Creating value in a business often starts with a change in the behavior of the owner. See if this sounds like you:
You are involved in most if not every decision in your company.
You are afraid to let go because mistakes might get made.
It's easier for you to make the decision because you can do it more quickly.
You find it hard to trust that your employees know what to do.
If you're not involved in every decision, you fear you will lose touch with what's going on in your business.
If more than two of these statements describe you, you may want to consider changing your relationship with your business. If you choose to approve everything, you limit what you and your business can accomplish. Ultimately, when you're involved in every aspect of your business, your business has to stay small.
The alternative isn't just turning over decisions to employees; it's about letting others help you make your business successful.
(Read more: Secrets of Successful Entrepreneurs)
Create a reporting system
I've seen too many businesses where the owner tries to become a passive owner but struggles with how to stay current with what's going on. It happened to me. Years ago, when my food vending business opened its second branch, I was no longer in the warehouse with all our vending route drivers every day. At first, I just told people what I wanted. But that didn't work very well. And when a mistake was made I would yell at the person who made the mistake. That was an even worse idea. Finally, I realized that I needed to create a reporting system that would provide me with critical information. That was crucial to keeping me focused on solving problems and not blaming others.
But doing this required two cultural changes and one technical change. The first cultural change was learning to trust the decision-making power of supervisors and managers. The second was allowing mistakes to be made. I just had to find a way to make sure the mistakes were learning opportunities and not the kinds of mistakes that could put me out of business.
Get a dashboard to track your numbers
The technical change I needed was a system that gave me critical information on a daily, weekly and monthly basis: a dashboard. We put together a report that showed what our daily cash receipts were, whether each route was hitting its targets or falling short, what the productivity of each route was and how much waste was coming off each route. All of these were critical numbers for us. Tracking them allowed me to stay in touch and gave me an early-warning system for when I needed to re-engage in an area I had delegated.
In many respects a well-designed dashboard is an exception report. It allows you to focus on aspects in your business that need your attention but only when they need your attention. Different businesses will have different numbers to track. It's important that every owner figure out which numbers to follow. Here's a hint: don't look to your profit-and-loss statement for clues; your key numbers aren't there. For some it's what their daily cash position is. For others it might be production per hour from manufacturing workers. And, for still others it might be a pipeline report of where the company is on future orders.
From screamer to coach
Before I installed a dashboard I delegated responsibility but didn't have an inspection and reporting process as part of my business process. This method of management isn't really delegation; it's abdication. My dashboard allowed me to start transitioning from being a screamer to a coach who could have intelligent conversations with managers about critical areas of our company.
For me, building a dashboard came out of crisis. I needed one page with critical information that was sent to me daily. As we moved out of crisis, I realized I also needed a dashboard that showed trends. As our success improved, our dashboard changed. It continues to be a key component of tracking success and pressure points in my businesses.
I found that figuring out what to track was a trial-and-error process, and I think that's the case for most business owners. Have you figured out what to track in your business?
Josh Patrick is a founder and Principal at Stage 2 Planning Partners where he works with private business owners on wealth management issues.