Management vs Leadership Part II – Clarity to Perform

Part II
Click for Part I

In the previous installment, we discussed how leadership is one of the biggest problems in business.  Not because leadership is bad but because there is a lack of management leading to the leadership.  In reality, most people are just lazy managers.  They just give someone a task but they don’t give them a time frame or a schedule or plan to get it done by.  Then we complain that they don’t get it done on time and correctly.

So let’s take a look at how we can become good managers as well as how we can operate as good leaders.

There are 4 keys to a good manager are…

• Creating clarity on how to perform  their job
• Creating clarity on what needs to be achieved
• Asking Questions
• Provide ongoing Training

In this article, we are going to focus on the first key.  Does your team know how to perform their job well?  Do they actually know what their job is?  If you were to ask your top 10 employees to write a list of what they think their job is and at the same time you are writing you list of what you think their job is, do you think the list would be the same?

Most employees don’t actually know what is specifically required of them.  Their job description is too vague and there is no reality about what they are actually doing and why they are doing it.  Or if they know what to do, do they know what the actual outcome is that you are expecting? 

Management starts with a really good job description or positional agreement. 

A good manager will be sure his staff knows…

·        What they are responsible for

·        Who they are accountable to

·        How to do it

·        Why they are supposed to do it.

·        What is the expected outcome when they do their job well.

Give your people checklists and systems
This will allow them to be competent in what they are job doing so they deliver the actual results that you expect. 

Good management starts when people know what their job is, what they’re expected to do, and at what level they’re expected to do it (performance standard), the time frame it should be done in.  They should also be told why they are doing it.

When you give someone a job and you don’t agree on a time frame of when they need to finish that job that’s just lazy management.  Some people call it micromanaging.  Yes!  Some employees need micro managing until you built their competence and their ability to do it.  You don’t have to do it forever but this is part of the coaching, training, the managing, and mentoring of these people so they can actually become good and productive at their job.

Next, I will continue to be covering the 4 keys of a good manager.  The 2^nd key we will be discussing how to create clarity on what needs to be achieved.

Management vs. Leadership Part I - Are you a lazy manager?

Leadership is one of the biggest problems in business. Not because leadership is bad but because there is a lack of management leading to the leadership. I would like to share with you what I’ve learned from my business mentor and ActionCOACH founder Brad Sugars about the differences between management and leadership. Many of us are trying to find the golden goose of leadership. We’ve read the books; we’ve been to the seminars, we’ve watched the latest TEDtalk on leadership. If you go to the bookstore or go on Amazon, there are a massive amount of books on leadership but there are very few books on management. If we think about it, the last bestselling book on management was the One Minute Manager from the late 70s or early 80s. Let’s take a look and define what the differences are between leadership and management. Management is about creating competent and productive people. They have a level of competence, they know what they are doing and they know how they’re doing their jobs. If a company has a group of people that don’t know what they are doing, there’s a lack of competency or productivity going on in the organization, that’s a management problem or issue. Let’s flip to the other side of the coin and take look at leadership. Leadership is about creating passionate and focused people. If the people in the organization lack passion and motivation to do their job and they’re not focused on what they need to be doing, that’s a leadership issue. The challenge that I see most businesses have today is that the business might have been built very well from a leadership perspective, but because of the lack of management, we got people that are not good at their jobs, they’re not that productive. They’re passionate and excited but we’re not getting the results that we want. So how do we get the results that we want to get in our business? This is not brain surgery. It’s not actually that complex. What I have seen throughout my career if someone gets promoted to be a manager in a company they don’t get much management training. In most cases, they got promoted because it was assumed that they had those skills. One of the biggest challenges they face is the transition from being “one of the guys” to being the boss. In this day and age, the lack of management training is extortionately high. Now, why is that? Simply, it’s because businesses don’t give management training to their staff. Maybe management got a bad rap somewhere in the 90s or early 2000s. The mantra was that you don’t need to manage your people you need to lead them. It was like leadership was saying that management was a bad thing. To get the job done, we need competent and productive people if we want to get the job done in any business. We do need to learn management skills; we do need to understand what those management skills are and how they work. Let’s now focus on both leadership and management. Management is where we start because if we see negative behaviors in an organization normally it’s a lack of management. When there is a lack of management I see that they’re in denial of how competent they are. They think that they are better than they are. There’s a lack of responsibility, people are blaming others and there is no team cohesiveness. A lot of these issues are around lack of management. In reality, most people are just lazy managers. There I said it. They give someone a task but they don’t give them a timeframe or a schedule or plan to get it done by. Do you have a system to manage your people and tasks or do you just wing it? As a friend once told me winging it is not a strategy. Over the next few installments, I will be covering the 4 key of a good manager that you need to be focused on.

