Going from a small business to a company

Are you the owner/operator of a hospitality business? Lately I’ve had contact with a few who have some rather interesting problems. It appears that there is a danger period in the development of a business just when you feel you are successful and want to begin to relax a bit.

You decide to expand a little by involving others in the management and supervision, and you promote some of your staff to a more responsible positions, or perhaps recruit a manager to help relieve your workload. It is at this stage you must clearly realise that you beginning to turn your business into a small company. The change requires a different philosophy of management.

You are at the point where you need to start to develop a whole new set of skills to those that have made you successful in the past; and this is where a common problem arises. How should you now spend your time?

An unfortunate number of people in this position continue doing the thing they do best — their old job, or at least enough of it to severely frustrate subordinates who should be learning and developing new skills themselves.

There is a distinct difference between directly running a business, and running it through other people. Instead of occupying your time directly supervising activities as you were used to, you now need to occupy yourself training and developing subordinates to be able to do what you once did. You must continue to do this until you can feel confident that they can handle most situations without assistance. Then you are in a position to build the business further.

This is where things can get tricky. Where you previously did a lot of things by the seat of your pants — like stock control, staff rostering, marketing etc — you now need to develop orderly systems which let you know what is going on without you having to haunt everyone.

Your loyalty to ‘your baby’ can get in the way of planned business development. Many business owners feel that nobody can do it as well as them. They give their subordinates more senior titles, but they do not grant them the authority to make decisions, to spend money or to try new ideas.

I had a graphic example of this recently, albeit taken to extreme. I was called to teach management skills to the middle managers of a rapidly growing hospitality company. The owners, a husband and wife team, function as joint General Managers. They felt that something was seriously wrong in their organisation because they seemed to be in a state of crisis all the time. They were both working ridiculous hours and expressed the feeling that their subordinate managers needed education.

They declined to participate in the training sessions themselves making the comment, ‘We already know all that stuff, we built the business.’ I should have woken up at this point and headed the other way, but I ignored the danger signs.

I’ve now finished that job, and have I got news for them. I’ve never been involved with such a weird company. Nobody knew what they were supposed to do, no one had any authority (a $10 million plus business, and the Operations Manager had to seek the owner’s authority for a $20 expenditure).

The staff claimed their goal posts were a constantly moving target. In spite of intense frustration they were too terrified to express their feelings upward for fear of retribution. Six out of the 8 participants in the class were seeking other jobs! This was just the sort of assignment to ruin a consultant’s whole year. We probably got the blame for them leaving.

I hope I’m making the point that the owners had made the transition from a small business to a middle sized company without upgrading their own skills. They wouldn’t let go of their old comfortable jobs and adopt higher level duties. I’m sure their life is a total nightmare. I sat them down and talked to them about their problems. it’s too early to tell whether they will do anything about it, but I’m really hoping.

Perhaps you are trying to turn a small business into a successful company?