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What’s the Most Critical Transition in the Growth of a Startup?

Introduction: This post was originally created on LinkedIn, as it has more to do with entrepreneurship than it does the specific nuances of running SAP BusinessOne.  However, more and more of our customers are facing the same challenge: SAP BusinessOne is the best and cheapest solution on the market for a small growing company.  But nobody can afford the consulting fees.  We’re dedicating a large amount of our time to solving that problem, and in doing so, helping growing companies understand the challenges that lie ahead.  Most of which are not technology based.  However, as my colleague says: “Capabilities Create Possibilities”.  We are entering a new age.  One in which technology will no longer be a liability on the balance sheet.  Modern companies realize that technology provides exponential growth and scale – but only when done correctly.  Without further rambling, here is the post:

As an entrepreneur, the most important transition in a successful business isn’t obvious.  It isn’t when you sell your first product, or your first million products, or even when you sell the whole company.  It’s not when you hire your first employee, or even when you start delegating tasks.  The most important point is when you start delegating decisions.

Why is this particular point so significant?  After all, it’s just a procedural thing with no direct impact on the P&L.  The reason delegating decisions is most important is because the goal of every entrepreneur should be to build a business that can function without them.  In part, this is just good business sense – you need the company to function without you if you plan to sell it, and even if you want to hold onto ownership, you’re going to want to retire at some point.  But the main reason is that if you don’t, you’re putting an artificial cap on how big your business can grow.  Any entrepreneur will tell you that time and attention are your most scarce resources.  They’ll also tell you that to make good decisions on any topic, you need to have an intimate understanding of the situation.  If you are making all the important decisions yourself, your only options are to make your business small enough that you can keep track of everything yourself – or to make a lot of uninformed decisions.

Practical considerations aside, building an organization that can function without you is the truest test of business skill.  Delegating tasks doesn’t demonstrate much.  It’s a slightly more efficient way of doing what you’ve always done.  Delegating decisions is different.  It proves you have the insight to design an effective organizational structure, the perceptiveness to identify talent, and the humility to admit that you’re not the best person to do every job.  When you start out, your customers are hiring you, but as long as that’s the case, you’re just a glorified freelancer with some hired help.  When you’ve mastered all the skills of enterprise-building, your customers aren’t hiring you – they’re hiring your company.

There’s nothing easy about giving up control.  Your team make mistakes while they’re learning, especially at first.  And even complete success is bittersweet.  If you do it right the enterprise into which you’ve poured your heart and soul won’t need you around anymore.  Still, every company has to leave the nest someday.  By mastering the nuances of effective delegation, you’re priming your company to be the biggest success it can be.

Harrison Holland and Thomas Mitchell, 2016 Big Concepts

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