Extract
Business management and the path that entails becoming a successful company goes through a set path. Starting with the assignment of responsibilities, going through the division of labor and the delegation of authority, until reaching risk management and decentralization, each phase represents a crucial step towards the professionalization of the company that guarantees its success and continuity in today's dynamic and competitive business environment.
Contents
Stage I - From 2 to 4 technicians: Assignment of Responsibilities
Stage III - From 8 to 40 technicians: Delegation of Authority and Performance Management
Stage IV - From 40 to 100 technicians: Risk Management, Control and Continuous Improvement
Stage V - From 100 technicians onwards: Decentralization, Expansion and Diversification
The Business Evolution to Make a Company a Great Business
With the ambition of every entrepreneur being to lead large companies, leave wealth for their family and establish a legacy in their community, many find themselves trapped in a challenging reality. They operate businesses where they invest more than 60 hours a week, facing urges, anger, anxieties and anguish that generate an environment of excessive stress due to the poor balance between personal and work life, triggering physical, family and organizational health problems.
The apparent success of these businesses manifests itself in deceptive ways:
There are million-dollar sales…but most come from the personal effort of the owner, despite having vendors, or even a commercial area.
There is good billing… but it is not known if you really win or lose money; and in case of profits, no trace of the cash is found.
Profits are reported… but they disappear in the payment of services, payrolls and suppliers; The owner, when he is lucky, receives his remuneration despite working 10 or more hours a day every day.
New hires are made… but the owner cannot separate himself from the operation since the collaborators are dependent on him.
The need for change is evident, and the key to freeing yourself from the slavery of the business that depends exclusively on the owner lies in the professionalization of the company. This process involves:
Align the organizational structure to a specific, measurable, achievable, relevant and time-bound strategy.
Implement best practices in business processes that promote sustainable business growth.
Develop an ecosystem that fosters excellence at all levels of the organization and promotes business success.
These components evolve as the organization grows in the number of technicians who work in the company, going through different stages of business evolution that seek to lead it towards achieving its objectives, taking into account its size and scope. These steps not only offer a clear path to business independence, but also promise a significant transformation in work-life balance for everyone in the organization.
Stage I - From 2 to 4 technicians: Assignment of Responsibilities
In the initial phases of many companies, it is common to encounter the figure of the self-employed, a person who assumes all functions and responsibilities. Although this practice may seem thrifty initially, it becomes inefficient over time due to the overwhelming number of responsibilities involved in operating a business.
As it is no longer a single person who operates the business, the assignment of responsibilities becomes a fundamental strategy that seeks flexibility and substitutability so that multiple individuals can perform the same activities but in an order. The general responsibilities to be assigned are:
Directives: Risk decision making, Definition of business strategy, Definition of goals.
Commercial: Valuation of supply and demand, Search and obtaining of Clients, Customer service.
Administrative: Budgeting, Purchases, Orders and payments.
Operations: Project coordination and control, Organization of workers, Decision making on unforeseen factors.
Humanities: Hiring, Calculation of payroll and withholdings, Training.
In this initial phase, the efficient distribution of these responsibilities lays the foundation for the orderly growth of the company, allowing each technician to focus on specific areas and contribute to the comprehensive development of the business. Collaboration and substitutivity become essential pillars to overcome initial challenges and pave the way to successful business evolution.
Stage II - From 4 to 8 technicians: Division of Labor
As the company experiences growth, initial flexibility of responsibilities can lead to invasions and internal conflicts. At this point, the need arises to establish a clear division of labor and formation of work teams to optimize the functioning of the organization.
The division of labor involves a careful strategy to turn each collaborator into a specialist in their area, capable of addressing and solving problems effectively, taking advantage of individual capabilities. If you lack the technical or human skills to develop an area to its maximum potential, training or hiring new talent should be considered.
In this phase, departments or divisions are formed that cover specific, achievable, homogeneous and separate fields of activities, paving the way for more effective management of the complexities that come with business growth. This specialized and efficient approach becomes a critical pillar for the organization's continued success as it expands its operations.
Stage III - From 8 to 40 technicians: Delegation of Authority and Performance Management
This phase represents a crucial moment in business evolution and liberation from the slavery of the business, where the leaders who have been the driving force of the company since its inception face the challenge of delegating decisions to collaborators who have not shared the entire journey. This process can be challenging due to several factors, including:
Family problems (in the case of family businesses).
Lack of competent personnel for decision making.
Lack of interest in the development of subordinates.
Insecurities, such as the fear of being replaced.
Distrust of competent subordinates.
Lack of experience in delegation.
Need to stand out.
Personal immaturity.
Perfectionism.
Among others.
Overcoming these challenges requires, first of all, raising awareness about the responsibility that comes with power and how decisions impact the entire organization. In addition, it is crucial to establish an effective command order, support the authority of capable collaborators to make decisions, and maintain strict consistency in this process. Each team member must clearly understand the direction to follow.