Steve Goranson has owned and operated the North Florida office of ActionCOACH since 2004. He is also a certified team engagement specialist and a social media educator with Luv4 Marketing.  Contact Steve to discuss how he can help your business in the areas of Team Engagement, sales & marketing, and operational efficiency.

Case Study: How Three Moves Quadrupled the Value of this Business

Are you stuck trying to figure out how to create some recurring revenue for your business? 

You know those automatic sales will make your business more valuable and predictable, but the secret to transforming your company is to think less about what’s in it for you and more about coming up with a reason for customers to agree to a monthly bill.

Take a look at the transformation of Laura Steward’s company, Guardian Angel. Steward had gotten her IT consulting firm up to $400,000 in revenue when she called in a valuation consultant to help her put a price on her business. Steward was disappointed to learn her company was worth less than fifty percent of one year’s sales because she had no recurring revenue and what sales she did have were dependent on her personally.

Steward set about to transform her business into a more valuable company and made three big moves:

1. Angel Watch

The first thing Steward did was to design a monthly program called Angel Watch, which offered her business clients ongoing protection from technology problems. Steward offered her Angel Watch customers ongoing remote monitoring of their networks, pre-emptive virus protection and staff on call if there was ever a problem.  

Steward approached her clients with a calculation of what they had spent with her firm over the most recent 12-month period, including the cost of her customer’s downtime. She made the case that by signing up for Angel Watch, they would save money when taking into consideration both the hard costs of her firm’s time and the soft costs associated with downtime.

90% of her customers switched from hourly billing to the Angel Watch program.

2.      Doubling Rates

Next Steward doubled her personal consulting rates. That way, when one of the customers who decided not to opt into Angel Watch called her firm, they were quoted one rate for a technician’s time or twice the price to have Steward herself. Not surprisingly, most customers opted for the cheaper option and others chose to re-consider their decision not to sign up for Angel Watch.

3.      Survivor Clause

Steward also credits a small legal maneuver for further driving up the value of her business. She included a “survivor clause” in her Angel Watch contracts, which stipulated that the obligations of the agreement would “survive” a change of ownership of her company.

Steward went on to successfully sell her business at a price that was more than four times the original valuation she had received just two years prior to launching Angel Watch.

Steve Goranson has owned and operated the Northeast Florida of ActionCOACH since 2014. ActionCOACH is the World's #1 Coaching franchise with of 1000 offices in 50 different countries. They coach over 15,000 business each week.

Steve's commitment is to assist small business owners, to spend less time working "in" their business and more time working "on" their business so they can build a more valuable and sellable business. In the end, you’ll be spending less total time working, will be making more money and will have truly created the company and team you always dreamed of. In addition we will help you put the FUN back in your business and your life.


If you would like to learn more about how you too can get an "actionable" business education to improve your business's operations, sales,& bottom line contact ActionCOACH Steve Goranson to schedule a free 1/2 hour Phone Strategy Session  at 904-739-0200. www.actioncoachjax.com

5 keys to get your business working harder so you don't have to

Business ownership is one of the American Dreams; being able to be in control of your own destiny and have the freedom to choose want you want to do and when.

But for many entrepreneurs, that dream has escaped them. They have fallen into the business trap. The dream of freedom has fallen into the daily challenges and frustrations that struggling entrepreneurs face every day.

