Despite popular beliefs, running a successful small business isn’t easy.
For one thing, you face many of the same challenges as larger businesses — but with fewer resources. Even worse, most firm owners don’t work on their businesses full time and have to spend much of their time and energy working on a full client load.
At some point in the growth curve of an independent advisory firm, owners need to decide whether they want to become CEOs and run their businesses or become full-time advisors and promote or hire someone to fill the CEO slot.
For owners of firms who haven’t embraced this reality, I offer the following advice, which is based on the differences between leadership and management.
Time to Choose
In my experience, most firm owners don’t understand the difference between being a manager and being a leader. Whether you choose the role of one rather than the other can have a major impact on both your time and energy, and the motivation, performance and learning curve of your staff.
These are two different ways to approach business management. “Management” involves directing and controlling one’s employees; it is a focus on employees’ activities: what they do and how they do it.
This approach happens usually with advisors who are new to business ownership or are growing very rapidly, owners without formal business school training, and/or advisory owners who are drowning in their growth.
Here’s an example of this management approach: An owner advisor needs something done, such as a report on the number of clients each advisor of the firm works with. The owner tells a junior advisor what he wants in the report and the deadline.
There are three basic problems with this approach. The first is the impact on employee’s sense of control.
When people feel out of control, it adversely affects their state of mind. It creates uncertainty and undermines their self-confidence. Therefore, you end up with staff who are waiting around for your directions.
For the ones who are impatient and get bored, they will create problems, i.e. drama, to get your attention. This creates a whole myriad of culture problems, which creates anger and anger creates turnover.