The decision of delegating authority must go through a defined process to ensure that decision making is correct and consistent, which involves:
Lead beginner, enthusiastic, eager to learn and committed collaborators by providing specific instructions and closely supervising the fulfillment of the task.
Coaching collaborators not so new in the process who are unmotivated or distrust their abilities, directing them and explaining the decisions to increase their maturity.
Advise experienced collaborators who are motivated to contribute to decision-making and willing to be heard by sharing responsibility for decision-making.
Delegate to competent collaborators who can self-direct the achievement of guidelines, goals and results, giving them autonomy in decision-making and problem solving.
Establishing a performance evaluation system becomes crucial at this stage to evaluate how employees contribute to company standards and objectives. This system is a management tool that serves to:
Contribute to the planning of the career development of each employee.
Contribute to decisions on remuneration and personnel movements.
Provide feedback to supervisors and human resources leaders.
Enable the detection of errors in the design of charges.
Determine training needs and potential.
Know the validity of the selection procedures.
Intervene with appropriate actions.
Evaluate human potential.
Given deficiencies, training emerges as an essential tool to enhance staff performance, being more than an expense, a key investment in organizational development. Overcoming obstacles, such as lack of investment, time, profitability, supply or interest on the part of collaborators, is achieved through a detailed analysis of technical and human development needs. Training becomes a strategic process with continuous monitoring, guaranteeing an effective impact on the company's performance and sustainable growth.
Stage IV - From 40 to 100 technicians: Risk Management, Control and Continuous Improvement
Control is defined as the establishment of systems that allow errors, deviations, causes and solutions to be identified efficiently and economically; involves actions aimed at ensuring that the work executed is aligned with what was planned. From this perspective, effective control is characterized by:
Obtain data without interrupting the company's productive efforts, ensuring that the information collected is the minimum necessary to understand the current situation and the critical factors that are being measured.
Minimize the impact on time, money and effort in the administration and management of business risks, while providing adequate visibility of these on a regular basis.
Store, protect and ensure data integrity, facilitating the making of correct and informed preventive and corrective decisions.
With the delegation of authorities in the previous stages, the organization and structuring of information becomes a critical priority to ensure the survival and continued growth of the company. In the first two stages, the owner maintained precise knowledge of all business information. However, in the third stage, this ability to retain information begins to decrease due to the growth and professionalization of the business, both for the owner and the various departments.
Specific areas to take care of are:
Management control: Focused on administrative activities at upper and middle levels of the organization, including long-term elements.
Financial control: Focused on financial and accounting information, financial ratios and the organization's ability to meet debts and finance its operations. Very important in making key decisions.
Operations Control: Aimed at supervising the main activities of the organization, ensuring that they are carried out as planned. It covers lower and middle levels of the organization in the short term.
Quality Assurance (QA) and Control (QC): Focused on ensuring that the organization's main activity meets quality parameters; considering aspects such as training, coaching and the work environment in the result.
This phase not only seeks to maintain detailed monitoring of operations, but also promotes a continuous improvement mentality. The collected data is used not only to correct deviations, but also to optimize processes and strengthen the company's competitive position in the market. Effective control management at this stage is essential for sustainable progress and business resilience that facilitates decentralization and expansion into new markets, where the owner is free and willing to explore new opportunities.
Stage V - From 100 technicians onwards: Decentralization, Expansion and Diversification
In this evolutionary stage, a significant transformation takes place: Each area acquires its autonomy, consolidating itself as an independent entity within the organization known as the “Business Unit”. This change marks the transition towards a decentralized structure, where each Business Unit has the capacity to make autonomous decisions, always in tune with the established general rules and policies and is responsible for guaranteeing its profitability on its own.
This process leads to greater specialization and efficiency in business management where each Business Unit operates as a small company within the whole, with clearly defined responsibilities and a vision aligned with organizational objectives. This decentralized approach not only drives operational efficiency, but also facilitates the identification and exploitation of new expansion opportunities and contributes to the overall growth of the organization.
At the same time, it promotes diversification, penetration into new markets and the constant search for innovative ways to add value to customers and the business. Decentralization thus becomes a key driver for continuous and sustainable development in a dynamic business environment.
Conclusion: The Professionalization of the Dream Business
The process of business evolution and professionalization for making a company a great business involves overcoming initial challenges, optimizing operations and achieving business independence. Through five stages, ranging from the assignment of responsibilities to decentralization and expansion, the aim is to create an efficient structure, hire appropriate personnel and promote growth.
This entrepreneurial journey is not only a testament to adaptability and perseverance, but also a strategy to achieve a balance between work and life, culminating in an independent, efficient and sustainable business in a dynamic and competitive business environment like the current one.
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About Pablo Tellaeche (Author):
Owner and main consultant of TACs Consultores, Speaker and University Professor; seeks to bring a true and positive Lean Culture and Digital Transformation to every company with which he has the pleasure of collaborating.
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