The dream of most business owners is to build their businesses so that they are stable enough to thrive even without the owner there to oversee all the work and key decisions.
But most of us business owners (myself included) are control freaks, so we find letting go of decisions and responsibility tough. (This is often one of the hardest behaviors to get our business coaching clients to change – that of intelligently and incrementally letting go of direct control for areas of their businesses.)
One important tool to help you grow your comfort level with empowering your team to own functions of the business is to make sure sound internal controls are in place in the business.
“Controls” are specialized systems inside your company that protect it from poor decisions and careless behavior. They include things like your operational checklists, your marketing calendar, and your new hire on boarding process.
But as a growing business you need to balance off the benefits of implementing intelligent internal controls with the extra friction and red tape more structure can bring.
Here are five simple action steps for you to immediately upgrade your business’s existing controls.
- Eliminate or amend wasteful controls you currently have in place.
Examples of wasteful business controls include: requiring the business owner to sign off on all purchasing decisions no matter what the amount; requiring staff to generate reports that don’t create value for the business or influence decisions of the management team; not allowing front-line employees to make simple decisions that thrill customers yet don’t cost the business too much money.Pause for a moment right now, and list possibly wasteful controls you currently have in place along with how you can eliminate or improve them.
- Review your financial controls, and (ideally) get a trained expert to help you easily upgrade them.
This is one area of your company that you should likely increase the level of controls you have in place and that you follow.
One statistic that we quoted in our recent book, “Scale: 7 Proven Principles to Grow Your Business and Get Your Life Back”, was from the Association of Certified Fraud Examiners.
In 2010, they reported that 42 percent of fraud cases happened in privately held companies with fewer than 100 employees, with the average fraud continuing for 18 months before it was even discovered. In case you’re wondering, the median loss in these fraud cases was $231,000. Hence my suggestion that you pay close attention and upgrade your financial controls, which most small and medium-sized companies are lax with.
You’ll likely need outside help in setting these controls up. This can be your CPA or, if you have one, your CFO. They will look at the flow of money through your business and the danger points where your business needs stronger controls in place.
3. Build a clear score board that makes it easy to see the score.
The best controls are there not to “catch” an employee doing something wrong, but rather, they give your employees direct, timely, and useful feedback so they can more effectively self-manage.
So give your pillars of your company (e.g. Sales, Marketing, Operations, etc.) clear score boards to see how things are really going. A visual scorecard will help the people doing the work measure their performance and give management a tool to ensure your business is functioning optimally.
- Observe which of your current systems your team actually uses, and reformat, redesign, or eliminate the ones they don’t use.
Remember, a business control is a subset of a business system, and a system in the wrong format is of no value, even if it could technically work.
Observe your team’s behaviors to see if your systems are functional. Behaviors don’t lie.
If a system is significant and technically accurate but isn’t being used, tweak the format of the system to make it more user-friendly.
- Push decisions down to the lowest level they can competently be made.
Nothing is more deadening for your team members than requiring them to go to you for decisions they are competent and fully informed to make.
It kills initiative and arbitrarily creates a stifling bottleneck in your business—you!
The more you personally must decide, the more you must keep on deciding.
Your goal must be to create intelligent controls that allow your team to make decisions they are competent to make. But also put safeguards in place so big decisions get well thought out before it’s too late to change them.
For more ideas on growing your business, including a free tool kit with 21 in-depth video trainings to help you scale your business and get your life back, click here.