Understanding that small business owners have two hats to wear is only half the battle. Understanding the difference between owner and operator roles and the necessity of switching hats is key to business growth.

Topic

Doug Poll Group

Owning a job vs owning a business

Are you profitable?

Are you generating goodwill?

Are you building the value of an asset?

If you own a business…

What is the distinction between business owner and operator

Only one thing at a time, one role at a time

Time and task management according to David Allen, GTD"

Planning mode

Execution mode

The same idea applies to switching hats between owner and operator

Things owners think about and ask

Mission, Vision, Values

How did we perform financially?

What should the budget look like?

What products should we add or subtract from the business?

What is the succession plan?

Where do we employ our limited resources for greatest effect?

Fighting resistance to build momentum? Read Steven Pressfield’s book The War of Art

What should you be working on while wearing the “owner” hat?

The stuff you know you should be doing but never have the time to get to.

Evaluate the list to see what is owner vs operator

80% probably relates to ownership

Operations tends to be urgent and need immediate attention

To address the ownership tasks you must decide what operating tasks are NOT going to get done today.

Make it clear which role has your focus

The more clearly you can define your ownership role the more opportunities you will have to lead

The owner is the only irreplaceable person in the business

If you are only an operator you are imminently replaceable (and your team knows it)

Perception as an owner

Credibility to make changes

Authority to make changes (authority is granted by subordinates)

Specific times and specific routines related to ownership are the most effective ways to communicate your focus on ownership to other team members

Failure to craft perception affects your ability to do the things owners are required to do to be successful

The calendar is your primary tool

Decide how much time you need to spend as an owner vs an operator

The smaller the company the higher production required of the owner

But committing too much time to production will inhibit growth

This is a personal question that won’t be the same for any two business owners.

Where to go looking for time to free up for ownership responsibilities

What operating responsibilities can you delegate?

What extra time outside of the normal work week can you free up?

Situations where the owner has too much time

Tough situation because you may need to be more involved in production

If working more wouldn’t add anything and planning more wouldn’t make any difference the business is probably in a struggling industry

What do you do with the time you clear off your calendar

Operational changes from a high level (e.g. changing processes)

Get a coach

Work on the coaching homework

Review your financial statements

Are they in decent shape from a technical standpoint

Are they reliable

Do they provide good information about operations

What your CPA really does with your financial statements

Communicating what you need your CPA to do with your financial statements

Compensation

The money you take out for performing services

IRS on Owner Compensation

Reasonable compensation

Starts with a job description

What do you have to pay in the open market for someone else to perform your duties (as an operator)

Determining the right salary number

Look at your [much larger] competitors

Treat your business like a real business

Market rates are important. Not too high, not too low.

Applies to everyone in the company

Succession depends on paying yourself market rates

Market rates include performance bonuses

Paying market rates keeps you from playing small ball

Dividends

The money you take out because you own stock

Profits go to three places

Performance bonuses to employees based on a share of profits

Reinvestment in the business

Dividends to the owners

Confusion about the ownership/operator roles will hamper business growth