Business owners often dream of taking their business “to the next level,” by which they usually mean reaching a point where it takes on a life of its own and ceases to become a mere extension of the founder. This can occur when annual revenues are half a million dollars or $10 million. Or it can never happen at all. In that case the company faces a decidedly unhappy future, if much of a future at all.
Making a transition to the “next level” rarely just happens. It is usually the result of a determined and focused effort. Two successful Manhattan entrepreneurs, Deb Wasser, the founder of Deb’s Family Disco, and Ruth Ro owner of of RRSK Studios, employed different strategies to transform their companies from “personality-based” to “process-based” businesses. Looking closely at how they went about it can help other owners save their businesses (and their sanity) from the weight of their own success.
SOLUTION: SPECIFY JOBS AND RESPONSIBILITIES
When Deb Wasser started Deb’s Family Disco, her main goal was to create a profitable business from the key factors of her life: her 4-year-old daughter, Savvy; her natural gifts as a promoter; and her fondness for “partying and dancing with friends.” The result was Deb’s Family Disco, a weekly “ball” where kids and adults could dance together in a real discotheque for birthday parties, fundraisers, and other events. Before she knew it, Deb’s Family Disco was a smashing success: It won awards for “Best Birthday” and “Best Family Activity” in New York magazine’s Best Of issues, and 25 families a month were celebrating at Deb’s Family Disco.
“In the beginning,” says Wasser from her busy home office in midtown Manhattan, “I ran the whole thing: taking sales calls, creating the gift bags and custom birthday cakes, and playing DJ at the actual parties.
“But after we appeared in New York magazine’s Best Of issue, the phone never stopped ringing,” she says. Her “fun family business” quickly became a job that required 60 hours a week. She constantly worried that details might be slipping through the cracks.
“I had reached this point,” she says, “where I wanted the business to grow more, but there wasn’t enough of me to go around. I felt stuck and stressed out. I really enjoy certain parts of the job, but I didn’t know how to remove myself from any of the daily details.”
Sound familiar? Despite her success, Wasser had fallen victim to one of the most common mistakes made by small-business owners: she was running a personality-based business. In a personality-based business, there is no organization of job responsibilities or business procedures. The major pitfalls associated with running a personality-based business are that there are no plans for training employees, delegating work, or hiring new people. As the work piles up, the owner (and other key employees) simply works more hours. Eventually mistakes are made: Customer care slips and orders aren’t filled correctly, for example. Additionally, there are no plans for the owner to take a vacation or be replaced if he or she becomes sick or injured.
Wasser concluded that continued growth, and even the survival of the company, would require a fundamental change in the way it was run. Specifically, Deb’s Family Disco would have to quit acting like a start-up and become what consultants call a “process-based business,” with formal job descriptions and clear lines of authority embodied in an operations manual.
Process-based management can unlock a company’s growth potential. It allows the business to increase volume without decreasing product and service quality. It lowers operating costs. It lets the company more easily add, and adequately supervise, full-time and part-time workers. And it frees the owner to develop business opportunities.
Evolving from a personality-based to a process-based business can be frightening to company owners, especially those who believe their gut instinct is an important reason for their success. Most entrepreneurs are anti-bureaucratic by nature. Sooner or later, however, they realize that owner-dependent management is holding them back. And once they’ve taken the step, many are surprised that the transformation to a process-based business is not only easier than they feared, but gives them a new and valuable perspective on their business.
Deb Wasser started by mapping out all the jobs at Deb’s Family Disco. “The key point was to make a distinction between the people doing the jobs and the jobs themselves,” she says. “When we began to focus on the jobs, we created a fairly long list.”
Officially or not, most businesses have a CEO/president (that’s you, making decisions to grow your business), a CFO, a sales manager, a chief technology officer (yes, even if you have nothing more than a laptop, phone, and fax machine), a marketing director, a customer service manager, and a human resources manager. Many businesses undertake such functions as procurement management (purchasing raw materials for production as well as office supplies), inventory management, production management, and distribution/shipping.
Deb’s Family Disco, like many businesses, also has some unique jobs. Wasser identified 17 different ones, including cash-box manager, party coordinator, gift bag manager, and dancers. Using a one-page job description template created on a personal computer, she catalogued these details for each job: job title, primary responsibilities, secondary responsibilities, the managing position for the job and the person assigned to the job.
Aaron Zwas is the president and lead consultant of The Zwas Group, specializing in identifying and correcting inefficient business operations. He has worked on business start-ups, training initiatives, product launches, mergers, and technology implementations in a variety of industries and with businesses ranging in size from two-man operations to Fortune 1000 companies. Zwas can be reached at firstname.lastname@example.org.