In April, we discussed the importance of marketing, sales and customer retention.  This month, we will review organizational structure and how some of the best run businesses achieve success in this area.

We have noticed that when a company sells and after a brief transition period, the new owners start to implement changes within the management team.  Frequently, they add a general manager to lead the rest of the team.  This step is often avoided by the original owners of the company, because they see it as giving up control or an unnecessary expense.  The new owners, however, see hiring a general manager as adding value to their company.  Why the difference?  As one of my buyers told me recently, it is building muscle in the company.  This successful business owner has increased revenue by 50% over the last two years.

To gauge whether you may be ready to hire or promote a person to general manager, consider how important you are to the effective day to day management of your company.  Ask yourself – how long can I be gone from the business before the wheels come off?  If you can’t take time for a long lunch, that’s not good.  Begin your assessment by:

  1. Listing all your duties and responsibilities.
  2. Exploring who within your management team is capable of assuming some of your duties and responsibilities.
  3. Cross training your management team with the skills you use daily to run the company.  Through this practice, you will also be more prepared, if a key person gives notice.

If you still have major gaps in transferring duties and responsibilities, it may be time to consider adding a general manager.  By having the day to day activities assumed by the general manager, it affords time for the business owner:

  1. To explore new markets for products and services.
  2. To work on the business, instead of in the business.
  3. To recharge his/her battery and reflect.

If the cost seems to be the problem, consider offsetting the expense with a modest price increase.  It can pay huge dividends.  A buyer will also see added business value when key management is in place.