1. No Cash – You may be selling, but there’s never enough cash to pay the bills at the end of the month. There no cash left over to invest in new technologies or to upgrade equipment or put into your pocket.
2. No Time – You’re not running your business, it is running you. You are spending most of your day solving problems and putting out fires. Instead you should be planning your company’s next big venture, or just have time to do things you want and spend it with the people you love.
3. No Team – Instead of having a team of professionals that are working together toward a common goal, you have a group of employees that are looking out on how to better themselves. It’s more about “I” than “We”.
4. Feeling Stuck – Your Company has hit the glass ceiling. You can see as clear as day where you want to go, but something or someone in your organization is holding you back from crashing through that barrier. Nothing you have tried has worked.

If you find yourself struggling in any or all of these areas you are not alone. These are very common challenges for most businesses. Though very common, successful businesses have learned to overcome them by focusing on these 5 areas to get there businesses working hard and they can enjoy more life

1. Planning & Vision – Having a common focus & goal that everyone can buy-in to.
2. Leadership Development – The business is not working because you are. You need to develop leaders within your organization that are aligned to the company’s focus and goals that will run organization.
3. Test & Measuring – What gets measured gets improved! Each leader and team member in the organization needs to have an activity based score card to help them stay on track towards reaching the company’s goals.
4. Systems –Leverage is about doing more with less. To get your business working as hard as you do, you need to create written systems for your team to follow to drive consistency throughout your organization.
5. Implementation – Without Action nothing happens. This is where accountability and discipline come together. This is where most businesses get struck and spin their wheels.  Your organization must agree on 3-7 priorities that they will focus on. Each team member must know and be responsible and accountable to how their role leads the company towards achieving your top priorities.

Want to learn more about how you too can get your business working harder so you can enjoy more life? Contact ActionCOACH Steve Goranson at 904-739-0200. www.actioncoachjax.com schedule your free 1/2 phone coaching session.

Steve Goranson has owned and operated the Northeast Florida of ActionCOACH since 2014. ActionCOACH is the World's #1 Coaching franchise with of 1000 offices in 50 different countries. They coach over 15,000 business each week.

Steve's commitment is to assist small business owners, to spend less time working "in" their business and more time working "on" their business so they can build a more valuable and sellable business. In the end, you’ll be spending less total time working, will be making more money and will have truly created the company and team you always dreamed of. In addition we will help you put the FUN back in your business and your life.

Call his office to schedule a free 1/2 hour Phone Strategy Session 904-739-0200

Six Power Ratios to Start Tracking Now

Doctors in the developing world measure their progress not by the aggregate number of children who die in childbirth, but by the infant mortality rate – a ratio of the number of births to deaths.

Similarly, baseball’s leadoff batters measure their “on-base percentage” – the number of times they get on base – as a percentage of the number of times they get the chance to try.

Entrepreneurs buying businesses also like tracking ratios, and the more ratios you can provide a potential buyer, the more comfortable they will become with the idea of buying your business.

Better than the blunt measuring stick of an aggregate number, a ratio expresses the relationship between two numbers, which gives them their power.

If you’re planning to sell your company one day, here’s a list of six ratios to track in your business now to use in creating a score card for potential buyers:

1.      Employees per square foot

By calculating the number of square feet of office space you rent and dividing it by the number of employees you have, you can judge how efficiently you have designed your space. Commercial real estate agents use a general rule of 175–250 square feet of usable office space per employee.

2. Ratio of promoters and detractors

Fred Reichheld and his colleagues at Bain & Company and Satmetrix developed the Net Promoter Score^® methodology.  It is based on asking customers a single question that is predictive of both repurchase and referral.

Here’s how it works: survey your customers and ask them the question, “On a scale of 0 to 10, how likely are you to recommend <insert your company name> to a friend or colleague?”

Figure out what percentage of the people surveyed give you a 9 or 10, and label that your ratio of “promoters.” Calculate your ratio of detractors by figuring out the percentage of people surveyed who gave you a score of 0 to 6. Then calculate your Net Promoter Score

The average company in the United States has a NPS of between 10 and 15 percent.  Reichheld found companies with an above-average NPS grow faster than average-scoring businesses. 

