Time is money: where are you spending yours?
Much of our ethos here at Stellar is directed toward creating and developing businesses that are profitable and sustainable. The most valuable resource that makes that happen? Time.
We hear a familiar refrain over many decades of working with hundreds of businesses: all that hard work and dedication to growing the business has become a drain on time. As CEO or a senior leader, you may believe that you must manage or double-check everything because no one will do it as well as you do.
That’s fine – even inevitable – if you’re a sole trader or start-up. But it makes it completely impossible to grow a business, let alone reach a point where you can step away and have the business work for you. The concept is embedded in the title of our eBook, More Time. More Revenue. More You.
In other posts and throughout the eBook, we’ve talked about the elements for success, from your purpose as a leader to your products, positioning, valuation, and even your exit plan. A crucial step in business growth and maturity is the fully functional business. We don’t mean a business full of functions, having the relevant departments, processes, policies, and systems. We mean fully functional.
Lumpy growth
Let’s trace the growth of a business. It’s typically top-down because one or two people start it. Then, more people are hired to support growth, and people turn into teams and perhaps even departments. The business areas that scream the loudest get the investment in resources. It’s organic growth, but it’s chaotic and lacks method and discipline.
Creating a fully functional business starts with smoothing out the lumps – step back and identify the best functional structure for your business. Ideally, it supports your goal to be less hands-on with day-to-day operational matters and allows you to devote your team’s time and talents to productive and profitable work.
Colour coding success
Let’s take the functional structure we just mentioned. You’ve sketched it out; now what job functions are needed to support it? These are critical roles, not mere job titles. We can also group these functions into a colour-code system. All activities within an organisation fall into one of four groups, and we can colour code them: red, green, blue, or yellow activities. You can easily plot where time is currently spent across your business and then match that against what the business needs using colour-coding.
Red: activities that support the infrastructure and, whilst non-revenue generating, are critical to the functioning of a business such as administration, finance, HR and IT.
Green: revenue-generating and client-related functions. Include anything to do with making, selling, delivering, and servicing whatever your clients buy from you and anyone involved in marketing, for example.
Blue: activities related to business growth and asset development. These include leadership functions, such as strategy and planning, to create long-term growth. Functions include developing your market positioning, new product and packaging strategies, key external professional, and referral relationships, as well as joint venture, licensing, or merger activity.
Yellow: activities where the focus is the development, documenting, nurturing, and implementation of the company culture and the way people behave and interact with each other.
The chart below shows an example. Note that once the functions are populated and grouped into our colour coding, we can start adding people – the best people for that role. These are your key lieutenants. They are people with the appropriate skills and experience to run that function. They may well be in another part of the business, or you might have to hire or train someone. But, most importantly, they fulfil a role the business needs.
Know your gaps
Every business has inefficiencies, duplications, and infrastructure requirements that when addressed, directly improve the functioning of the business. We call these functional gaps. The gaps slow people down and can even create undue stress and frustration that fractures team cohesiveness. Not all gaps can be closed easily, and some may cost money that your budget doesn’t allow. However, if you keep a list of what your gaps are (get everyone in the team to list any inefficiency or blockage they encounter) then you can acknowledge them and prioritise closing them. You’ll be surprised at what low hanging fruit you find that can help increase efficiency and get you back more time.
Diary of a CEO
We’ve mapped out what and who the business needs, and what some of the gaps are that need to be closed. Now let’s assess your role the same way. The data doesn’t lie; it will reveal where your time is consumed. We can define most red and green activity in a business as what it does, the content. Blue activity is more aligned with context and purpose, or why it exists. We’ll get to yellow shortly. Now think about your week and colour code your time according to those four domains. Where are you spending your time? That simple exercise tells most CEOs why they feel so stressed and why there is never enough time to grow the business.
Where should you be spending your time? The answer is most likely obvious; get out of the red and green activities as much as possible and into the strategic blue activities. Your functional chart shows who you’ve entrusted with sorting out IT problems, handling a stock problem, doing sales calls, and so on. Make a chart of where you’d like to be spending your time and, as we’ve mentioned, use your functional chart to make it happen.
The yellow areas? This is the development, documenting, nurturing, and implementation of the company culture. Do not underestimate the power of this function. Over the years, many businesses we have worked with derived significant commercial benefit by focusing on the yellow.
This exercise is just the start of implementing a functional structure strategy. The same methodology applies to each business layer until it truly is fully functional, efficient, and effective. You may even need outside help to do it, and there will be false starts. But it pays off and is a huge step on the road toward getting your business to work for you.
To learn more about establishing a fully functional business, download our free eBook More Time. More Revenue. More You. and head to Section 14, which covers this topic in more detail.