Business Owners Toolbox Blog Discussions and articles to help the small business owner solve the challenges they face as they grow their business.

April 4, 2011

Can You Afford a $100,000 Manager?

Filed under: Growth Management — Tags: , , — Mike Van Horn @ 10:29 am

“Promote yourself to CEO!” I’m always exhorting the business owners I work with. Too many of us run our companies from a manager’s or supervisor’s perspective. We’re there in the trenches, directing our people, doing lots of little jobs ourselves. We work long hours—sometimes evenings and weekends. We work this hard because we’re growing our businesses, and we know we have to put in the sweat equity.

But this gets old! “I have to wear a nametag so my kids will recognize me!” complained one business owner. We see ourselves heading toward burnout; we can’t possibly work this way indefinitely.

You miss opportunities. With your head down, running the day-to-day operation, you’re not paying attention to the big picture. You miss windows of opportunity that are opening, strategic alliances beckoning, and threats peeking over the horizon. Your company has no chief executive. Your company’s growth and profitability are held back because you neglect being presidential.

But you can’t promote yourself to president unless you have a strong manager in place. Managing the day-to-day operation cannot be ignored. If you don’t have someone in place, you must do it yourself.

Good managers are expensive—and they are overhead! Whether you call it general manager, operations manager or whatever, this person can cost you $80 to $150,000 per year. And as everyone in a professional service firm knows, top managers aren’t usually billable to clients. Their pay is mostly overhead. This fact alone keeps many small business owners from hiring a general manager. You just can’t stand to hire this “non-productive” person. You forget, of course, that this pulls you—whose time is even more valuable—into the top manager’s position and away from being president.
How can you justify spending $100k? Where does this $100,000 come from?

Here’s a story: A growing professional service firm will soon have ten highly paid technicians in the field working with customers. With every new technician hired, the owner’s scheduling and oversight responsibility increases. He’s tearing his hair out, working evenings and weekends, and the job isn’t getting done well.

I asked him, would a good operations manager be able to improve productivity by, say, $10,000 per technician per year? “Heck yes!” was his answer. “By better scheduling, better job selection, billing for all the work done, handling change orders properly, upselling the customers, training to improve skills, etc.” All of a sudden, the $100k salary didn’t sound so daunting.

He got excited. “A good ops manager would enable us to hire another 8 to 10 technicians—almost doubling our revenue. The addition to our bottom line would be much more than double what he costs.

You get to become president. Most important, hiring this manager frees the owner up to focus on business development, handling the most challenging projects, watching overall performance. “If I’m freed up, I can easily bring in that business.”

“I’d be crazy not to hire him.”

You deserve not to work so hard. Your new manager also allows you to take more time off. More time for family, more vacations, more time for your avocation, hobbies, or community service. More time for watching the waves and clouds!

More time or more money? As your business grows and profits, you can choose to pay yourself more. Or you can buy time off by hiring really good help who can run the business in your absence.

Bigger vision. “As soon as my new GM had a firm grasp of the day-to-day, I started seeing ways we could grow, and opportunities appeared that I had been blind to,” said the owner of a small financial services office I work with.

This is the joy of running a successful small business.

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