3. Sales per square foot

By measuring your annual sales per square foot, you can get a sense of how efficiently you are translating your real estate into sales. Most industry associations have a benchmark. For example, annual sales per square foot for a respectable retailer might be $300. With real estate usually ranking just behind payroll as a business’s largest expenses, the more sales you can generate per square foot of real estate, the more profitable you are likely to be.

4. Revenue per employee

Payroll is the number one expense for most businesses, which explains why maximizing your revenue per employee, can translate quickly to the bottom line. Google, for example, enjoyed a revenue per employee of more than one million dollars in 2015, whereas a more traditional people-dependent company may struggle to surpass $100,000 per employee.   

5. Customers per account manager

How many customers do you ask your account managers to manage? Finding a balance can be tricky. Some bankers are forced to juggle more than 400 accounts, and therefore do not know each of their customers, whereas some high-end wealth managers may have just 50 clients to stay in contact with. It’s hard to say what the right ratio is because it is so highly dependent on your industry. Slowly increase your ratio of customers per account manager until you see the first signs of deterioration (slowing sales, drop in customer satisfaction). That’s when you know you have probably pushed it a little too far.

6. Prospects per visitor

What proportion of your website’s visitors “opt-in” by giving you permission to e-mail them in the future? Dr. Karl Blanks and Ben Jesson are the cofounders of Conversion Rate Experts, which advises companies like Google, Apple and Sony on how to convert more of their website traffic into customers. Dr. Blanks and Mr. Jesson state that there is no such thing as a typical opt-in rate, because so much depends on the source of traffic. They recommend that rather than benchmarking yourself against a competitor, you benchmark against yourself by carrying out tests to beat your site’s current opt-in rate.

Entrepreneurs looking to purchase a business have a healthy appetite for data. The more data you can give them – in the ratio format they’re used to examining – the more attractive your business will be in their eyes.

Interested in learning how to create a score card in your business that will help you to predict not only the direction your business is going but how valuable it is to potential buyers? 

Contact ActionCOACH Steve Goranson to schedule a free 1/2 hour Phone Strategy Session at 904-739-0200.

Steve Goranson has owned and operated the Northeast Florida of ActionCOACH since 2004.  ActionCOACH is the World's #1 Coaching franchise with over 1000 offices in 50 different countries. They coach over 15,000 business each week worldwide.

Steve's commitment is to help small business owners to develop actionable ideas that will allow them to spend less time working "in" their business and more time working "on" their business so they can build a more valuable and sellable business. In the end, you’ll be spending less total time working, will be making more money and will have truly created the company and team you always dreamed of. In addition we will help you put the FUN back in your business and your life.

Call his office to schedule a free 1/2 hour Phone Strategy Session 904-739-0200 www.actioncoachsteve.com

How to Get Rich in 3 (Really Difficult) Steps

Becoming wealthy may not be your primary goal, but if it is, there is a reasonably predictable way to get rich in America.

Step 1: Ignore Your Parents

Parents around the world typically encourage their kids to get educated so they can get a ‘good job.’ This may mean becoming a doctor or lawyer, although neither tends to be a path to significant wealth. High-paying professions provide an excellent income stream, but two insidious forces undermine the professional's ability to create significant wealth: tax and spending.

Tax

It is difficult to become wealthy on the basis of a salary alone. Since income is taxed at the highest possible rate, you're left with not much more than 50 cents on the dollar.

Spending

The other problem with having a high income is that it creates a ‘wealth effect’ that triggers spending. Thomas J. Stanley, the famous author of the research-driven classic The Millionaire Next Door, points out that some professionals—in particular, lawyers—spend a large portion of their income to give the impression that they are successful, in part because they do not enjoy much social status from their job. In other words, when you earn $500,000 a year, you buy a Range Rover or send your kids to an elite private school at least in part because you want people to think you are wealthy.

Step 2: Start Something

Most wealth in America is created through owning a business. Recently, Mass Mutual looked at the proportion of business owners that make up a number of wealth cohorts. They found that 17 percent of people with between $100,000 and $500,000 to invest were business owners.

