The Natural Evolution of an Entrepreneur

Evolution of an Entrepreneur

No two companies follow the same growth path. Some follow a rapid trajectory while others maintain a slow, steady increase in revenue and profit. Many rely on organic growth while others refer to expand through acquisition. But in all cases, leading a growing business is exhilarating.

Whatever path growth might take, entrepreneurs and their management teams must adapt to the demands of a larger organization. In the midst of growth, owners begin to see the stress fractures that occur when the organization can no longer handle the volume and complexity of operations. Bottlenecks become obvious, both in systems and in the effectiveness of the people running the business.

Don’t Do Everything Yourself

The most obvious first step in dealing with growth is for entrepreneurs to replace themselves. It does not matter whether the business is in startup mode or has several hundred million in revenue, the job that the head of the company is doing needs to change as the company grows.

Sometimes the entrepreneur, and maybe their spouse, handles most responsibilities in the business. Together these owners take on the roles of salesperson, accountant, and production manager. This can be true even in larger businesses. As the business progresses, the entrepreneur may find he or she does not have the skills or experience with functional areas such as human resources or financial accounting to handle what needs to be done. They can’t wear all hats.

The problem is trusting someone to fill a role they know well. But many owners are surprised to find that the new employee is more effective than they were. They need to hire strength in an area, and trust that they have brought on the talent they need. Then the entrepreneur needs to let go.

Growth potential and success depend on the entrepreneur’s ability to adapt and mature. Delegating work to others seems like an obvious step, but in practice it is extremely hard to do. The owner must have a desire to adapt to a new role within the business, expand his or her competencies, and mature as a leader and a manager. The entrepreneur’s ability to attract quality people has a direct impact on results.

One person who has experienced this situation first hand is Mark Loeppky of FFUN Motor Group. As Loeppky explains, “People make a difference. You need to surround yourself with great people if you really want to achieve your vision for growth.”

Loeppky should know. As CEO of this second-generation family business, he started when the business’s revenue was under $10 million. Current business plans are approaching half a billion.

Aaron Dillman, a chartered professional accountant and partner at Virtus Group, has had a front-row seat for FFUN’s growth, having worked as Loeppky’s business advisor and the firm’s external accountant during this recent period of growth. “Mark really has pushed himself to evolve,” explains Dillman. “Mark started to delegate to key staff and is learning how to do a better job on a limited number of responsibilities. Part of this is having the confidence in competent people around him.”

Make Sure Your Structure Is Right

The business may have functioned well for years with existing systems and processes, perhaps even all manual, but at some point, the volume and complexity are just too great.

What can go wrong? Without internal controls in place, assets may be misappropriated. Without the proper capital structure and monitoring systems, a lack of attention can result in financial difficulties and the business may find itself overextended. Great people produce incredible results, but without an effective management support structure, employees can run a business into the ground. And the list goes on. In addition to ensuring that good operational structure is in place, corporate structure needs attention: it often dictates liability and can have unforeseen consequences, such as paying more tax than required.

Systems must be scaled up to deal with growing complexities. These changes are often not difficult to implement. At its most basic, there is a need to make sure the staff structure, management systems, and access to cash flow are appropriate for the business’s size.

“Success when adopting systems often comes back to the entrepreneur’s ability to evolve and mature,” comments Dillman. “Trust that you don’t need to do everything yourself. Trust your people and your systems.”

 

Work On The Right Things

Everyone has the same number of hours in the day, but some people get more done. That’s important, but focus is more of a catalyst for growth than productivity is. It’s about doing the right things. Knowing what to pay attention to is difficult. After all, most entrepreneurs lack previous experience. They have never operated a larger and more complex business than what they have in their hands today. People need direction from peers, advisors, and key managers.

Entrepreneurs often need help taking the initiative. These are motivated people, but often an issue that needs to be dealt with is not as urgent as daily operations in the business. So the decision sits. It’s a combination of being too busy and not wanting to deal with the issues. A seasoned and mature leader is someone who is willing to take advice from those closest to them, even if it’s not flattering. People who have the owner’s best interest in mind will ask the right questions and push them to do the right thing.

With an open mind and relationships with the right advisors, entrepreneurs begin to seek out ways to put plans in place to get where they need to go. As Dillman explains, “Clients often say ‘Here’s what I’m thinking, what I want to do; now how do we make it happen?’ Sometimes they have a grand overall plan and just need a practical perspective from someone they trust. Other times they might have to make a big decision, like whether to acquire another company, and want to know the impact on their financial statements or financing arrangements. These conversations are often the drivers behind growth.”

The adage holds true that it’s important to work on the business rather than in the business. To do that, entrepreneurs need to welcome help from others. This allows them to achieve more than they ever thought possible. It’s on this point that Dillman reflects on his experience with FFUN Motor Group. “Mark was able to achieve this rapid growth because he constantly tried to change how he operates, how he manages, and how he leads.

”Entrepreneurs need growth, both in their business and personally. It’s in their blood. And it can be wonderfully rewarding to step back from putting out the fires each day and focus on building the business.

First published in the March 2018 edition of The Business Advisor. 

More Information

We can help you with The Natural Evolution of an Entrepreneur or any other accounting or business needs you may have. Contact us below and we’ll be in touch soon.

If you know your Virtus Advisor’s name, please select it from the list below to contact them directly. If you don't already have a Virtus Advisor, please select No Advisor below and we will have someone contact you shortly.

Back

Subscription Confirmation

By confirming your subscription, you are agreeing to receive occasional updates about Virtus Group LLP news, events, announcements, and services. You may unsubscribe from these updates at any time.


Virtus Group LLP
virtusgroup.ca

The King George Building
Suite 200 - 157 2nd Ave North
Saskatoon, Saskatchewan
S7K 2A9
Phone: 306-653-6100
virtus.saskatoon@virtusgroup.ca

Central Park Place
Suite 200 - 2208 Scarth Street
Regina, Saskatchewan
S4P 2J6
Phone: 306-522-6500
virtus.regina@virtusgroup.ca