Who would have thought that leaving one of my favorite employees would be one of the most valuable leadership lessons I need to quadruple my bottom line and catalyze my sale of my business?
Let me explain.
I started my small business just after graduating from college in 1991 when I was 23 years old.
Except for a three month concert, I never worked for anyone or had an official job. I have been self-employed all my life, and much of the leadership lessons I have learned over the years have been learned through on-the-job training.
Unfortunately, I started my business on a tight budget, and by the sixth month of my job, I had run out of the last few hundred dollars, literally a few days after the doors closed.
I managed to hold out month after month for at least the first couple of years, barely getting some positive cash flow.
In the early years, I looked after everything from sales marketing and accounting in technical support. I even cleaned the toilets. For the first five years, I regularly worked 70 to 90 hours a week, slept often in the office, and rarely took days off.
Fast forward many years later (October 2017 to be exact) and I successfully closed the biggest deal of my life when I sold his business with 50 employees into private capital.
Now that I am 51, I am fortunate enough to live the life I imagined when I was a young and somewhat ignorant 23-year-old entrepreneur.
Those early business years were challenging. Not only was it difficult to find sales and cash flow was very limited, but most importantly, because I never managed anyone other than myself.
Management lessons learned
I now know that one of the keys to building a successful and prosperous business and ultimately, wealthdepends on how well the business owner can get out of the way and successfully manage and lead the business team.
The better a business owner learns to manage and lead at the same time, the more successful the business will be.
You see, I didn’t understand the concepts of management and leadership. I knew instinctively that in order to grow, I needed to be a good manager. But since I had never worked for anyone, I really didn’t understand what it meant to manage and lead people.
I used to have a hard time relaxing and it makes sense because I cared about almost everything. As a result, I knew and understood the business better than anyone else.
It was often easier for me to do something myself than to wait patiently for my co-workers to figure it out. Instead of wasting time teaching someone to do something, I would do it myself.
I know I was a difficult boss, and to be honest, I didn’t listen very well. It was only in recent years, when I was running my business, that I realized what it means to manage. It was only after I started delegating authority that the business began to grow effectively.
In 2013, there was a specific incident that played a decisive role in my personal development. This incident was the catalyst that helped me and my business move to a new business level.
The leadership lessons I learned at one event in 2013 ultimately helped my business more than double sales and quadruple margins in four years.
Leadership lessons learned. A present from Frank.
One of my favorite co-workers left me a gift.
He went out.
Usually, when one of your favorite employees leaves, this is not a cause for joy. In this case, I did not celebrate his resignation. I was very disappointed.
So I thought that this particular employee (let’s call him Frank) enjoys working for me and my business.
Frank came to my office with a letter of resignation in hand.
Fortunately, we talked about why he is leaving. He provided me with a list of what I was doing wrong and what was wrong in business.
Normally I wouldn’t listen, but in this case, Frank had good arguments.
Bitter truth
He said the business was disorganized. Working for me was like drinking from a fire hose. The company lacked any formal business structure, and people were unsure of their job responsibilities because no one had a formalized job structure or responsibility. For the most part, everyone did everything.
The business needed an operative. I acted in this role. To be honest, I was doing a pretty lousy job. He also said that the company has no formal leadership.
His reviews offended.
Fortunately, he sent his notice shortly before New Year’s holidays, and I had a week to ponder and ponder his comments.
I realized that in the past few years, sales have been more or less stagnant because I got in the way too often. The skills that I brought to the business allowed us to grow to 30 employees. These skills were not the skills required to further expand the company.
Frank’s retirement incident made me realize that I was holding back my business, and if I didn’t manage it differently, the company would remain the same. Frank was my leadership lesson.
There is a term for what I have just described.
The Peter Principle
What is the Peter Principle?
V Peter Principle was a term coined by business management guru and writer Lawrence Peter.
In his book The Peter PrinciplePeter observed that people in the organization are “reaching their level of incompetence.”
The principle is that people will expand in their roles to the point where they reach their ceiling. And unless they make some changes to their methodology and process, they will most likely stay there.
The point at which a person feels stuck – the ceiling – is called the Peter plateau.
Each has its own Petra plateau. Unfortunately, most of us do not realize that we have achieved our goal, and until we do, and until we make changes in what we do and how we work, we will not move beyond our ceiling.
Going beyond my ceiling and quadrupling profits
By the time I got back to work in early 2014, I thought about what Frank had said and why he had retired. Frank has more or less laid out a clear path for the business.
And that was Frank’s gift.
Within three weeks, we hired an operations manager and promoted one of our salespeople to sales manager.
I left the sales department and started working on creating a vision for the business.
For the first time, an official business plan has appeared. I put together a team of managers and learned not only to manage, but also to run my business.
I created BHAG (Big hairy cheeky target) and reported this to our team in the form of a meeting about the state of the Union.
In this meeting, I laid out our five-year goal of doubling the business and detailed, to the extent possible, what we are going to do and how we are going to do it.
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Vision
I created a vision that could inspire everyone in the company.
I began to realize that if I tried to control everyone’s work at the micro level, nothing would be done. So we spent money and time making sure everyone in the business gets formal training…
I made one-on-one appointments with my direct reports.
By the end of 2016, we were ahead of schedule on our goal of doubling our business and, in the meantime, quadrupling our profits.
In the end, I decided to sell the business, not because things were going badly, but because I didn’t like running the company. After 27 years, I was ready for a new challenge.
On October 16, 2017, I stood in front of the team, this time as a business leader with a leadership lesson in hand, much like I did four years ago during our first state of the Union, and announced to everyone that I had sold the business. It was bittersweet. I sold my child.
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Peter’s plateau has surpassed. mission accomplished
I achieved my goal thanks to Frank. If he hadn’t handed me his letter of resignation at the end of 2013, and if we hadn’t had a field interview, I probably never would have made these changes.
The changes we needed to make were so obvious, yet they weren’t.
This is the essence of the Peter principle and your Peter plateau. Flashback is always 20/20.
When you are busy with your day to day activities, doing the same thing over and over again, we often don’t think about the fact that maybe we are the reason why our business is not successful or why we are constantly overtaking for promotions.
It doesn’t matter if you work as a small self-employed person. legacy book company, a 200-person artificial intelligence software company, or managing a large team in a multinational company. Each of us has our own Petra plateau.
Until you find yours, don’t be surprised if you do the same thing over and over again, expecting a different result. If you are not meeting your goals, you may now know why.
If you would like to read the background story, you can here: My post-sale journey as I sail to a new harbor. Next Stage, Semi-Retired and Lifetime Post-Retirement Sale