Keep in mind that there are about 8 million employer-based companies in the United States, meaning that the incidence rate of business ownership (the natural rate at which you find business owners in the general population) is about three percent. Said another way, if you grabbed 100 people walking down the street, on average three of them would be business owners. On the other hand, if you took a random sample of 100 people with investable assets of between $100,000 and $500,000, 17 of them would be business owners, meaning you're over five times more likely to find a business owner in the $100,000 to $500,000 wealth segment than you are to find an employee in the same segment.

The trend becomes more pronounced the higher up the wealth ladder you go. If you look at wealthy investors with between $500,000 and $1,000,000 in investable assets, you'll see that the proportion of business owners in this segment goes up dramatically—to27 percent.

The Very Rich

Among investors with between $1 million and $10 million in investable assets, the proportion of business owners jumps to 52 percent. As for those investors with $10 million to $50 million sloshing around in their bank account, 67 percent are business owners; and for investors with $50 million dollars or more in investable assets, 86 percent are business owners.

Simply put, if you meet someone who is very rich, it's highly likely they are (or were) a business owner.

Step 3: Get Liquid

The next step for you as a business owner is to focus on improving the value of your business so that you can sell it for a premium. Just being a successful entrepreneur is typically not enough to become rich. You have to find a way to take the equity you have locked up in your business and turn it into liquid assets. When it comes to selling your business, the three most common options are:

·         Acquisition: This is the headline-popping way some entrepreneurs choose to trade their shares for cash. When Facebook acquired WhatsApp for $19 billion, founders Brian Action and Jan Koum got very rich.

·         Re-capitalization: A minority or majority "re-cap" occurs when you sell a stake in your company (often to a private equity firm) yet continue to run your business as both a manager and part owner, with a chunk of your wealth in liquid assets outside of your business.

·         Management Buyout: In an MBO, you invite your management team (or a family member) to buy you out over time, usually with a mixture of some cash from the profits of your business as well as debt that the managers take on. There are other, less common ways to turn your equity into cash (e.g., an IPO), but the key is turning the illiquid wealth in your business into diversified liquid wealth. The best part about selling a business is that the wealth created is taxed at a very low rate compared to employment income, so you get to keep most of what you make.

You might argue it is better to keep all of your wealth tied up in your business as it grows, but that can be a risky proposition—just ask Lululemon's Chip Wilson or BlackBerry's cofounder Mike Lazaridis. If you keep your money locked up in your business, it also means you may not be able to enjoy the benefits of wealth. You can't use illiquid stock in a private company to buy an around-the-world plane ticket or a ski chalet in Aspen. You actually have to get liquid first.

There are many good reasons to build a business; and for you, wealth creation may not be as important as making an amazing product or leading a great team. But if money is what you're after, there is no better way to get rich than to start and sell a successful business.

In creating a more valuable business, it is always the little things that get the big results. Our Business Health Check will give you invaluable insights into the many areas of your business that if tweaked will increase the value of your business.  By completing the Business Health Check, you will receive a Free Report based on your answers, prepared by our team of highly skilled Business Coaches.  CLICK HERE to take your Business Health Check Now

Steve Goranson has owned and operated the Northeast Florida of ActionCOACH since 2014. ActionCOACH is the World's #1 Coaching franchise with of 1000 offices in 50 different countries.  They coach over 15,000 business each week.

ActionCOACH Steve Goranson's commitment is to assist small business owners, to spend less time working "in" their business and more time working "on" their business so they can build a more valuable and sellable business. In the end, you’ll be spending less total time working, will be making more money and will have truly created the company and team you always dreamed of. In addition we will help you put the FUN back in your business and your life.

Steve's clients are feeling happy because they are focused on their goals, they're feeling more successful because they are reaching their goals, and they are feeling more free because their businesses are starting to work harder than do. 

Business Advice: 6 Reasons Not To Diversify

Diversification is a sound financial planning strategy, but does it work for company building?

How does Vitamix get away with charging $700 for a blender when reputable companies like Cuisinart and Breville make blenders for less than half the price?  It’s because Vitamix does just one thing, and they do it better than anyone else.  

