious, articulated vision of what they want their world to look like and a well-defined strategy, supported by a formal organizational structure designed to make it happen. Finally, they need staffing and managerial leadership practices to maximize effectiveness, efficiency and trust.
Over the following weeks, Larry and I created a new business plan. An organization chart based on the functions needed to manage the practice efficiently was drawn up, as well as role descriptions for each position. Current staff was matched with the requisite organization along with training plans where required. New hiring needs were identified and the compensation plan was revamped to reward appropriate results. Most importantly, Larry’s energy began to surge again. He was resuming his quest for greatness.