How to manage a business
What’s your biggest business obstacle? If you answered scaling your business, you’re not alone. We recently surveyed entrepreneurs and small business owners around the country, and we found that only 69.5% are confident in or certain of their growth and scaling tools. But these are tools any CEO needs – especially if you plan to sell your business for a high price.
The day-to-day concerns for how to run a small business may differ from large corporations, but you can always operate with a growth mindset. It starts with learning how to manage a business.
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How to structure your business
The structure of your business is vital to its success. It will affect your agility, synergy and your company culture. At the most basic level, there are tall and flat structures.
Tall business structures
Tall structures, also called mechanistic, are traditional, top-down hierarchies. “Climbing the ladder” gets you promotions within the hierarchy and more responsibility. Tall structures provide a clear career path, with everyone knowing their role while being closely supervised.
Until recently, this was the structure of nearly all businesses – but then came the tech boom. Technology changes rapidly, and the giants of tech found that tall structures left them unable to quickly pivot. They couldn’t keep up with the changes in the industry.
Flat business structures
Organic, or “flat,” business structures are much more agile. They have fewer management roles and more collaboration. Flat companies are more of a “jungle gym” than a “corporate ladder.”
You don’t have to look far for companies that have experimented with flat structures. Zappos lost about 18% of its employees when it offered a “buyout deal” to those who weren’t on board with the new, flat-structure policy, but it was a step toward making them into a million-dollar company and strengthening their company culture. On the other end, software company Buffer abandoned a completely flat structure after finding there is a such thing as too much freedom.
Perhaps the best examples of how to manage a business are organizations that use a combination structure. Global sportswear behemoth Nike has many divisions operating independently, but they all report to one headquarter, allowing them to be agile yet organized. And Google’s structure, while hierarchical, allows employees to “skip levels” and go directly to upper management.
How to hire the right people
You might think there’s a huge difference in how to run a small business versus a large enterprise, but even small businesses must think about how to scale. You must plan out your company structure and your hiring process in order to see massive growth.
As Tony Robbins says, if you continue to be involved in every decision, “You don’t have a business, you have a job.” As you grow, you’ll need to build out departments.
- Administrative: These are your “behind the scenes” employees. It includes your HR department and your office manager – both vital to the day-to-day functions of your company.
- Marketing: Your marketing department promotes your company. You need a compelling story and a strong brand identity to stand out from the crowd.
- Sales: Your sales department promotes your product. In short, your marketing department gets you leads. Your sales department closes them.
- Finance: We don’t need to tell you why money is important. Your finance department pays your bills, prepares your records and keeps you in the black.
Your first employees will have a huge impact on your business – but who to hire first can depend on your location, your industry and even your personality. “The right employee can create a seismic shift in your company,” says Tony.
How to own a business: CEO responsibilities
It can be difficult to give up your day-to-day involvement in the company you love. But a truly successful business can operate when you’re not there. As a CEO, your job is to get your company to that point.
Managing your managers
Nobody likes a micromanager. Trusting your managers is an absolute must. But how do you manage a business without micromanaging?
- Hire great leaders. They’re confident, decisive and resourceful. More importantly, they’re aligned with your company’s purpose and vision and they inspire others to take action.
- Create a system. A certain amount of flexibility is essential to innovation. But everyone needs to be on the same page when it comes to time management. Use Tony’s Rapid Planning Method (RPM) to shift managers’ focus to what really matters. “Where focus goes, energy flows,” so make sure the focus is in the right place.
- Provide support. Hiring great leaders means nothing if they don’t have the resources they need to innovate. Professional development, the latest tools and proper training are crucial.
Leverage vs. delegation
Here’s a fact you may find surprising: you don’t need to delegate to run a business. Delegating can actually take more time – and time is money. You want to use the power of leverage. What’s the difference?
Delegating starts with the “what” and the “when” – you tell employees what you want them to do and when to do it by. Then, you review their work and provide feedback until they get it “right.”
When you use leverage, you start with the “why.” You help employees understand why the task is important and how it will help your company. Then, you let them be the expert – while checking in frequently for updates.
Delegating is telling people what to do. Leveraging means inspiring them to do it themselves.
The role of the leader
If you’ve learned how to own a business properly, you’re inspiring your employees to become leaders themselves. You’re living your purpose and bringing passion to the workplace every day. You are flexible, but decisive. You provide vision, but also stability. You are approachable and communicative.
Leadership is 80% psychology and 20% skills. When you change your mindset, you change your life – and your business. The professional is personal, and a business is only as strong as the psychology of its leader.
Ready to lead your business to success?
Sounds like a lot to think about, doesn’t it? You can learn everything you need to know about how to manage a business at Business Mastery. Break through your barriers, elevate your business to the highest levels of success and achieve the life you dream of.