WhatsApp was just a messaging platform before Facebook acquired them for $19 billion US. Go Pro makes the best helmet mounted video cameras in the world. These companies stand out because they poured all of their limited resources into one big bet.

The typical business school of thought is to diversify and cross sell your way to a “safe” business with a balanced portfolio of products – so when one product category tanks, another line of your business will hopefully boom.  But the problem with selling too many things – especially for a young company – is that you water down everything you do to the point of mediocrity. 

Here are 6 reasons to stop being a jack-of-all-trades and start specializing in doing one thing better than anyone else:

1. It will increase the value of your business  -- When you sell one thing, you can differentiate yourself by pouring all of your marketing dollars into setting your one product apart, which will boost your company’s value. How do we know? After analyzing more than 13,000 businesses using The Sellability Score, we found companies that have a monopoly on what they sell get acquisition offers that are 42 percent higher than the average business
2. You can create a brand  -- Big multinationals can dump millions into each of their brands, which enable them to sell more than one thing. Kellogg can own the Corn Flakes brand and also peddle Pringles because they have enough cash to support both brands independently, but with every new product comes a dilution of your marketing dollars. It’s hard enough for a start-up to build one household name and virtually impossible to create two without gobs of equity-diluting outside money.
3. You’ll be findable on Google  --  When you Google “helmet camera,” Go Pro is featured in just about every listing, despite the fact that there are hundreds of video camera manufacturers. It’s easy for Go Pro to optimize their website for the keywords that matter when they are focused on selling only one product.
4. Nobody cheered for Goliath  --  Small companies with the courage to make a single bet get a bump in popularity because we’re naturally inclined to want the underdog – willing to bet it all – to win. When Google launched its simple search engine with its endearing two search choices “I’m feeling lucky” vs. “Google search,” we all kicked Yahoo to the curb. Now that Google is all grown up and offering all sorts of stuff, we respect them as a company but do we love them quite as much?
5. Every staff member will be able to deliver  --  When you do one thing, you can train your staff to execute, unlike when you offer dozens or hundreds of products and services that go well beyond the competence level of your junior staff. Having employees who can deliver means you can let them get on with their work, freeing up your time to think more about the big picture.
6. It will make you irresistible to an acquirer  --  The more you specialize in a single product, the more you will be attractive to an acquirer when the time comes to sell your business. Acquirers buy things they cannot easily replicate themselves. Go Pro (NASDAQ: GPRO) is rumored to be a takeover target for a consumer electronics manufacturer or a content company that wants a beachhead in the action sports video market. Most consumer electronics companies could manufacturer their own helmet mounted cameras, but Go Pro is so far out in front of their competitors – they are the #1 brand channel on You Tube – that it would be easier to just buy the company rather than trying to claw market share away from a leader with such a dominant head start.

Diversification is a great approach for your stock portfolio, but when it comes to your business, it may be a sure-fire road to mediocrity.

Actions that Lead to Profits

The goal of every business is to make money or a profit.  For some reason profits seem to elude some businesses more than others.  They are working hard day in and day out, but they seem to just be spinning their wheels and not getting anywhere.  They are trapped in the American dream treadmill, moving faster and faster but going nowhere.

The reason they are working so hard and not seeing any fruits from their labor is that their actions are in the areas that do not lead to the profitability of the business.  We are busy, but we are spending our time with non-productive activities.

So what is a productive activity?  The definition is very simple.  An action that moves us toward making money is productive and an action that leads away from making money is non-productive.

In business we have to realize that “people working” and “making money” are now the same thing.  Once we understand this, we can now look at our business from a different perspective.  We now need to look at our profitability per activity.  So now we can start looking at a different set of metrics to measure how profitable a particular job or activity is in our business.

The financial measurements we now have to look at to see if we are making money are:

[1] Net Profit    [2] ROI – Return on Investment    [3] Cash Flow.

We need to determine our Profit KPI’s (key performance indicators) by determining profit per....

• Direct labor hour
• Team member
• Transaction or Job
• Customer
• Product or Service

The first area you should look at is gross profit per labor hour.  This will help you to determine what types of jobs you should focus on to increase your overall profits.  Let’s take a look at this example...

	Job A	Job B
Revenue	$3,900	$9,000
Material Costs	$2,250	$3,000
Labor Costs	$450	$2,500
Direct COGS	$2,700	$5,500
Gross Profits	$1,200	$3,500
Gross Profit Margins	30.8%	38.9%
# of Labor Hours	18	100
Gross Profit per Labor Hr.	$67.00	$35.00
Determine Labor Hr per month 10 Techs @40 hrs  (@90% compactly * 4.3 wks) 36 hrs per tech	1560/hrs	1560/hrs
Gross Profit per Month	$104,520	$54,640

In this example we are comparing 2 different types of jobs.  At first glance, Job B has a higher gross profit margin and seems to be more profitable.   However, when you further analyze the gross profit per labor hour, doing more of Job A type jobs can double the profitability of your business.

By understanding this, we can now direct our marketing to target more “A” type jobs.   Or, we can look at how we can be more efficient with Job B type jobs to reduce our labor hours per job.  Once we implement these 2 basic strategies we can begin to learn how to work smarter and not harder in our business.

6 Ways to Profit from Your Vacation this Summer

Summer is here, and although it may seem strange, now may be the perfect time to increase the value of your

company.

The most valuable businesses are the ones that can survive without their owner. A buyer will pay a premium for a company that runs on autopilot and levy a steep discount for a business that is dependent on its owner.

This summer, consider taking an extended break from your business to see how things will run when you’re not in the building.  It’s likely that some things will go wrong, but use those errors as the raw material for making your business operate more independently of you – and therefore more valuable. 

Here is a 6-Step plan for profiting from your vacation time this summer:

Step 1: Schedule your vacation plus one day

Whatever day you plan to start working again after your holiday, tell your staff you’ll be back one day later. That way, you’ll have a full day of uninterrupted time to dedicate to understanding what went wrong in your absence.

Step 2: Bucket the mistakes

When you return, make a summary of the things that went wrong and categorize them into one of three buckets

 Mistakes: errors where there is a right and wrong answer;
Bottlenecks: projects that had difficulties because you weren’t there to provide your feedback;
Stalled Projects: initiatives that went nowhere while you were gone because you’re the person leading them.

Step 3: Correct the mistakes

The first and easiest place to start is to simply correct the mistakes that were made. Usually mistakes are due to a lack of training rather than outright negligence. The right answer may be crystal clear in your head but not immediately obvious to your staff. Write up some instructions for next time the employees face the same situation. Make sure your instructions are clear, and share them with your team so everyone has them (a file sharing service like Google Drive or DropBox can be a helpful repository for your instructions).

Step 4: Unblock your bottlenecks

If you’re being asked for your personal input on projects, there’s probably going to be a bottleneck if you’re not around. Make sure your staff is clear on the projects where you need to have a say and the projects where you don’t. Some employees may wrongly think that you need to approve all decisions. Make it clear when you want them to act alone and when you still need to have a say.

Step 5:  Re-assign stalled projects

The hardest part of making your business less dependent on you is dealing with projects that get stalled when you’re away. Start by asking yourself if you’re the right person to lead the project in the first place. As the owner of your business, projects often fall in your lap by default, rather than because you’re the best person to lead them. Categorize your stalled projects into two groups: a) strategic projects you need to lead; and b) non-strategic projects you are leading by default. Hang on to the strategic projects, but delegate the non-strategic projects to someone on your team who is better suited to drive them forward.

Step 6: Give every employee a blank check

At Ritz Carlton Hotels, they give every employee discretion to spend – without approval from their general manager – up to $2,000 on a guest.  The $2,000 figure is a large enough number to make the message clear: front line employees should act first, make the customer happy, and ask questions later. Many employees know how to make a customer happy but lack the confidence to act. Giving employees some spending authority will speed up the resolution of customer issues and empower your team to do the right thing when you’re not there.

The sunshine is beckoning, so go ahead and take a vacation – if you follow the six steps here, you may end up with a tan and a more valuable company.